All Forum Posts by: Tom Sylvester

Wheatie has offered you some good advice (as always).

Have you considered partnering with a rehabber on this property? It sounds like a lot of work, but someone who has experience may be willing to partner if the profit is there.

The first thing you need to do is get a better estimate on comps. Find a Realtor that you want to work with, or even someone who will run you comps for a little bit of money Have them run comps on the ARV (After Repair Value - read "fixed up"). Once you have this number, post it up and we can offer some more suggestions.

Mike - Thanks for your analysis. I use your methodologies as a basis for my analysis, so it is nice to see your confirming the numbers.

One question... You used 30 years as your basis in the calculation. We most likely will be getting a 15 year mortgage. As long as the unit still cashflows with a 15 year term, is there any reason for you to go with a longer time? Do you use 30 years as the standard when evaluating the deal so that all deals are on the same level?

TC - The taxes are $2139/year. The utilities are separate and the tenants pay them.

Dafly - The tenants pay for heat.

We got this property under contract for $26k. Closing should be on or before Sept 18th. I will try to keep this updated as we progress through the process.

JD (Paul's Older Bother and the "Manager"). came to speak @ our REIA and had a one day training for $25. I think their system for doing rehabs is great. They are big on paperwork (making sure everything is documented and planned out). They have 6 steps they follow for rehabbing, and the actual rehab doesn't start until step 5.

I did not personally purchase the course, but think it would be worth the money. Some other people did and I plan to borrow it from them. I have been watching on ebay and have only seen one course of their s for sale on there for $500.

Like I said, there system seems very thorough. They have ~3 different "layouts" for each of the main rooms. So there are a few base layouts for the kitchen. You take the floor plan you have to work with and see which model fits it best. They then show you the model number and approx price from lowes/home depot so that you can very quickly know what layout you will use and the cost.

If you are into rehabbing, I would suggest this course. I have not purchased it, but I plan to when I begin rehabs.

I purchased my first duplex 7 months ago, and am close to purchasing my second.

This property was originally listed @ $46,000, then dropped to $35,000 and more recently dropped to $29,900. It has been listed with an agent for 3 years and is still on the market.

My partner and I put in an offer of $20,000. The sellers came back @ $27,500. We came back @ $23,000, with our goal when we started to be $25,000.

The property is currently rented pretty well below market rent, and the tenants are on month to month verbal leases. I figured we can bump the rents to the price that my other duplex is getting around the corner. This property is in better shape and has more sqft.

The $6500 rehab cost does not need to be done right away. The main roof is ok, but there is a smaller front and rear roofs that need to be replaced, as well as some other cosmetic things.

This is how it looks with the way it is currently rented.

This is how it looks when we adjust the rents to reflect what they should be.

Let me know what you guys think...

Sounds like some good goals. Goal setting is very important. It is the first step to achieving them.

One point of advice though. It currently looks like you have short term and long term goals mixed up together. What you should do is sset goals and a time period for achieving them. Additionally, you want them to be specific so that you can measure success/failure. Ex.

1 Month
1. Spend 1/2 hour each day reading on the forum.
2. Find a local REIA group and attend the first meeting.
3. Order 100 bandit signs

3 Months
1. To have put out 50 bandit signs every other week for the past three months

6 Months
1. Flip my first property
2. Obtain a mentor who is knowledgable in Sub 2/Lease Options

12 Months
2. Flip second property

By doing this, your goals are now very measurable. As you approach the end of each time frame, you can look at your list and finish up whatever you have not completed yet.

What you should also do once you have made a list is to figure out a plan that you can follow to achieve each of these. Ex. for the flip (I'm assuming wholesaling).

In order to wholesale two houses this year, I will need to learn more about the subject. I will order Vena Jones-Cox's Wholesaling course off e-bay (10 Cds & 1 Binder) for around $100. While I am going through the course, I will start contacting realtors to find one who will take me around to beat up properties that need a rehab. When I go to these properties, I will have a checklist in hand to note all of the problems with the property, and will try to come up with some repair estimates based on what I see. I will then call three different contractors to get estimates on how much the work will cost. With these costs, I will then use a formula (for example. After Repaired Value (ARV) * 70% -rehab cost - your wholesaling fee). Once I come up with I can pay (you won't be paying it, your buyer will), then have the Realtor submit an offer. During this entire process, I will be writing down numbers from bandit signsand getting business cards from every investor that I meet. Once my first deal is accepted, I will begin calling these people and letting them know the deal that I have.

By getting down to this level of detailed, you have thought out and put an action plan together to accomplish your goals.

Good luck, and keep us updated.

It depends on the bank. Different bank have different programs and standards. Some banks have "rehab programs", which they will finance the purchase and rehab if it falls within the programs criteria.

Well, my goal for last month was to get the LLC setup. This is in process now and I am waiting on the state to do their part.

For this month, my goals are as follows:

1. Finish up the incomplete sections of the website.
2. Get our logo created. I have been in contact with a company to create it, so I am just waiting to see what they come up with.
3. Once the LLC is created, and the logo is done, order 5 "For Rent" signs with the new logo and company name.

We are putting in offers on two duplexes today. I may have a few additional goals if they get accepted.

Holding costs is anything that you have to pay while "holding" (read rehabbing) the property. This could include mortgage or private lender payments, electric, heat, water and anything else that you pay during the time you own the property.

How long it takes depends on many factors. Some rehabs don't need much work and get done in a few weeks, and sell in a few weeks. Some take months, depending on who is doing the work, how much needs to be done and what you market is like.

You can finance the project via any source of funding. This can mean a bank loan, mortgage, credit card, hard money lender, private investor, HELOC, etc.

TRoyce - Although you need to be aware so that your buyer does not cut you out of the deal, most people wouldn't do that. If they did, you would not sell them a deal in the future. Additionally, you would probably tell every real estate investor you know what happened, and they in turn would not work with that buyer.

Jeff88 - I wouldn't be to worried about not putting cash down. Just follow through with things as normal.

First off... congrats on getting your first property under contract. Now is the time to put in the real work to get paid!

One side note before I give you some suggestions... anytime I put an offer it and am called back on it later, I put on the "Reluctant Buyer" hat. I tell them how interested I was when I first put in the offer, but since then my circumstances have changed and I am only able to offer $XXX for it. By the time they call you, they are typically more motivated, and you can often get the price down lower just by being the reluctant buyer.

As for marketing, start getting on the phones. Ask everyone you know if they know anyone who does rehabs. Go to any real estate related event and hand out flyers. If you know any real estate agents, see if they know any rehabbers in the area and call them. Put an ad in the paper for handyman special and also on Craigslist. Call bandit signs that you see on the side of the road. Basically you want to get in touch with as many potential buyers as you can. Make sure to keep a list, even of those who may not be interested in this deal. You may be able to offer them a future deal.

Good luck. Let us know how it goes.