All Forum Posts by: Thomas Thompson

Thank you all very much for your input. I've been gone all day & just walked in the door. I intend to base the majority of my ARV figure on comps but it's nice to know where other FMV figures stack up against it.

Just figured how to access prop info by address online from the county assessors office.

Can anyone tell me if the FMV listed here leans more towards Zillow estimates or is it closer to the figure a realtor might give you? This is just another variable I'm using to try to determine a fairly accurate ARV.

Thanx,
Tom

Home Depot markets a very economical yet energy efficient line called American Craftsman (made by Andersen).

All vinyl, double pane, tilt in for cleaning. Prices start below $100. I used them throughout my home.

Good God Jon. Just woke up. Raging hangover. Only a couple of sips into my first cup of Joe & I'm having vivid flashbacks of standing rigidly at attention while Sgt. Alford (my D.I. at basic training) chews my butt up one side and down the other with his angry face so close to mine that the brim of his Smokey the Bear hat keeps bumping into my forehead, which only serves to piss him off even more.

In the short time I've been here (lurking and learning) you are one of a handful of people I've singled out for being really on the ball. I was hoping you'd reply to this post & now that you have, I'd like to thank you for a much needed reality check.

You've made me realize that I can't run a profitable business (something I've never attempted) while approaching it with my typical 'Mr. Nice guy' mentality.

I intend to print and laminate your reply then read it everyday until it becomes rote memorization.

Thank you Drill Sergeant!

Thank you sir for your reply. I had allotted $1200 for inspections b/c I'm taking into acct. black mold, septic (still don't know if the property is city sewer) - technically it's the town and not the city.), termites, radon, water and possibly others.

I tried to estimate for worst case scenarios, Everything I install will be top end, plus I'm building kitchen cabinets, bath vanity, & any other cabinetry on site (indistinguishable from top of the line Thomasville type cabinetry) which will save me at least 10k - even more since I'm working for free. It also helps that there's a Home Depot about 3 miles away.

While I was out I remembered I'd forgotten the furnace - that's another $2500 if it needs replacing. I've got an understanding with the HVAC company too - I used to work for him. Price breaks in exchange for continued business. I will not skimp - if there's any question about the existing unit, it will be replaced. I'll not sell anything sub-standard to increase my profit margin. I am honest to a fault & only seek to provide what I would expect were I the prospective buyer. I'll happily decrease my profit margin in exchange for building a good reputation. Call me old fashioned, but I grew up in a time where a mans' reputation was something to be proud of. I'll not do anything to tarnish mine.

Good day everyone. A bit about myself... I'm a carpenter/GC. Thanks to an inheritance, I'm now in a position to get into rehabs, something I've wanted to do for many years. I've spent the last few weeks getting an education (books/forums/guru courses, etc.) though I'm sure that's going to go on for years. I've joined my local REI club (unfortunately, just after their last monthly meeting so I've yet to meet anyone.) I have another carpenter & helper on board & willing to work at reduced rates for the 1st deal in exchange for giving them steady work down the road. Got a money backer who'll qualify for a mtg. if I'll put up the cash for the rehab. Everything's coming together nicely but I had told them up front it's probably going to be a couple of months because I wanted to start out bird dogging to get some hands on experience.

Then this (rehab) 'deal' just fell into my lap.

The house is on the outskirts of a small city (pop. 30,000). It's within 1/2 mile of a prosperous community college. Not a great neighborhood, but by no means a bad one. Quiet. Cookie cutter houses built in the 50's. Small lots - tiny ranch houses (900 - 1500 sq. ft. though 90% of them are 1200 sq.ft. or under).

Per Zillow (take it with a grain of salt, I know) seven homes surrounding mine range from 158 - 195k (4 of these are only 900 sq.ft., 2 are almost exactly the same size with same # of bdrm./bath & values are 179k & 185k, with the 195k being 400 sq.ft. larger. My Realtor puts the values at 200k. There is also a house right across the street on the mkt. for 149.5k that is a flipper (pretty much only cosmetics/updated kitchen per an online virtual tour.)

My house. 1140 sq. ft., 3 bdr./1 bath, 0.2 ac. Needs rehab. (realtor) $59,400. I did a drive by this afternoon. Alum siding in good shape, roofing ok. No broken windows. Didn't look bad at all from outside though I couldn't see the back. I've set an appointment to go see it Tuesday. Nagging fear - per zillow, this house sold for $121+k six months ago! What could've happened to drop the value 60k in that short amount of time? I suspect winter freeze & broken pipe. I'll find that out Tuesday.

Concerns... Scott (my carpenter) & I are going to look at the house together Tuesday. We will immediately see 95% of anything that needs attention. Various inspectors will hopefully catch the rest. Between the two of us, we can fix anything but neither of us has ever been deeply involved in estimates/material costs. How do I come up with a fairly accurate number for the total rehab costs other than breaking out a pad and pencil & spending an inordinate number of hours online checking prices?

70% rule dictates AFR of 160k minimum. I don't want to use a higher number because should I elect to go for this I intend to put it on the market for below mkt. value in order to move it quickly. Comes out to 112k minus cost of rehab. Even paying the asking price (isn't gonna happen) that leaves $52,600 towards rehab/holding costs. I sincerely doubt the rehab will come to 50k for a house this size so the house is already at the formula highest offer price.

58k mtg. (plan to offer 50 cash) = $307/mo. Taxes (comp for sale at 149,500 = $5143.) Approx. PITI - $723/mo. Hold until sale 4 months = $2892.

Inspections - $1200 (just a guess.)

Labor - $1200/wk for Scott and helper. I work for free. City code requires licensed plumber/electricians. (can't approximate this till I get inside.) Regardless of what we find inside it should take no more than 6 weeks max for a house this size. ($7200 labor w/o plumber and/or electrician.)

Closing costs x 2?

Allowing 5k for closing costs & 4k for plumber/elec this leaves a profit potential of approx. 32k provided rehab cost doesn't exceed the $52,600 figure mentioned earlier. (minus anything I've forgotten.) Will put back on mkt. FSBO with online/local paper/bandit sign campaign to avoid realtor fees.

Any costs I'm forgetting here? Suggestions? Is this a good deal like I think it is or am I just an overly excited noob?

I'll give you an update after I see the house.

Thank you for your time.

Tom

Thank you much for the words of welcome. I'll be seeing you around.

I'm already learning! Good forum.
Thank you for the kind welcome.

My name is Thomas Thompson. I'm from a small town near the NY/Conn/Mass border. I've wanted to get into a rehab/flip type business for years now but was never in a position to do so. Now I am and I'm ready to take the plunge. I have a partner (another carpenter) who at this stage of the game is willing to work at a discounted rate for the first deal in order get the ball rolling. We're both very excited about this.

For the last couple of weeks I've been re-reading flip/rehab books I've bought in the past and studying REI forums intensely. I've lined up about half the contacts I'll need once I find a deal (various inspections, on call electrician, etc.)

I just need to fine tune my education so I'll know a good deal when I see one & have the confidence to jump on it. Books & forums are alright up to a point, but nothing teaches you better than 'hands on'. That said, I think I'd like to do a handful of deals as a bird dog to get my foot in the door, learn a lot in the process, and make some valuable contacts for down the road.

You'll be seeing a lot of me here & I'm looking forward to getting to know you.

Take care,
Tom