All Forum Posts by: Steven Mitchell

@Adriel Hsu

Dude, you killed it.

Your first project is almost a carbon copy of my first project.  You have now spent a little bit of money on an education that is going to pay dividends as long as you decide to play the game.   

I am actually surprised you did so well! Great job.  

ive used all foundation for my foundations and didnt have a problem with them.  They damaged my water main and then reduced my bill for the repair.  No complaints here.  

How much are you guys buying your rentals for?  How much rehab?  How much rent?

@Lindsey Iskierka I ran it through a calculator I wrote.  At 240k this is something I would buy.  220k is a winner.  

assumptions

25% LTV

4.375%

30 years

my own estimates for management, vacancy, capex etc.  

Sidebar - I wouldnt look at the numbers with you living there, I would look at it as a standalone investment.  Looking at it living there will cause you to pay more.  Ask me how I know.  

also one final note, look at what its appraised for now and by how much your taxes will increase when the govt appraiser adjusts based on your new purchase price.  I didnt know this on my first one and got hosed.  the 3k I lost in CF per year killed the investment.  

did the comps support the expected ARV's?

@Joe Villeneuve what loan terms are you using for your commercial loan? Is that what youre seeing in the marketplace? Are you really finding commercial NNN returning 12% cash on cash?

@hisashi - i wouldnt sell your current portfolio, youre making good returns.  I would leverage them and buy more.   Without using joes strategy i dont see you doubling your takehome without taking Joe's drastic action.  

Take my advice with a grain of salt as Ive only done 5 flips, but if this is your first one....starting smaller will allow you to learn the trade without all this risk.  

@Leigh C yes now rereading my post i can see what you mean.  I meant the same as you....we are teaching our PM's the industry.  I also agree with how you are paying yours, by comparing his job to something comparable in the area and then settling on a percentage.  

If you find one let me know.  We finally found one who we are overworking and need another.....after a string of thieves.  How do they all stay in business?

we came up with our PM fee by taking our number of flips per year.  taking the profit. taking what we thought was a fair salary, and turning it into a percentage of profits.  For example if we made 100$ in year 1 and the PM could handle that volume working 40 hours a week and 10$ was fair compensation, we turned it into 10%.  That way the PM's interests are aligned with your own, and thats making as many dollars on the rehabs quickly.  

Also it may be rough comparing your percentage to other PM's because the profit equation may be different.  For example, we take out hard money costs whereas another flipper here in town does not soooooo, the profit is a much different number.  

I give her phat bonuses because she's amazing and really makes the machine run.  

Also, think of your PM job as you learning the rehabbing process inside and outside so you can eventually do them yourself without being employed.  Its an extremely expensive education you are getting.