All Forum Posts by: Bryan Casteel

Tell us how it is possible to truly wholesale deals all over the country. I don't doubt that it is possible, but it sounds very difficult. Without understanding the areas that the properties are in, how do you really know if you have a good deal or not?

Robert,

I just put in my two cents on your question on the other thread:

http://forums.biggerpockets.com//viewtopic.php?p=6479#6479

In the future, please post a question only once so that the conversation stays in one place.

Robert,

That sounds a little too good to be true. I would guess that there is something that you are missing in this equation. Plus, if you only have a 10% spread in the deal after purchase plus fixup, you are getting into risky territory. You need to have a much larger spread when you are all done with the project. I have now had two properties that lost 10% in value over night as the market in that area of town was going through a transition to a buyer's market. My $210K ARV turned into a $185K sales price (OUCH). If you don't have enough spread in your deal to absorb that, you are going to be hurting when you sell.

I have never painted over tile and my guess would be that you could not paint on such a slick surface. The tiles on the floor may be rough enough to paint, but you would really want a professional opinion on that.

The tiles around the tub need to be glazed. If you call a tub glazer, they can also glaze the surround tiles. What they do is actually coat the tile (and the grout) with porcelin (sp?). It can get pricey though. If you have ever seen a before and after on a tub that has been glazed, that would give you an idea, it looks brand new.

You are right, I should have kept the example apples-to-apples and included the 1 point and 9% interest into the expenses. If you assume a 4 month holding time, that is $1350 in interest and the point would cost $450 - So round it to $2K. When making the payments, the pricipal portion of the loan doesn't count as an expense, just the interest.

I completely agree that you can normally negotiate from the strongest position by offering all cash no financing contingency. This is actually what I do. I do not have any financing contingencies on the contract. For timing purposes, if I need to pay all cash I do it, but I still get the loan to free up that capital for more purchases.

I just checked and you are right, the checks have dollar signs on them, not percentage signs. I just want to make sure that I get more checks.

By the way, I am focused on rehab and retail, not rental or selling with terms. Your all cash position in the home gives you an amazing amount of flexibility on getting the most out of the deal - I understand that.

I am not convinced in the all cash theory. I understand the arguments, but I fail to see how leverage is bad on a good investment. My perspective is certainly around the rehab world though.

Leverage allows me to stretch my capital into more projects. The financing costs and interest expenses are another expense on the rehab that I figure into the numbers before I buy.

If you have a property with a $100K ARV that needs $25K in fixup and holding costs and you buy it for $50K:

- All cash: $75K invested, $25K profit = 33% Cash on Cash return

- Leverage: 90% loan on purchase price, 1 point, 9% interest)
Cash invested = $5K down and $25K fixup/expenses = $30K
$25K profit on $30K invested = 83% cash on cash return

I know another investor in town who is buying rental properties with leverage. His criteria is that the cash flow from the property needs to pay the mortgage off in 12 years. In 15 years he wants to have $10MM in property completely paid off with huge cash flow. The renters paid off the property for him.

Bill,

I have dealt with RealNet for awhile now in the Cincinnati area. I can't say that I really believe in too many of their deals. In my experience, they are very motivated to get people into thier hard money loans and they find real estate deals that are good for selling loans. That being said, if you DO YOUR OWN homework on a deal and you are happy with the numbers, they will get you through the deal quickly. They have extreamly tenacious agents working for them and they get a lot of deals under contract.

Is there anything in particular that you were looking for?

You should be able to install right over the ceramic tile as long as you have a flat surface and it is not all cracked up. It sounds like it is in pretty good shape. I have put in two hardwood floors recently and both of them were installed over the top of the old hardwood floors. The floor height will be raised just a bit, but with threshold transition pieces, it looks great.

Good luck!

Christy,

Unfortunately, spamming is a big problem with these boards. You don't recognize it that much because Josh does a great job of cleaning it up a couple times per day. He will clean these up as well when he logs on next.

Although spamming is virtually impossible to stop, it is very nice that Josh stays on top of it here so that we can all play in a clean environment.

Shawn,

If you are looking to personalize each letter, you can do this with Microsoft Word. Search under the Help function for "Mail Merge".

I would highly suggest hand writing all of the envelopes. If there are too many to do by yourself, then pay someone to hand write them for you. Also, include a hand written return address and a real first-class stamp on the envelope as well. You want your mailing to look like a personal letter to the owner, not another piece of junk mail.