All Forum Posts by: Peter Mckernan

Selling fees (estimate), $30,000, and holding costs? How quickly can you get the work done? I would project, 6 months, so if there are holding costs $2,270 a month (not including utilities), with utilities in about $2750.00. $2750x6 months= $16,500.. Points for the loan 1-2 points, so now you are in $3,413 roughly. 

Buy: $284,900

Rehab: $115,000

Holding: $16,500 

Points: $3,413 

Selling fee: $30,000

Insurance hold: $2,000-$2,500 (maybe get back $1,000-$1500 if you close quick)

Other title/escrow purchase: $2,500

ARV: $500,000

Profit: $46,587 (9.25% approx) 

I would do the deal, especially if you get that gap for rehab closed 3-4 months and tighten up the rehab costs too ($100,000) 

 I would get a contractor out there 

How I would build this database for you would be to connect with people at local meetups that you find. Build out the network for GCs in your area and start to bid jobs, then you can build out how much each job would cost. This then would allow you to look at a property 1500sf 3/2 with the same rehab as a property in the same condition that you got a bid for 1-4 weeks ago.. This will give you a baseline, I.e. own the Main St project same thing as this one, and it cost me all in $125,500 to do the full rehab. Then you can start seeing other places just on the MLS when you get this strategy down and knowing what rough numbers will be, but it is always mandatory to get a full amount of rehab costs to get the GC into the property.

This is a good baseline though of real costs that will get a project done. 

Everyone gave great advise, I would not use 70% when you start to get to the granular numbers. You need to get contractors in and estimates done. The 70% rule changed to 60% rule after 2020.. If you are analyzing 100 deals, use that to take those numbers down to 25-30 days that could really be deals then go deeper with GCs to get you full details on what you would be paying on rehab and good comps. Once you have done 100-200 deals you can really estimate in you head when you see a deal, so that 100 turns to 5 good ones within minutes and then 1 to get under contact with you to put an offer in. 

I would for sure know going into this that these are private companies and they can set their own fees. Some can charge less on a job and some charge more on a job. 

@Brandon Blackmon

I agree with Bruce, there is no PPSF model.. It's like the 70% rule, you can use it to narrow down 100 deals to 30 deals to dive deeper, but you need to know estimates per house.. Same things as knowing comps for the 30 properties that you narrowed down to from the 70% rule.. It is to get you to reduce the amount of time you waste looking at deals and knowing what is good and what isn't good for a deal.

You'll also need to know the area comps, are people putting in wood flooring or LVP etc. That will increase your material costs for the job and is the contractor paying for the material in their bid or are you paying for it and paying them a labor cost. All the stuff you need to dig in to.

These prices will come when you get GCs (licensed, subs, and unlicensed) into the property and start to get quotes. There is no one size fits all answer for this question, market to market, and property to property are all different. 

Once you start to get people in there to look at project to project, that will give you a baseline then you'll start to gain more knowledge on where you need to be on the pricing/estimates etc.

What I have seen in my own life was this..
- Working a W2 as a firefighter, posting and consuming content

- Leaving my W2 to dive deep into real estate investing and working as an agent... and still watching/posting content all while business was ok 

- Deleting social media apps (one have one on my phone that I use 10 minutes or less a day), diving deep into building my business and skills which have drastically increased due to pure focus and increasing my business significantly
- moral of the story... focus on the things you need to do in business (dollar productive activities) and life experiences while reducing consumption will increase your success  

Personally coming from an agent/investor in CA, I always get a quote from a broker of mine and make sure I am knowledgeable with the fees/costs. This goes the same for calculating rents in the area, I what to know the real data.. i.e. from the MLS, or insurance from the broker/insurance agent to make the right decision. I have had clients that had a quote come back 5K a year more than we expected it to come back. Just make sure you are fluid with this info on each property so you do not buy wrong.

All great info here for sure!

Build a team with all that time in the morning and and the time you have by walking up early etc. Building a team is something after you build the skills yourself, then teach them to other people to leverage more and more. The ones that build out great companies build the skills, then they teach the skills to people to set calls for them, go to appointments for them and they continue to build out their company as a marketing/sales operation that is more fluid to create more revenue.