All Forum Posts by: Steven Goldman

Hi BP! I'm looking to do my first fix and flip deal in a new market, Upstate New York (Hudson Valley areas). I have rehab experience with SF long-term rentals in MI, but it has been a few years since I've been close to any construction. I think I have two options to get my first deal off the ground and would love your thoughts:

1. Partner with a friend to work on larger projects with greater upside (600-700K total cost with 900K+ ARV)
- They have been doing luxury value-add STR (but never a flip) in the higher end Hudson Valley markets since the pandemic
- There's likely less competition at that price point
- It may take us longer to find the deal and obviously a larger projects also likely means longer timeline. I'm at a greater disadvantage because my part of the funds has a higher financing cost

2. Start with a smaller project on my own (300-400 total cost with 450-500 ARV)

- I would need to learn new markets and manage the risk of rehab on my own (I can borrow my friends contractor so this may not be as bad of an issue)
- There's more competition at that price point
- I would be able to start and finish quicker (hopefully) and get actual flip experience under my belt

I'm currently casting a wide net for deals at both price points and I'm very eager to get started (I've committed to doing real estate full time). Would love to hear people's thoughts and if there are other considerations I should think about. Thanks!

P.S. Sorry about the confusing title - I tried to edit the post but couldn't change the title. I am originally also wanted to know, if total costs are the same, would people rather spend more on the purchase price or on the rehab?

Hi Carrie, I must agree with all of the recommendations to start with the smaller project. If you have not done a rehab. in a while you ill learn that costs have increased and that risks are higher in the current market. One must walk before they can run. Good luck.

0 Votes

Upstate New York, New York

Quote from @Brady D'Hont:

Hello,

What are most peoples terms with contractors regarding payment plans/schedules? Obviously they vary, but from an investor side of the table what do people shoot for?

Thx

I advise reading J Scott's Bigger pockets book on estimating rehab costs. He covers the customs on timing of payments. I find that if you prepare in advance a good scope of work and a budget and payment schedule with the contractor you reduce friction and risk. In any event if you hand a contractor a big junk of money at the start off the job you are screwed from that point on. I learned that one time the hard way. The reason a rehab lender wants a draw schedule is it insures the work is completed before they release the fund's. If its good enough for the lenders than it should be for you as well. I wish you luck!

0 Votes

Quote from @Brady D'Hont:

Hello,

What are most peoples terms with contractors regarding payment plans/schedules? Obviously they vary, but from an investor side of the table what do people shoot for?

Thx

I recommend the bigger pockets book on Rehabs by J. Scott. he talks about the appropriate way to pay contractors for work performed. I must say I never let a contractor or sub contractor get so far ahead of his work that if he does not complete I am stuck. That happened to me one time and will never happen again. I advise a good scope of work and payment schedule in writing in advance of the commencing the work. It reduces friction with the contractor and risk. If you hand a general contractor a big junk of the budget up front you are screwed form that point forward. I like to have the materials or appliances on site before I pay for them. Good luck.

0 Votes

Quote from @Scott Russell:

I already have a renter willing to pay rent. I was gonna pull enough cash out to where the rent will cover the mortgage amount? (do a cash out refi for my cost and leave profit in the house)

I haven't dropped the price again. Does it look bad to repeatedly drop the price on a house? I have dropped it 3 times in the past three months. If I do a big drop will a buyer think something is wrong? I have about 35k of wiggle room until I break even.

I would rent the property out and refinance it. If you slowly drop the price only the bottom feeders will show up to buy it. If as you say the neighborhood will start maturing in 2-3 years than cash out and let a tenant carry the property until it reaches a higher value. Keep in mind you may need to invest some money in the property to get it ready for market in a few years. Good luck!

0 Votes

Atlanta, Georgia

Quote from @Sharma Parth:

Hi guys - looking to get into the Pennsylvania market for my first BRRRR deal and was wondering if anyone has good leads/contacts/groups to get alerts on them I am looking at something within the $120K-$140K range for purchase price + repairs.

Would love to connect with local sellers/investors + agents/companies who are offering inventory for such deals.

Thank you!

Check out my most recent project. It was a little more expensive all in than your price range but is typical for a smaller investment project. Unless you go into the Northern tier of Pennsylvania your budget is a little light. Feel free to reach out to me.

0 Votes

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 120 days.

2 Votes

Alex Gomez tell him Steve Goldman from G2loans sent you. Check your messages.

1 Vote

Quad Cities, Illinois

Quote from @Jose Gonzalez:

Wanted to know if I can withdraw money invested into a fix and flip to fix the property?

Ex I invested 30K into a home. This money was income I had earned and had already been taxed on. I just want to get the money back that I used to fund the properties rehab to fund my next flip. The profit that was made is not being moved.

Hi Jose, you can take out equity or other money available from your investment property with a HELOC.

Home equity loans, home equity lines of credit (HELOCs), and refinancing all allow you to access your equity without needing to pay taxes. In many cases, the interest you pay on your loans can be tax-deductible.

Good luck! Most HELOCS on investment properties are limited to 80 to 90 LTV..

0 Votes

Denver, Colorado

Quote from @Donna Coulter:

Hello Bigger Pocket Community, I live in Detroit, and wondering what investors or rehabbers are paying, on average, to rehab homes these days?

Good morning Donna: I completely agree with the posts that encouraged you to understand the actual costs of the components of you particular rehab. Having said that I have found that the costs of rehabbing a 1200 sq ft. row home needing medium grade fixtures to be around 60-65k. However, you started discussing roofing members and other more intensive construction. Typically a rule of thumb range is $100.00 dollars a square foot to $300.00 dollars per square foot depending on your grade rehab. In many cases those numbers do not make any sense. We hire our own subs and perform as much of the work as possible. You should get a scope of work form and do your homework to figure out the actual costs for each job. Good luck!

0 Votes

Detroit, Michigan

Quote from @Joseph Taylor:

Hey Community!

I am looking at buying my first investment property. The property is in San Diego, CA. I am wondering if you can help me figure out the process of my first flip.

I’m a licensed general contractor so I have a very good grasp of what the construction/rehab process will be like as I have been the contractor for 75+ Flips.

There are two main questions I have with the process. Both questions revolve around the way that my money and loans will work. I will purchase this property using hard-money. I plan to keep and live this property.

First Question- Who and how do I use to con vert my hard-money loan to a mortgage? Which bank or institution can help me with this?

Second Question- How can I get at least my down payment back out of the deal?

Here’s the scenario:

Purchase Price:$520,000

Out of Pocket= Down Payment-18% ($94,000) / Closing Cost/Fees-$110,000

Construction Loan-$60,0000

Total Loan Amount-$468,000

@ 11% Interest= $4455 Monthly Payments

Estimated ARV-$675,000

Please let me know if all of this looks correct and how I can go about getting at least my $110,000 back out of the deal when converting to a 30 year mortgage.

Also, any advice would be greatly appreciated!

Thanks so much in advance!

Joseph

Hi Joseph, congratulations on your first property. If you are BRRRRing and keeping the property than your refinance will be 75 percent of the appraised value of the improved property so long as the debt service coverage ratio supports that loan amount. Usually a 1.0 DSCR is necessary to get a reasonable rate on the refinance. To understand your loan amount you must know the fair rental value of the property. If you are flipping than purchase price-loan payoff and settlement charges equals proceeds. You should use a flip calculator to see what your likely proceeds will be after all expenses. Good luck!

0 Votes

San Diego, California

All Forum Posts by: Steven Goldman

Steven Goldman has started 15 posts and replied 514 times.

Post: Higher Purchase Price v. Higher Rehab Cost

Post: Payment agreements with contractors

Post: Payment agreements with contractors

Post: Fix and Flip - Need advice keep or sell

Post: Suggestions for good markets/town/neighborhood for first BRRRR deal in Pennsylvania?

Post: 146 Normandy drive Upper Darby PA fix and flip

Post: Insurance Recommendation for Flipper

Post: Can I withdraw the money invested into a fix and flip?

Post: Average rehab cost

Post: First Investment/ Flip - Loan to Purchase Process