All Forum Posts by: Michael Williams

 
Hi Eric, and that's why I posted this question. As I said I've been reading many discussions about this topic and I wanted to get views from both side, if any. The area my mom lives in is like this. All of my neighbors have been here for over 40 years or more and houses are paid for. The property value ranges are $24k - $38k. These are ARVs. My mom and 70% of the neighbors still take care of their properties and take pride in the neighborhood. There is one house that is a problem but I want to make them an offer to leave one day, but that's later in the plan. There are two vacant houses that belonged to neighbors that have passed away. The relatives stayed there for a short period of time then left, leaving them vacant. 

The reason I asked the question is because many investors want cashflow and like you said "if the cashflow comes with headaches it may not be worth it". There are many neighborhoods like my mom's here and I am looking to carve a niche with these what I call "Hidden Pockets". The key is to find good tenants for these properties once acquired and this is something that I am good at because I am a Facebook marketer that understand the power of marketing. Finding the good tenants will not be a problem so that is a side service I can offer an investor with the deals that I plan to provide. I think the Memphis market is a ripe one for the investor like me that can see the vision. I just wanted to get some insights about my plan from the BP Family to help me put together a strong strategy for this venture. Thanks for the input.       

 
These houses are in the lower end. The plan is to pay $12k-$18k to acquire and have an estimated $5k-6k in rehab.  These are to flip to another investor. These are neighborhoods with aging owners that are still interested in maintaining the area. But many of them are dying and leaving the property to their siblings that don't believing in paying property taxes. Which I can use to my advantage to get under contract. I am strictly in wholesale mode at this point. 

I am curious about this approach. I am still considered new to the investing game. I moved to Atlanta from Memphis TN about 5 years ago. I started out strong with real estate in Atlanta 4 years ago and did it for about 1 year. I got two birddog deals and had 5 under contract but all contract deals fell through. I then got away from real estate when I started another venture that included an investor. I just moved back to Memphis and a motivated seller just fell into my lap.  So I am contemplating taking advantage of the interest in the area.

I've been noticing that many out of town investors are drooling to get into the Memphis market due to the extremely low cost of properties and the good rent prices when compared to the cost of the house. For instance a small house in Atlanta my cost $50k plus $20k repairs totaling $70k and will bring about $680 - $800 rent.

In Memphis you can get 3 properties at $18k each averaging $5k-$7k repairs and pay and average of $75k total with each one bringing in about $600 each. This is $1800 per month minus expenses and some minor or major headaches with the area. Does this make sence from the numbers standpoint?

This prompted me ask another question of seasoned investors: Would you pay close to the ARV price of a property that is valued at $30,000, needs $6k in repairs to make it rent-able at $650 per month? This is $650 x 12 = $7,800 per year or return on investment in 3.9 years.
For example would you pay $22k plus $6k in repairs making your all in $28k to get this property? To save time let's say there have been some issues in the area as far as burglaries but still is the average of the entire city for these C areas. Not warzone but one of the nice pockets in bad areas. What would become your new measuring points in this type of area or would you keep the same formula for these type areas as for all of your deals? Is there ever a time to change a formula that has worked for you for years? 

Thanks Elizabeth I will look them up. 

I moved to Atlanta from Memphis about 5 years ago and I am moving back to Memphis. I discovered Real Estate wholesaling while in Atlanta and I plan to take what I've learn to grow my portfolio in the Memphis market. The Idea of buying a house for $18k and rehabbing for $10k then renting for $650 is very enticing. I had one cashflowing property in Memphis but gave it up. I plan to build up a Memphis portfolio this time for the long term.  The street my parents stay on is my starting point. Over 80% of the neighbors have paid for their houses and are passing away with no children returning to live in or rent them out. This is also true form many of the neighborhoods most of my relatives stay in as well. My goal is to buy up the block and surrounding blocks. 

I also plan to create a way to help Atlanta investors to take advantage of my presence in this Market. I have sources already interested. Time to build that list. 

But first things first. I will be scouting for the most active REIA in the area to introduce myself and start giving value. If you are in a local REIA in Memphis that has the people that are serious about winning in real estate give me an address so I can sign up. I look forward to connecting with new investors in the BIG "M" Town. Mom I'm coming home!  

 The contractor is the guy that contacted me. He is going to buy the house from the owner and rehab it up to the $1.6m. He is seeking to partner with someone to split the $60k to get it under contract, and the also split the $400k upgrade cost. The contractor is the buyer and the rehabber seeking a partner. The owner is open to creative methods with the buyer, who is also the contractor who is going to rehab the property. 

I am a wholesaler, I am trying to get into this deal by finding him the partner he seeks to split all of the cost.  I know the back end price will depend on the lot size zoning and other factors. 

 I use zillow and realtor to find out what has sold in the area for what price. I use Realtor to get a ball park price of the homes close to it. 

I have a CASH 4 Houses sign on my car and this contractor called me today about collaborating on a deal. He has a house that is free and clear in a sought after area in Northwest Atlanta. Realtor.com has it listed as $700k & Zillow has it listed as $698k. There is builder activity in the area. The 3 houses next to it are $1.6 million, $1.3 million, and $1.1 million. The one on other side is $985K and $1.2 million. The owner wants $700k and is willing to work out financing, but to get in the game he has to bring $60k to the table. 

The contractor and I talked for quite some time and I found out that he has been in contracting for 30 plus years, so the experience is there. He says that he has built houses of this caliber from the ground up. We also talked about what changes he would make to make to bring it to $1.6 million. It will cost $400k to get it to appraise at $1.6 mil. So that is all in at $1.1 mill, which will bring a profit of $400k - $500k. Worst case scenario $300k.

The house is vacant at this time and he said that there is an arrangement with the form a contract with the contractor who then in turn deals with the owner? Or should all three of us form the partnership and deal with the owner as one entity?

How would you structure it and what questions am I missing?

Really We are ALL IN at $460k, cost to owmer and $400k to upgrade.