All Forum Posts by: Shawn Clark

Originally posted by @Justin Westmoreland:

 @Jason D. @Andrew Johnson @Brent Coombs @J Scott @Shawn Clark @Harry Williams @Jay Hinrichs @Brian Pulaski @Brent Coombs

@Shawn Ward Updates on the property. I saw the property on Tuesday. The guy was right it was a very nice house that only needed paint and carpets. I not too confident that it would sell for full ARV of $425,000 with just those improvements though. I think if it had an updated kitchen and a couple updates in some of the bathrooms it would sell for that.

The executor wanted $325,000. With the PA 2% transfer tax on both ends, realtor fees and paint and carpets, I don’t think it was worth the risk. I would of did the deal for $250,000. 

It was a good learning experience for me since this was my first offer. I’m committed to finding great deals for my investors and i won’t get anything under contract if there’s isn’t enough meat on the bone. 

I have pictures of anyone wants to see them. 

Thanks for the advice everyone it really helped out! 

You have to nail down the ARV very well. Not exact, but like what you KNOW you can get for it at a minimum. Then nail down the repairs. Then add in the other costs and you are good. I think it's easier if you are the rehabber yourself. I'm not sure how I'm going to do it when I start wholesaling.

Good job though. You got out there and made something happen. One will come.

Not trying to scare you away. Just trying to give you some perspective. Sounds like a great deal to me. I would do it in my area.

Are you doing the rehab yourself or selling to an investor? Keep in mind there can be $30,000 in hard money costs on one like that. Plus $20,000 in commissions to sell it. Etc. That still leaves roughly $50,000 profit IF your other numbers are correct. I would be fine with that myself. But I don’t use percentages. And I usually deal in lower priced properties. My minimum is $20,000 for profit but that equates to about 15%. Keep in mind on the higher price properties the mistakes can be bigger too. So that’s why $50,000 might seem large for profit but what if the real ARV is $480k or the rehab is $45k or the sale takes longer? Or all of the above?

The idea is to use 70% of ARV minus repairs. But I never bought like that. I didn’t hear of it until finding BP. I took ARV and subtracted what I wanted to make and then all costs including a safety factor for having to sell it low or running into extra repair costs. I think 70% minus repairs is pretty solid though. That leaves about 20% for profit depending on how it’s financed.

Ask more people around your area. I don’t think you need to remove it. We just painted it on one house. On another we covered it which vinyl.

It’s real and it’s very doable. But you have to get that first deal under your belt somehow. One deal. That’s all you need. I had a construction background. And I ran into someone at a wedding doing it that gave me some books to read. And I had tons of cash at the time. But I was still on my own otherwise. I just started looking for deals. In 2003 newspapers still made sense. I stumbled on a wholesaler’s ad. Bought the house after looking at it. I was a little scared, trust me. 6 months later sold it for $50,000 in profit after $45,000 in rehab part time. It’s real. But you gotta make it happen. One deal is all you need.

Originally posted by @Shray Patel:

Hey everyone,

I am 20-years old at Temple University with 3 semesters left before I graduate. I recently decided to switch from studying/working in the IT industry to Real Estate. I have worked in a property management company for 1.5 years and am currently partnering in a 6-unit construction project with my father and a developer we know. I am trying to decide if it is worth to switch to a Real Estate major and finishing my semesters to get my Real Estate degree VS. working under a successful developer full-time and dropping out of school. I am leaning more towards dropping out and working full-time under our developer who will teach me ins-and-outs of RE development, investment, and management. I feel like I would learn the most and be best prepared learning under his mentorship than wasting 1.5 years studying RE theory in school. Our developer agreed to help with any costs related to my learning (i.e. any textbooks, online courses, etc) and hire me full-time. I will get my Real Estate license while working under him. 

Do I need a formal business degree in Real Estate to get a job in the industry or is it just my experience and expertise that counts? What would you guys do having worked already and been successful in this industry?

Thanks for all your help in advanced!

Shray

 Both. You've essentially wasted the prior time if you don't finish, in my opinion. Three more semesters and you will have the degree for the rest of your life. It may prove to be worthless professionally, but you will know you finished it and it may help you in subtle ways you can't put your finger on right now.

There's a quote somewhere about the two greatest mistakes. Not starting. And not finishing. Personally I think in this case you should've either not started at all OR wrap it up and get finished. Don't quit when you are relatively close to the finish line. Do both and you'll hit the ground running once you graduate. You have tons of time.

Seems too small to go after the seller in court because you have to prove that they knew about it and had intent to deceive. Maybe what he said already could help. Just not sure how much.

Originally posted by @Jason D.:

The closing cost I'm using are buyers closing of roughly $3000 based on my experience buying in Pa. You have a 2% transfer tax (1% each buying and selling), and 6% agent fees on the sale, plus seller closing costs of roughly $2000. All in you're looking at about $38k in all plus roughly 4-5 months holding. My rough estimate is $42-45k in total costs on this deal.

 5% should be enough for the agent fees. I would do it for 4 if I was there. :)

It's not "less than 90 days". You have to consider 90 days before an FHA buyer can put a contract on it, and that's if it sells the first day. I assume minimum 6 months of money cost for any rehab/flip because by the time you settle, work on it, get it listed, under contract, and settled, the investor could easily be out the money for 6 months. Hopefully less, but if they need an FHA buyer it'll be at least 4 months and probably 5. Maybe this one is large enough that it'll go conventional.

But definitely take all costs into effect. Assume a listing commission. Assume transfer costs. Holding costs, etc. For the investor. I looked at one recently that I thought would have $100,000 in margin, but by the time I ran all the numbers it wasn't worth it. I was surprised because it "seemed" like a slam dunk. But the math doesn't lie.