All Forum Posts by: Steven Goldman

To answer the question in a intellectually honest way requires you break down the success rate by investment strategy.  if you plan on building a portfolio and using the rental income as your primary income the overall success rate is probably 5 percent or less. I am a flipper. I know from actual statistics that 54 percent of all flips result in a loss. There are various reasons that people lose money in the fix and flip business. I list them in order of priority: Unknown repairs not accounted for in the financial analysis. Poor preparation of scope of work and estimate of costs. Poor location of the target property. Problems with contractors who fail to perform or complete work. 

The key to success is research, experience and good team building. We employ the rehab and sell strategy. Our ownership team consists of lender and contractor. Everyone has skin in the game and is experienced. If you are just starting up combining with more experienced investors is a must. Good luck and keep moving forward.  

@Bob Stevens has a good suggestion. I also recommend J Scott's book on Estimating Rehab Costs a Bigger Pockets publication. You can not use your contractors pricing as he is padding the estimate for his own benefit. You need to develop your own independent knowledge of the actual costs of rehabbing a property. Good luck and keep moving forward!

I agree with Scott E. As an aside I would really want to know what happened as it may be more complicated than it appears. It may impact anyone's plans regarding the developments of this property. As a matter of course I will not entertain the purchase of a stalled project unless I have the straight scoop on what caused the original developer to crash! usually the building code officer can clue you in.  It is a sensible rule. 

Wyatt, the money cost 12.99 plus approximately 5 points for 1 year no prepayment penalty. This is no holdback, no scope of work loan. Their are other options t 10.99 or 11.99 with 15 percent on the purchase price with 3 points total. Also, our private 6 month lenders will go 11.99 and 4 points if it is a 6 month loan. The drawback is the penalty when you exceed the 6 months. That is too much aggravation. I would rather bring the lender in at a slightly greater cost o financing then deal with being hijacked when I miss the deadline. 

Investment Info:

Townhouse fix & flip investment in Upper Darby.

Purchase price: $88,000
Cash invested: $35,000

This is a 1100 square foot row home in Upper Darby. The property was acquired form an estate while it was in mortgage foreclosure. Exterior rehab. windows, electrical service, concrete and and paint. Interior rehab includes, kitchen bathrooms, flooring and carpets. New breaker box and some rewiring. Time to completion 90 days.

Investment Info:

Townhouse fix & flip investment.

Purchase price: $88,000
Cash invested: $35,000

This is a 1100 square foot row home in Upper Darby. The property was acquired form an estate while it was in mortgage foreclosure. Exterior rehab. windows, electrical service, concrete and and paint. Interior rehab includes, kitchen bathrooms, flooring and carpets. New breaker box and some rewiring. Time to completion 90 days.

What made you interested in investing in this type of deal?

We are working in this community due to the recent demographic changes and the condition of the homes. It is a neighborhood in transition in the suburbs of Philadelphia. Delaware County.

How did you find this deal and how did you negotiate it?

One of our mortgage customers is a rehabber wholesaler. It was off market and about to be sold at foreclosure auction. We worked with h the heirs to open and estate and to sell the property. The purchase price was the cumulative debt including municipal liens and the payoff with an additional 20 k for the heirs. We negotiated on some judgments.

How did you finance this deal?

Private money at 100 percent of the purchase price and rehab budget less lending costs.

How did you add value to the deal?

By partnering with a wholesaler and rehabber from the area we control the costs of the rehab and give the contractor skin in the game. The rehab if performed by an outside contractor would have been at least 60k.

What was the outcome?

We are in progress and will update.

Lessons learned? Challenges?

The best deals are off market.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No. but we will use a selling agent when it is completed.

If you are planning on working in the Cleveland area you should find a team of professionals who can assist you. Agent, property manager, contractor, lender. We have found that the borrowers whop are successful put together that team and then let them run with it and present them opportunities. The real estate websites are O.K. for educating yourself but are not the place to find properties. You would be netter off looking at real estate groups on Facebook. Good luck and keep moving forward. 

@Stephanie Chapman   In doing your due diligence make sure that the location you are buying in has ample employment opportunities nearby. (Hospitals, municipal buildings, warehouses, manufacturing  etc.) if you buy in a area which is conveniently located for a tenant working in the vicinity, you will have no problem locating a tenant regardless of the time of year. The three keys to real estate are, location, location, location.

We are a busy mortgage brokerage in Eastern, PA. We have numerous borrowers who want to buy and rehab properties in the metropolitan Pittsburgh area. We need a go to private lender who can fund smaller rehab properties with loans totaling under 75k.  We want to establish a long term relationship with the private lender to allow us to better service the area.  DM us @ G2 Loans. Thanks

Casey Spence: why not get a larger HELOC on your personal property and use the money to fund another project. The primary rate on your mortgage rate is so low that I would hold on to it. If you want to rent keep in mind high end rentals are often the worst to manage. The type of tenant that rents in that space usually has reasons they can not buy a house and they are not good ones. Good luck and keep moving forward.