All Forum Posts by: Rick Turman

@Jerry W.,

I have some good new and some bad news. The bad news is, I had two mold inspections done on the property today as I knew there was mold in that home but didn't know how much. With HUD you have 2 business days for HUD to receive a copy of the EMD and the contract. Make sure you have your inspections done before your offer and or EMD is sent so you have an exit strategy.

All in all looks like we need to do a full remediation in the home, crawlspace, and attic.  First quote was 6500 with us ripping up the underlayment just so the subfloor could be scrubbed and treated from the top and underneath in the crawl.  Second quote, 15,000!   Of course the higher quote was for the big dog disaster company.  The other quote company (Local mom and pop shop (Licensed)) felt more friendly and explained everything thorough.  Add 2k for the lower quote and they will demo the floor.  

Good news, I had the agent hold off on sending the signed contract and EMD to HUD until I had my inspections. Now that I have them, i'm trying to get them to agree to lowering the price Or I am walking away unharmed. It's a win win for me, and I think we played our cards well on this home. Keeping everyone posted. Will find out more tomorrow morning from my broker. Cheers!

@Brent Coombs, @Jerry W.

You are correct, it is a lot, however it may be the way I factor my numbers.  I include my Commission Payouts into my Holding costs/Fixed costs.  Anything I don't touch that get's paid out (Accounts Payable less construction/reno costs) during the 6 Months (God forbid it doesn't take longer than 6 Months in anyone's scenario) get's factored into this number.  I take J Scott's MPP and work off that.  My Rehab Costs is a running total from another sheet that contains all my receipts for every dollar spent. Here is an e.g. for this home:

Time to get the EMD to the Tile Company. Thanks gents! Have a great Weekend!

@Michael Trizzino,

Update to yesterday's chat.  We got an accepted offer on this new property. We offered 80 with seller covering 2K of closing. Needless to say, If we stick to our plan on this one here is the layout:

Purchase Price: 80,000
Renovations Costs: 40,000
Holding Costs: 25,000
Sale Price: 179,900 (Active comps at 179, recently sold comps at 219-239)
Projected Profit: 35,000

Let's keep our fingers crossed. Thanks everyone!

So I think I figured this out and it may have been a blonde moment after all.  Regardless 20% in, in the long run, that money is returned back to me through the proceeds therefor the 20% is not kept by any party.  I found out that my 20% was towards the Rehab costs that I initial accounted for in the MPP formula.  With everyone's help, I was able to reverse think this one through and confirmed with my closing statement.  

On the other hand, we got an accepted offer on this new property.  We offered 80 with seller covering 2K of closing.  Needless to say, If we stick to our plan on this one here is the layout:

Purchase Price: 80,000
Renovations Costs: 40,000
Holding Costs: 25,000
Sale Price: 179,900 (Active comps at 179, recently sold comps at 219-239)
Projected Profit: 35,000

Let's keep our fingers crossed.  Thanks everyone!

@Brent Coombs, @Wayne Brooks,

Thanks for your replies.   So say this for instance, If profit 23,000 on this house and my 20% of my 80/20 loan = 26,400 that I need to invest to my lender, do I only Net a final profit of $3,400?  This should answer what I am looking for.  Thanks all!  

@Jerry W.,

I am following you 100%.  Where does the 20% get factored in?  Maybe that is the question I am looking for?  It may be a simple answer, but if that answer is provided, I think that is whats holding me back.  Again Thanks Jerry and everyone else for responding!

@Michael Trizzino,

Thank you for your kind words.  I am actually discussing another worry of mine in another thread on BP and cannot believe the amount of replies I have already had in the past few minutes.  This is why I love this site, and no one can tell me different.  Here's to flipping, and success to everyone!

@Jerry W. I think we are getting closer. This package does include loan for buying as well as rehab. I'm looking over my settlement statement from house 1 to understand this more. It looks like my 10% down (which was also EMD on the first flip ) was applied to my 20% down payment on my 80/20 Construction loan. With this being said, my 20% into the deal may be included in the total Rehab costs so I would have skin in the game. If this holds true, then I covered myself in my rehab costs. Does this make sense? If you beg to differ, please elaborate to understand. Thanks for your reply!

This is why I love BP.  Everyone is always there for you.  I most definitely will be going pro by EOY.  I just wish I could contribute to the contributors of my inquiries.  I would be more than happy to pay everyone for helping.

Back on Topic @Brent Coombs,

I'm going to try an explain this the best I can as my brain is in overdrive and words may be all over the place.

I am second guessing my numbers because I cannot figure out where my 20% get's applied through the closing process. I understand with 10% EMD, only 10% is needed to go to the table however, does this reflect the 45K that is provided by the lender? If so, than my Reno Costs that I accounted for in this flip will cover my liquid (20% in) in the reno. I just want to make certain that everything that is put into this flip comes right back to me and zeroed out in the end.

What has everyone else done, and accounted for in the past?  I hope this makes sense.  Thanks Brent!

@Michael Trizzino,

Sorry for the late response.  I've been tied up in my latest of projects hoping to pull the trigger.  Thanks for the kudos!  Yes this entire process was very stressful.  I was stuck in analysis paralysis for about a year and one day just put an offer in.  My wife about killed me lol.  Once we got through this first one, I think I had her hooked and she is now itching for the second.  It is possible and anyone can do it.  My advice to anyone that is stuck in the same situation as I was months back, Just play Nike and Just Do It!  The worse that could happen is fail, but even failure shouldn't stop you because you learn from it all.  The education you get from the entire process is priceless.  

To answer your question, I wasn't that stressed out until after the first few weeks on the market and our showings rocked with no offers.  That's when I started to worry if we were to high.   I stayed zen for most of the reno because I love doing this type of work as it's R&R for me.  My wife?  Not so much haha.  She was well, not so zen.  If anything I kept her together until the end to show her it's possible.  Yes I gave up a lot of family time for this first one however it will be all worth it once that bank roll is no more an issue and I will no longer have to show my face to these flips.  Keep that head on strong and keep on keeping on.  

I have recently placed a new offer on a HUD home today and will find out tomorrow if our next flip will be underway for the season to come. Very excited, and itching to get started. Cheers to the weekend to come, and go Tribe!