All Forum Posts by: Wesley L.

If you don't mind carrying two devices, keep your phone and buy an IPad Mini. You can use free wifi at a Starbucks and save money from having to get the mobile data plan on a smartphone. It's light enough to lug it everywhere and it's got a nice big screen to use all the RE apps like Redfin, zillow and realtor.

Please excuse the sarcasm in my title. I've been working with a realtor for the past couple of months and it's kinda ridiculous of late. Listed properties seem to be selling for +10% above asking and from my view, putting them in the spec arena. For me, the numbers need to make sense so I'm sticking with my non-competitive offers.

Please critique my latest offer and let me know what I can do be more competitive but still make the numbers work.

2/1 SFR, 900sqft, 0.25ac lot, listed for $110K.
It's a complete gut rehab and actually 200 sqft of it looks like unpermitted work with foundation issues.

Comparable 2/1s are selling for 200-225k, 3/2s, ~1200sqft are selling for 275-325k. The comps are run by my realtor so I'm assuming correct.

Rents for 2/1 are $1200/mo, for 3/2 are 1700/mo. Source rentometer.com.

Plan: Rental Rehab 2/1
40k for the rehab and bring the property to code. From my SS, here's what the offer price looks like for self-managed, refinance with conventional loan after rehab 30yr @ 4%:
NOI $8,640
Desired Cash Flow $100
Max Payment $8,540
Max Loan Amount $147,673.96
Max Offer Price $106,023.96

Plan: Rehab and add to 3/2 1300 sqft to Flip
40k + $100(400) expansion = 80k rehab
Quick formula 0.7*300000-80000= $130000 offer price
At 80%*300000-80000 = $160000

It's listed for $110k, I offered $121000, all cash. For a rental, I would refinance with a 80-70% LTV to make the numbers work. For me, I'd rather do a 3 month rental rehab versus a 6 month flip.

I expect the place to sell for around $160000-$175000. The last couple of places sold for around the 80%arv-rehab +/- $20000.

A couple questions:
- Am I way off and what numbers should be corrected?
- What would the pros offer on this type of place?
- What would you offer to stay competitive and make the numbers work?
- Would you knowingly submit a "non-competitive" offer as just in case to play the numbers game?

Thank you for your advice.

Wesley

In it for the long run, learning and loving the journey!

Welcome Tony! I'm also full-time engineer. Are you in Norcal or Socal or somewhere in between?

Thank you Michael Galloway, J Scott, and Glenn Espinosa! Invaluable feedback from the pros!

I definitely underestimated the new construction costs and by half or more. I had planned for about 100-125k profit for me and my partners, and at less than 50k, absolutely not worth the time and risk.

Curious, are any of the new construction costs cheaper in cities like Antioch, Concord, Brentwood? I know you are expected to pay an arm and a leg for WC and Lamorinda but considering these other cities are only 10-30 miles away, I wonder if you can pay say an Antioch crew to travel a little further and get the price down to under $100/sqft?

To deal with this crazy Bay Area market right now, I'm trying to cut my teeth on something new and less popular like adding on. Sounds like this is working for you Mr. Galloway in the better neighborhoods.

Thanks for all the rssponses!

Wow 200/sqft that is eye opening! I've done some pretty gutty rehabs and usually average $40-50/sqft. Maybe I should get my GC and earn that extra 150/sqft in Cali!

200/sqft doesn't include land? Wow!

This is probably going to fall under the category of need more info. I've rehabbed multiple houses but have never added on. Wondering if my ballparks are even close to making sense.

Listed price: $300k, 2/1 1100 sqft.. Big lot.

Neighborhood comps: 500-600k for 3/2 or 4/2, 2000-2500 sqft.

Plan is to use conventional financing, 20-25% down. 3/1 or 5/1 ARM.

Add 1000sqft at $65/sqft. Hire GC and subs to do additional foundation, frame, roof, wiring, plumbing. I do the finishing. Plus additional 25k to update kitchen and bathroom.

To summarize using easy formula:

0.7*550000-90000 = 295000 which is pretty close to list price.

I'm a cup half full kinda guy and these numbers seem to work. I'd like to hear the cup half empty point of views.
Thank you!

Hi all,

I was going to ask a question in another forum but felt it might be more appropriate to introduce myself first.

I'm Wesley, hailing from Walnut Creek area. I'm a full time computer nerd and work in Silicon Valley. I'm a part-time property manager, fixer, and investor-wanna-be. I've lived all over the Bay Area in the last 12 years and did the buy-ugly-house, rehab, live in it for 2 years, and sell thing about 5 times. Is that called flipping? Probably not. This last one didn't work out too well and I'm still living in this one. Definitely not a flip! :)

Lately, I've set a goal to acquire 3-4 rental and/or flip properties this year, working with a Realtor, and currently 0 for 5 on the above-asking offers I've made. Crazy. I'm working on getting the RE salesman license to help out with finding and seeing more properties.

Enough about me, what a GREAT resource here! Ever since googling "What to do when your renter dies" and finding this site, it's been endless late nights perusing the posts and blogs. And I listen to the podcast during my commute.

Thanks to the creators and all the forum posters for creating and contributing to this invaluable website!