All Forum Posts by: Paul Z.

@Scott E. we have a project manager with extensive experience in managing construction projects. Him, myself, and my real estate agent physically go through each property together to define a best possible and worst possible estimate of rehab costs prior to purchase.

We complete an extensive pre-purchase inspection list and then we develop a task-specific SOW. From that task specific SOW we estimate costs based on historical price estimates. If we go ahead and put the property under contract we will often pay for an official inspection. Then during our due-diligence period we call in our subs and specialty service contractors for bids and get a final budget. If we're within a certain percentage of our earlier estimate.... It's go time!

Afternoon everyone!!

Thanks for the insight @Tomasz Strzemecki

@Tomasz Strzemecki

@Tomasz Strzemecki@Tomasz Strzemecki

@Tomasz Strzemecki

@Tomasz Strzemecki

Got a possible deal that I'd love all of your thoughts and opinion on. Thanks in advance! :)

Market: Cook County, IL- Northwest Suburbs

Spec: 4/2 Split Level w/ finished basement, attached garage, 1092 sq ft., 51 yrs. old.

Sale Type: Bank owned web auction. Opening bid $60K; reserve unknown

Level of Renovation: Complete interior cosmetic + Cabinets/Vanities, Countertops, Doors, Appliances, Washer/Dryer, and Water Heater.

Demographic Analysis: 50% of listed non-distressed homes within subdivision have sold within 6 months.

4.25 months of total inventory

10.2% unemployment as of July 2013

"Major" corporations and employers within 5 mile radius

$59,623 median income

Disposition: Property is situated in a well developed urban community with great schools and almost zero crime. Home surrounding the property are all very well kept with mostly updated exteriors, clean lots, clear roads, and well developed landscaping. There's definitely pride of ownership amongst all the neighbors. Plenty of major retail shops, restaurants, and entertainment all within close distance.

Comp Analysis:

Personal Valuation w/ detailed systematic approach (Please inquire for methodology): $176K-$232K w/ avg. being $201K

Agent Valuation: $200K-215K "conservatively." High-end $225K

Exit Strategies:

Flip

Refinance into rental. Rental rate conservatively for area is $1500-1700/mo.

Refinance and offer a lease/option to buyer with negotiated terms.

Financial Analysis:

*I prefer @J Scott 's flipping formula:

Worst Case-

Sales Price (ARV): $200K

Fixed Costs: $28,425 (Purchase, Holding, Selling, Private Investor Interest Payments)

Rehab: $40K (high-end)

Profit: $25K

$200K-$28,425-$40,000-$25000= $106,575 MPP

Price Ratio: 53%

70% Rule?: Actual 73%

Best Case-

Sales Price (ARV): $200K

Fixed Costs: $27925 (Purchase, Holding, Selling, Private Investor Interest Payments)

Rehab: $30K (low-end)

Profit: $30K

$200K-$27,925-$30,000-$30,000= $112,075 MPP

Price Ratio: 56%

70% Rule?: Actual 71%

Thank you for your thoughts! Any and all insight is appreciated. Please let me know if you have any questions. I'll provide my full detailed and comprehensive analysis upon request. Thanks again!!!

Paul

@J Scott check your "spam" folder ;)

Thanks J! I know you didn't do anything intentionally. But I figured I'd get creative in getting a response a bit quicker ;-). Whenever you get the opportunity to review the message/email that would be great. Hope all is well with all the craziness you're dealing with. There's light at the end of the tunnel I'm sure!

@Mark Ainley check your inbox!

@J Scott I'm sure you hear this A LOT but I'm hoping I could pick your brain for a few specific questions and 1 quick request. I sent you these things in a message to your inbox and I tried to send an email to [REMOVED]. I know you're a busy guy so I know it's hard to give a bit of time to every one who tries to contact you, but you gotta give me an A for effort here!

Thanks!

For everyone who has replied so far I'll be sending you a colleague request with a message!

Btw there is a "major" part in my plan that I believe I'm going to change but I'd like to hear from you guys first to see if you can spot it and/or agree with what I'm thinking. :)

@Patrick Connell good evening!

When I say highly active and "credentialed" I really only mean to hear advice from people who at least have done a flip or own a property. But I am open to pretty much any thoughts from anyone. I've sent this plan to some colleagues who have zero experience in the field so I totally agree with where you're coming from.

I'm not worried at all if someone were to steal it either. Mostly because my "vision" and the way I plan to implement it can never be copied. In fact I chose to use the business plan template that @J Scott provides on his blog. His template has a great structure to start with and it fit nicely for what I've always envisioned my business to become. I molded it to fit the Chicago market and added many other features as well.

@Tom Sylvester thanks for the reply! I shot over a colleague request and a quick message.

Anyone else? 133 reviews on this post and no one else wants to take a look and offer some thoughts? Come on you know you want to!! ;)