All Forum Posts by: Stan Sims

Thanks @Michael S.and @Dave Visaya!  It definitely felt good to pick up the check from the closing attorney.  

@Account Closed keep at it and a deal will come through.  If you don't mind me asking, what are you doing for marketing currently? 

It only took a year but I collected my first assignment fee in mid-October. I didn't do it alone though. I met an experienced investor through my local REIA group who made time to answer my questions and keep me honest over the past year. As it turns out they ended up being the buyer and offered to allow me to walk through the rehab with them! The plan now is to use a solid portion of the fee to really get a decent direct mail campaign set up and apply the marketing concepts I learned over the past year. I anticipate the next deal won't be so far away given what I learned spending time on the phone with sellers.

First post...here goes!

I'm looking at a single family property as a rental which I'd then try to wholesale but before I pull the trigger I wanted to reach out to the BiggerPockets community.  The property, not in a warzone but no picket fences either, has fire damage and the estimated repairs are around $17K-$20K.  It was renting at $400/month though fixed up it could fetch as much as $500/month.  For retail purposes, houses in the area are worth around $40K-$50K. This one in particular is probably in the low 40s.  The asking price was $10K but I've negotiated down to $7K though my gut tells me to not pay more than $5K.  

Going with the 1% rule of thumb for monthly rent seems to work out based on the property value. Based on the 50% NOI rule of thumb, $250 is left over to cover borrowed money and cash flow assuming $500 in rent. Ideally, I'd like to pass on $100/month cash to an end buyer which leaves $150 to cover borrowed money.

Let's say an end buyer is borrowing (private/hard money) for the purchase price, repairs, and wholesale fee.  If I'm targeting $5K as a wholesale fee on this property, my end buyer is looking at a total price of $32K.  Assuming an end buyer can get 8 percent for 30 years, the monthly payment is around $235 which will instead leave about $15/month cash flow.  If no private or hard money is involved in the purchase price or wholesale fee then they are at $20K (repairs only) which is about a $150 monthly payment leaving the desired cash flow for the end buyer.   

So my questions are...

• How does this analysis look?  
• Am I missing anything glaring?
• Does this look like a deal or a dud?
• Am I being too picky on the $100 desired cash flow?
• Am I being too greedy wanting to get the property at $5K or is $7K look good enough?

Thanks in advance for your help!

-Stan