All Forum Posts by: Ross P.

Eric,

Thank you for your replies. I understand what you meant. It is was not a good rehab deal, and it was also not a good deal for landlords. This was the first home I seriously looked at and I would say my thinking was a little confused. Thanks for helping me straighten it out.

Anyway, I passed on the deal. I am recalibrating and looking for another one.

Thanks for taking the time to respond.

Ross

Eric. Thank you for your response!

First, I think you are right that the total price of 50-55k is not especially low for a "quick flip" type of situation. What I was thinking though is that here it seems 55k would be a small price for a 3 bedroom rental home. So, the deal is that the property cashflows and then as an added bonus you could hope to sell for a profit at some future date.

However, all the details involved with holding the property would not be my concern. I only want to wholesale this deal. Its my first deal, so I am sticking with the easiest and quickest exit strategy. I'm hoping to develop a talent for identifying deals. When I do, I'll keep the very best ones for myself. For now though, I'm passing them to others for a fee.

To answer one other question. I do not know that I will have a buyer. I have contacted a few people and believe some would be interested in the deal or would help me sell it but I have not marketed a deal to possible buyers that I do not have under contract. That doesn't mean I will end up buying the home. If I can't find a buyer I will just lose the 2k earnest deposit. It will hurt to lose 2k (but not as bad as going through with the contract and being stuck with a house I have no expertise to do anything with). So, that is the remaining challenge. Do you think it is a good enough to overcome this challenge?

I would be funding this deal with transactional funding. That is, I would only have to have money for a couple of hours while I closed on the house with the bank because I would sell the house to the end buyer immediately after closing on the house with the bank. So, I planned to ask my parents for a few thousand dollars for a day so I could personally fund the transaction (its only a 20k house). This way I could save a couple of dollars not using a commercial transactional funding firm. Even then with this small a transaction the fee would only be around $500. I know it seems lame to ask my parents for money. But hey, it will save $500 off the bottom line! They will get their money back the next day too.

Thanks a lot for your thoughts.

Okay, I am looking to wholesale a bank owned (REO) property in Lincoln NE. It is certain to be a rental property. It is located near a small university in Lincoln and should rent relatively easily for 700 to 800 a month. It has been on the market for 29,900 for over 4 months (which makes me nervous because everyone has apparently passed on it). It is not livable at the moment and will require 25k in repairs (I have tried to overestimate). That should give you a decent picture of the house. I will put more numbers below.

ARV: 65/70k
My Purchase Price (expected): 19 or 20k
Assignment Fee: 3/4k
Closing Costs for a double close: 600
Financing: I can get transactional funding free on this because it is a small (for a house) amount (family).
Estimated Repairs: 25k
Estimated total cost for buyer: 47-50k
3 bed/1 bath
1196 sf
NOI: 6,274 (700 x 12 Rents minus 1,382 in Taxes, 300 property insurance, 300 in property management. Property managers apparently work for 20 bucks an hour here. At least the guy I called said that is what he worked for).

Please help me see what I am missing. Is this the deal that gets me off the sidelines?

Ultimately, I am thinking that if I can contract it at 19k or 20k and wholesale it at 22k or 23k then the buyer can put 25k into repairs. The buyer would have 47k-50k into a newly remodeled rental property that cashflowing and 15-20k under it ARV.

To get the property I have to put 10% in earnest money. I get a 10 day inspection period (over the holidays). Also, it is my first deal, so it IS possible I won't find a buyer. I can eat the 10% but obviously I do not want that.

I agree with you two about the ridiculousness of the guru wholesaling marketing technique.

On the other hand, it sounds like you two might be wholesalers. If you assume you are talking to a serious person who wants to get into real estate but doesn't have any expertise - would you recommend wholesaling as a good entry strategy? If not, what would you recommend?

Well, hopefully I will not be practicing! I hope to start an investment business when I finish. Maybe I will be able to use my legal background, but otherwise I am ready to cut bait on the legal world.

Lastly, I'm from Lincoln, Nebraska. However, I will be moving to another region when I complete my degree (hopefully Seattle).

Thanks for introducing yourself.

Ross

Hi all. I am new to the website and new to investment as well. I am currently finishing my law degree, so not yet investing. However, I am excited to create my own real estate investment business immediately upon finishing my law degree (August 2010). I'll be lurking on the website taking all of your secrets and creating a plan to launch my own business. Maybe I will even be able to complete a deal (or two!) while finishing my law degree.

Lastly, thanks to everyone who has posted great information and thanks to everyone who will post great information. Being connected via the internet is a powerful advantage for all of us!

Peace and Love,

Ross Pesek