All Forum Posts by: Lucas Pfaff

@Manolo D.

 Thanks again for the help. We're looking into it.

@Craig Jennings

I appreciate the review and even more so the offer. I believe we are likely going to go with the same product. I'll be sure to take you up on your offer if we get to that point.

PGN?? 

Hi All,

I have the opportunity to purchase 3 trinities in the center city/bella vista neighborhood in Philadelphia but I'm having some trouble analyzing the opportunity and putting a value on the buildings.

Note: Trinities (not triplex's) are 3 story SFH row homes with a basement and are roughly 100yrs old. They are shallow and narrow and sport 1 room per floor with the kitchen in the basement. Coverage is roughly 15x15. They are 3/1 with in unit w/d and small backyards.

Here's the breakdown...

The 3 buildings are all recently rehabbed including new plumbing throughout including service to the street. Also new 100amp electric. Updated mid range kitchen finishes. 

The windows need to be replaced but don't worry about this aspect. I will make adjustments based on my expectation of costs associated. I don't have the details at this time.

The owner is looking for $250,000/property. I will offer based on a package deal for all 3. He is open to Seller financing and in some ways prefers it as his father is the lien holder and isn't looking to pull his money out. Current terms are 4.5% 30yrs. He would like to get $30k upfront as he is looking to travel. The rest would be seller financed. They are currently FSBO but he reached out to me to find him buyer's and offered a 3% buyer commission. My plan is to scrap this and adjust the price down. The properties are currently held in an LLC and he is an RE attorney so in order to minimizing fees and transfer tax we would likely assign the LLC into my name (I'm not familiar with this process but I hope to pay nothing down and this seems to make sense to me).

Each unit should rent for $1,300-1,500/mnth. Let's assume gross monthly rent of $4,200.

Based on my CMA these should retail for $230,000 each.

The problem seems to be cashflow. These properties are in a great A neighborhood and won't cashflow the way I would normally hope, but the fact that they are in this great neighborhood makes appreciation nearly guaranteed (I've never factored in appreciation before but this makes me want to).

So...what should I offer? Any help/insight?

Hey @Brandon Turner

I'm thinking you might have some thoughts on this :)

Awesome that you're putting this together Sergio. Hopefully there's a good turn out, I know I'll be there!

@Manolo D.

In that case it would be ~$350k

@Manolo D.

I'm not certain what you are asking here...

Annual employee turnover and project scopes?

If so, the annual turnover is zero over the last 12 months. 

The primary project scopes are kitchen and bath design and remodel, but additional scopes can include basement remodeling, additions, and more.

Thank you for the input @Adam Anderson

@Manolo D.

The company currently has 5 full time employees not including the owner. 

@Manolo D.

@Aaron McGinnis

Gentlemen, thank you for the comments. I am actually more interested in moving from excel based spreadsheets to a software package for estimating construction jobs. I am the contractor...well that's not entirely true...my father is the contractor and has asked me to post this question in his stead. He is primarily involved in kitchen and bath remodel work.

@Justin B.

 and everyone else...thanks for the insight and feedback. After reviewing your comments, doing some research on guaranteed payments, and consulting further with my CPA we've decided to do a combination of options 2 & 3. 

All of my qualifying business expenses will be paid for directly from the LLC (minimize taxes) and the difference will be distributed monthly as a guaranteed payment.

Thanks again for the help!

Does anyone have experience with using an estimating software package to develop rehab costs? Specifically, does anyone have experience with XactRemodel or Xactimate?

Assuming you have experience with one of these software packages, could you provide some insight or review? 

I'm looking to use the software for estimating contracting jobs as well as working up estimates for potential flips.