All Forum Posts by: Wayne Woodson

This right here is all I need to hear to let me know this is a deal. The hard part is figuring out the repairs if you are new at this. You may want to go out with a contractor buddy of yours or a rehaber you know and trust and get them to tell them what it needs in repairs. Then you can calculate the ARV.

Here is a neat trick I learned when looking for a retail price to price my listings/ rehabs. I look at the active listings in the area and use the 2nd lowest comparable comp. The reason why is that someone will always come into an area and buy the cheapest house and when that house sells yours will be next up. I wouldn't trust freedomsoft's comps. I don't know if you guys have CRSdata in your area but you may want to look into it.

The sale cost is when the rehabber (sometimes me) sells the property. Included in that number is the cost to use a realtor, pay closing costs, taxes and other misc fees involved in selling a house. I like to make sure my rehabbers are getting truly great deals and/or make sure I didn't miss anything if I chose to rehab the property myself. 

The formula for Buy and Hold is Rents * 70 - Repairs.

example 123 Main St will rent for $800/mo based on other rentals in the area and needs $15k in repairs.

800 * 70 = $56,000 - $15,000 = $41,000 which is the max I should pay for that house.

The closing cost will vary from title company to title company. I use 1% as a good rule of thumb. So on $100k that's a 1k closing cost give or take.

The holding cost will vary from what source of financing you are using. For example if you using your own money your holding cost will be close to zero as opposed to private money or hard money. I use 3k as a general rule of thumb for 4 months holding cost and I mostly use private money. 

From what I understand the 70% and 65% came from the LTV or Loan To Value that most lenders lend at.

For instance, if someone borrows $130,000 to purchase a house worth $150,000, the LTV ratio is $130,000 to $150,000 or $130,000/$150,000, or 87%. The remaining 13% represent the lender's cut adding up to 100% and being covered from the borrower's equity.

It took me a minute to read through all of that. It looks great so far so keep us posted on what happens. 

A wise man once said

"Those who can, do. Those that can't guru"

  Sounds as if he was fund raising the $100mil or had private money. My question is does anyone know know any private money lenders that I could borrow $100 mil from to wholesale deals like this?

I found this to be very motivational. There was another guy in NY who made 2 mil flipping an apartment complex. This just reinforces the ideal that you are only limited by what you believe. 

I have money to purchase properties now but that doesn't mean I wont back out of a deal. Even though I haven't had to because of the market here I would if it came down to it. I am sure the guys that flipped this house didn't have the money and more than likely it could have been private money or financed. I know that there are alot of wholesalers who tie up properties and never close because they can't find end buyers. To me that's lack of training and understanding the numbers. Starting in this business broke with nothing has taught me to use creative methods of purchasing property and that not all problems need to be solved by wiping out the ole check book. 

I would like your help BP in seeing if this would worth the effort. I am thinking about marketing to the zero dollar sales in the tax records. My theory is that these people would be motivated and possibly want to sell if the inherited or just paid $0 for a property which would be recorded as $0 in the tax records.

 This is the wholesaler version of Brandon Turner's "You know you're a real estate investor when..." forum here. Just interested in hearing some good responses.