All Forum Posts by: Thomas Garza

@Kerry Noble Jr

I'm looking for houses East of downtown Houston. 77015, 77530, 77571, ...

@Odie Ayaga, I hope I find one too sooner rather than later! 

@James Dargan

I don't think it is beneficial for a wholesaler to be concerned about what a "good profit" is for a flipper, nor should a flipper be concerned about what a "good profit" is for a wholesaler. The whole system is built around the 70% rule. Hard money lenders will lend you 70%. If a wholesaler brings me a 80% deal then I am forced to cover the 10% that the hard money lender refuses to cover, which drastically reduces my cash on cash return. 

As an example, if a wholesaler brings me a 70% deal on a 200k house, the cash I have to put into the deal includes only my lender fees (points, origination, survey, ...) which might come out to 12k. When I sale the house, I might net 30k on the house in a 3 month time frame making it possible for me to repeat the process 3 more times in a given year. My cash on cash is 1000%. 

Compare this to the same house that is brought to me as an 80% deal. My investment my includes the 12k lender fees, plus 20k to cover the amount that the lender refuses to cover. Now I sale the property for the same amount and net 10k since I spent 20k more upfront, and I repeat this 3 more times. Now my cash on cash is 125%. 

@James Dargan, I'm not terribly certain if you are being facetious or not, but I will answer the question with the assumption that you aren't. 

When a flipper is looking for a property, they are generally trying to find properties that meet the 70% rule. That rule says that you take the after repair value (ARV) of a house, subtract 30% (ARV * 0.70), and then subtract the amount of money it will cost to remodel the house (repair costs). As a wholesaler, you have to find houses that beat these numbers, so that you can make a profit while still offering a good product to your clients.

The problem is, most wholesalers drastically overestimate the ARV and underestimate the amount it will cost to do the remodel.

Does that make sense? 

I think this is less a real question, and more me venting, but do good wholesalers actually exist? I have money burning a whole in my pocket, and I can't find a single wholesaler who has deals anywhere close the right price. I have seen countless properties get picked up by wholesalers from the MLS, only to get put back on a week or two later because no one wants their trash deals.

The formula is simple: (ARV * 0.7) - Repairs. Not (Inflated ARV * 0.85) - Underestimated Repairs.

Does anyone have advice on how to find a GOOD wholesaler? 

I'm curious what everyone thinks about allowing prospective tenants to "bid" on a property's rent. Logistically, I'm thinking that I could show my house for 1-2 weeks after it becomes vacant, and I would tell everyone interested to submit a free application with their best offer. I could then evaluate the applications and try to find the best tenant (most stability, high salary, no criminal activity,...) with the highest bid, and then rent it to them. If none of the applicants meet my minimum rent amount, I could just repeat the process. 

What are your thoughts? 

My wife and I own two rental properties, but we would like to have 5 by the end of next year (2020). We are looking for other investors who are hungry to grow that we can brainstorm ideas with, in addition to holding each other accountable on our investing goals. 

If you are looking to grow your portfolio and/or experience, maybe this is a good event for you. 

Hey @Adriel Hsu, thanks for reaching out. Braeswood is a bit out of my area that I am looking to invest, but if you find anything in East Houston (Channelview, Baytown, Deer Park, La Porte, ...) feel free to reach out. 

Thanks @Mark Sewell! I reached out to both of them so I will see if we are able to pull a deal together. 

@Mitch Messer

We have $98k cash, and would be willing to leverage a hard money lender if a house required more capital, although we don’t have an existing relationship with any hard money lenders as of yet. I assume whatever wholesaler we use would probably have a few people that you could point me to for hard money if I needed it.

We are looking for properties on the east side of Houston, in areas like Channelview, Baytown, Deer Park, and La Porte. We could possibly expand our search to include a few additional surrounding areas, but we would prefer to remain in the same region if possible.

Our ideal home is a 3/2/2 or 4/2/2, but we will look at anything with 3 or more bedrooms and a bath.

Although we plan to hold these as rentals, we plan to evaluate them as a flip so that we can have equity in the house once the renovation is done. With that said, we hope to find houses that all in hit the 70% rule as a flip, and the 50% rule as a rental. This is probably the most important aspect for us.