All Forum Posts by: Tanner Barnes

I have a question, when calculating cash flow do most people keep a 10% in there in case they go with a PMC. 

When I’m calculating I always keep PMC at 10% just in case I decide I don’t want to deal with the tenants anymore. 

 So what I’m gathering that as long as in the contract for earnest money there’s a clause stating if something unforeseen or unmentioned arises I shall receive my earnest money back. 

Also earnest money should be left with a third party such as attorney or title company. 

Go ahead and pay for inspections to be done would be the only money I could really lose if deal goes south. 

Title company will verify the title is how it should be and clear. 

It’s fairly safe as far as buying goes as long as you go through a title company and let the title company hold earnest money?

What's best way to go about this. I've only ever bought one home and it was a primary through a realtor so most everything was handled for me.

What are the questions I need to ask after we agree to a price as obviously that's first?

What do I need to check to secure myself as far as paperwork goes. (I've already saw house)

Basically looking for a walkthrough closing a wholesale deal for first time buyers and still somewhat new to house buying as this is only the 2nd home purchase. 

Thanks,

@Heath Ryans, how desperate is guy. He's messaged me again. Is there anything really binding that could put his company at risk if he can't sell this or is it just a reputation thing? 

what's headroom? to answer your question for a 7' door to work the distance above the door to the ceiling will need to be 12"-14". 

You can also use extension springs and get away with a little less clearance, as well as what they call low headroom kits. 

I install garage doors professionally in Alabama, you can get the garage doors in 6'6" height. 

@Heath Ryans he's definitely hurting, i told him i planned on mortgaging, and that my Credit union had preapproved me, which is true. 

He text me back and said just let me know. Honestly I have nothing to lose offering 120k, he does. If he can't sell it then I just have to go ask the homeowner if he will take 120k once his contract expires. If I make the wholesaler the offer and he rejects, but yet a few weeks later the homeowner accepts me going straight to him did i do anything wrong in your views?

I want to make like minded friends doing this, but it's business and business can be very cut throat. I do construction work and buy straight from manufactures, would it make sense for me to buy through homedepot if I can get it cheaper elsewhere. 

@Heath Ryans, as long as it's been on the market and the fact he's posting on CL lets me know it's either priced too high, or he doesn't have a reliable list of investors and possibly new. 

So what's your thought's on margins he would have to work with on something like this? 

I'm in talks with a wholesaler now. His numbers he gave me seem fairly accurate and of course my numbers are giving me a cushion because I always feel a safety net is important.

He has a property listed for 155k, I had someone go and inspect the house with me, and while I was in the attic checking the roof out for leaks the person I had with me asked pricing and the wholesaler said 151k is as low as he could go. Given the guy with me knows nothing of wholesalers and before he asked the wholesaler he mentioned I guess I need to ask the owners a few questions and he later let me know the seller was very against that. 

Wholesalers estimates rehab to be about 25-29k, rent should be 1600-1800 a month, and ARV should be around 230k-240k.

Anyways here's projections I came up with, the house needs new siding and it's fairly large, I guessed 15k - 20k, the front porch could use some foundation work I didn't know how to guess so I assumed 5k on that, then I blanketed myself a 10k interior renovation. I told the seller I would assume it would rent for $1500 a month and I need a 1% rent on purchase + rehab.

So if my calcs are correct I need the house purchase to be anywhere from 115k to 120k.

I think we're fairly close on our projections which is good, it's asking him to drop 30k from a price I'm not sure he will go for. 

 Nice someone from Huntsville. Would you care to elaborate. 

Also I’m new here do we have a local Alabama thread?

I chose Decatur due to it being away from Huntsville Madison area yet still close enough for commuting, I could see Decatur going in any direction unfortunately as far as appreciation or depreciation. I used street view and was impressed by the area. 

I'm going to link a property to use as an example, as well as my predictions for a calculator and you guys tell me what areas I may be looking pass and not considering. 

It's got 6 units about 625sqft and 1 that's about 1400sqft.

https://www.zillow.com/savedhomes/for_sale/2085910752_zpid/1_pnd/35.550105,-83.715821,31.527043,-88.884888_rect/7_zm/1_rs/1_fr/

I used this calculator to figure most things, and I tend to over guess expenses and underguess returns. I looked at the areas rentals and made my returns the lowest worst case scenario. Adding closing costs and rehab in the total cost of loan. I assumed maybe closing property at 250, 50 for rehab, 15 for closing costs. 

https://www.calculator.net/rental-property-calculator.html?cprice=350000&cuseloan=yes&cdownpayment=20&cinterest=6&cloanterm=30&cothercost=0&cneedrepair=no&crepaircost=10000&cafterrepairvalue=150000&ctax=2850&ctaxincrease=3&cinsurance=2000&cinsuranceincrease=3&choa=0&choaincrease=3&cmaintenance=2000&cmaintenanceincrease=3&cother=0&cotherincrease=3&crent=3000&crentincrease=2&cotherincome=0&cotherincomeincrease=0&cvacancy=10&cmanagement=10&cknowsellprice=no&cappreciation=3&csellprice=200000&cholding=30&csellcost=8&printit=0&ctype=&x=54&y=24