All Forum Posts by: Dave Passey

From what I hear, flippers have the most difficult time continuing their normal business in recessions. I think as long as you are able to adapt to your market then you will always be able to get things to work. I was not investing during the last recession so I don't have personal experience, but I know there are a lot of other options. I would look forward to a lot more rental properties and Subject To type situations. Prices are lower which is good for buy and hold and people will be needing creative ways to off load their houses which makes Subject To attractive. 

To me, flipping would be tough because, like you said, there is a lot longer holding times. 

@Joe P.  So what is your plan? Are you going to try to work things out with the step kids?

Hey fellow investors, 

I figured it was about time that Missoula had an area where we could post potential deals that we are looking at and have other people look at it and contribute thoughts and ideas. 

I'll post a deal that I have been looking at and would lover to hear what other's thoughts are on it. This is a potential fix and flip. I'm sure that most of you have seen this house posted on the MLS.

The address is 120 Tahoe Drive, Missoula, Montana 59803. 

Here is the information on the house and my cost break down with my estimates. I would love to hear what other people think about my estimates and would love to hear where I am wrong or what you think I am missing. 

Current Asking Price: $130,000 - Irrelevant to me - I would be looking for a purchase price of $90,000

Costs Breakdown

Complete gutting of the house (labor only):                $1000

Mold Remediation:                                                           $5000

Roof:                                                                                   $8500

HVAC (Unit and Ducting):                                                $7000

Basement Reframing:                                                      $3000

Electrical Rough In/ Updating:                                        $6000

Plumbing Rough In (Basement)/ Updating:                  $6000

Insulation/ Drywall/ Tape and Bed:                               $8000

Interior Paint:                                                                    $3500

Flooring:                                                                             $8000

Doors and Hardware:                                                      $3000

Trim/ Baseboards:                                                            $3000

Kitchen (Cabinets/ Countertops/ Appliances):           $10000

Bathrooms (3 full):                                                          $12000

Lighting:                                                                              $1500

Exterior (Paint/ Fascia/ Fence work/ Cleaning)             $5000

Permits:                                                                               $2000

Miscellaneous:                                                                   $5000

Total:                                                                                  $97500

An investor friendly realtor that I have been working with and I have pinned the ARV at $260,000. I run my numbers 10k below that just to be safe which gives me and ARV of $250k. I have a hard money lender that will give me rates between 8-11% with points between 1-3. There are a couple other little fees adding up to about $1150. They are willing to lend 80% of the purchase price and 100% of the repair costs up to a total of 75% of ARV. I am putting in 9 months of use with hard money which would put my money costs at $9250. Repair interest would come in stages but could be up to $8000 if it was all calculated at once and not in stages.

This puts me at a total of $204,750 all in (roughly).

If I list at $250,000, I would pay 

6% realtor commissions:                     $15,000 

Closing costs of about 2%                       $5000 

Punch list items/ concessions:               $2500

Total:                                                        $22500

This makes 

Sales Price                $250,000

Selling Stuff           -    $22,500

Money In               -  $204,750

Profit                            $22,750

What do you guys think? What am I missing? What should I put in or take out? I'm excited to hear everyone's thoughts!

@Jeremiah Purdum I haven't seen those signs. I have been in Dallas for the last couple weeks. We are rolling out a new platform within our company that is keeping me pretty busy right now. Do you have the number for the yellow signs? I would be interested in talking to them. 

I would say that it seems like your maintenance and your CapEx are both 5% too low. I don't know what insurance rates are like around your area but you may want to peak at that as well. But, my goodness! You weren't kidding about those property taxes!

I wish I could get those rents for that purchase price around here!

@Kathleen Heine

I apologize, I did misread a little bit of your post. I did not put in any of the plumbing costs you had mentioned because for some reason I read it as you were including that 10k in the foundation 20k. Then from what you mentioned here about the roof stuff I added in a little bit more as well. I totaled it now at about 85k. Sorry I miss read that. Still a good deal though! I am basing my numbers off of being in the Dallas area and getting those prices. It would definitely be increased being further out. So that right there would be an increase. I calculate our numbers based off of what we have calculated from doing many deals and working out numbers working with our investors we work with and sell to. Most of the guys that we sell to have contractors in place and people that they work with regularly so their pricing is pretty set. It sounds like you would be looking for people to do the work while you are in it which will always raise the price as well. These together seem like they would probably account for most of the difference in price. 

Hopefully those other guys fall through and you can get it!

A good title company should be able to sort all of that for you. I would move forward with getting that going. If they do have a claim and they don't want to sell at that price then you may not be able to buy it. 

Hey @Nick Hundertmark,

It seems like y'all have a good business there, but have essentially created another job for yourself. The things that I would get rid of first would be pulling your lists and sending your mail. Those are two time consuming things that are tedious. There are people that better and faster than you at both of those things and it is worth paying them to do it so you can spend your valuable time on the important things. Licking stamps and handwriting postcards is a minimum wage job. You are worth more than that. Don't sell yourself short. Next thing to get rid of would be the title company work. Hire a part time person that has experience working at a title company that can do the title coordination. They can be the liaison between you, the title company, and the seller. It is not quite a minimum wage job, but your time will still be better spend on other things. Then, I would split work between you and your partner. One of you takes seller's calls and makes offers to sellers, the other finds buyers and schedules showings and takes offers from buyers. You will now be able to focus your time on the things that are really making you money. Buying and selling houses. 

Each of you then should become an expert on your aspect of the business so that you know it and can do it in your sleep. It seems like you are headed in the right direction. It is a good problem that you are not able to handle it all anymore. That means you are getting deals done. Getting things structured out and creating specific roles with specific responsibilities will be how you will be able to scale your business properly. 

Good luck and happy investing!

I have one. I'll send you a private message. 

I have had required renter's insurance in 3 of the last 3 places I have rented. It is usually $10-$15 a month. At the place I am currently in, it was available with a company that the property management company had. It was the same price and had the same coverage as anywhere else so I went with that because I can pay it with my rent. It is not a huge expense and it can be incredibly beneficial to you and the tenant.