All Forum Posts by: Ryan Johnston

Hey BP, I'm doubting my numbers right now because the whole first deal thing. I've ran them tons of times and I want to make sure that they're right. Can someone please give me some notes? Thank you!!

Property Info:

Purchase price: $100,000

Estimated Rehab budget: $25,000

ARV: $180,000

Profit Before Costs: $55,000

Extra Fees on the buy side:

Closing Costs on the buy of an estimated 3.5% = $3,500

No realtor needed for the buy = 0

TOTAL: $3,500

Hard Money lending detail: 115k loan @ 12.99% for 4 months w/ origin fee & draw fees

3.9% Origin fee on loan of 115,000: $4,500 (rounded up)

12.99% Interest Rate for 4 months: $5,000 (rounded up)

Draw Fees: $1,250

Misc Fees (appraisal/commitment/inspection): $1,000

TOTAL: $11,750

Holding Costs (insurance, utilities, lawncare, taxes): $250/mo

TOTAL: $2,000

Selling Costs: 

Closing Costs Estimated at 3.5% of ARV: $6,300

Buyers Agent Commission of 3%: $5,400

Other Misc Expenses: $1,000

TOTAL: $12,700

Summary

+55,000 Profit before fees

-   3,500 Closing Costs on the buy

- 11,750 HML Costs

-   2,000 Holding Costs

- 12,700 Selling Costs

--------------------------------

+  25,050 Profit after all fees are deducted

Did I miss anything here?! I feel like I'm being thorough but I wanted to double check myself!

Thank you!

@Jaysen Medhurst I'm not sure if the first floor is the original height. The house is so chopped up, no ceiling height is the same in any of the rooms.  There could've been 3 separate additions on this house from the looks of it. Seemed more like a full demo project to me..  I decided to pass on the project even though it seemed like a good deal. With a topsy-turvey market coming up this year, I didn't want to risk it. I knew it'd be a massive structural undertaking and the numbers just didn't work out. 

Thank you for your response though

I went to go look at this house today that I'm interested in flipping. The house needed the typical cosmetic and roofing work along with some windows and mold/termites. What's really interesting about this house is the code violations that come along with the house. Due to some shoddy additions, this house doesn't meet the current code requirements in the Tampa Bay area of 9'. Basically I'll need to figure out a way to raise the ceiling in the living, dining, and kitchen. Above those rooms is just a master suite - room, closet, bathroom. I'm not positive but I think that the second floor joists are right above the drywall ceiling on the first floor. If i jack the second floor up, i'll have to redo some plumbing on the second floor, redo the stairs and probably redo the roof on the first level.

Is there anything else that I should be expecting? This is a similar process as a pop-top but the second floor is already built. Also, a major question that I have is, how much should I expect this to cost? The second floor is about 250 sqft

Any advice would be appreciated. Thank you!

@Account Closed Hard money is just money from a company that comes at a higher interest rate and you'll have to jump through their hoops. Could be things like: needs an appraisal, fees for drawing the funds, must pay origination fee, has to get a survey, etc. In order to get the hard money lender's money you'll have to jump through their hoops and often have to pay some of the money down too.

Lots of companies out there doing this. If you're interested in hard money you should go talk to the local companies around you to figure out what type of rates & hoops you need to jump through. 

If the owner only wants cash, you won't win the contract unless you have cash. This could be through means of a partner, a lender like a bank or private investor, or the hard money lender. the HML is often the low barrier of entry for most unless you're lucky to have a family member that likes you enough to give you a bucket of cash. If you have this family member, send them my way too!

Even though the website might come a bit later, I'd reccommend snatching up your domain name now. I bought mine on google for $12 a year. Then a couple months later, after getting some other things taken care of, I went on Wix to create my website. That's an additional $49/year. Website creation is pretty simple if you have an eye for design.

Everyone is going to be looking for your website on your business cards, on your online presences, social media platforms, etc. The businesses that don't have websites are really behind. Have you ever looked for a business online, only to find out they don't have a website? You probably didn't go there after seeing that.

 But if there are other priorities that fall ahead, get them situated first.  Website should only take a day to set up  if you have your idea and logo made up. Hope this helps!

Hey BP,

I just got my first successful bid on HUD Homestore and I'm really excited about it. Being unfamiliar to this process though, I'm unsure about one of the documents that is stated on the checklist. It says that I need to attach a Closing Protection Letter (CPL) to the checklist. I called my title company that my broker uses and he's never even heard of it and he's been in the business for years.

Does anyone have any idea on where to get a CPL for a hud home?

Think long term. What's your plan in 5 years, 10 years, and beyond? Do you want to rent single family houses? If it aligns with your goals, rent it. If it doesn't don't rent it. Always good to have a view from 30,000 feet while you're working on the ground.

@Drew Klingler I'm coming from a big, multi-billion dollar general contractor who does in-house estimates for all types of construction all over the US and some foreign too and they only use excel... Somewhat old fashion you could say...

The other solution is getting heavy into BIM (building information modeling) where you link building elements to cost and time. This is also referred to as 4D and 5D modeling. For example you model a wall and price out the wall per square. As you model the house the program keeps track of how many squares are modeled and spits out a quantification at the end. It's pretty complicated but they're trying I guess. Not really a viable solution to the smaller companies since the software is time consuming, requires an expert to use it, and the software (Revit) costs about 5k/year.

Hope the lengthy explanation helps. The person who designs the software for everyone would be a pretty wealthy person!