All Forum Posts by: Westen O'Brien

@Shaun C. awesome - that is great for me to go off of - sounds like a good system to adopt.  Thank you very much.

All - thank you for your advice.  This definitely makes me weary of that proposal, and I will delve into other options.

Max - thanks for your input.  Yeah - I understand what you're saying.  That makes me curious as to why the realtor (who has a lot of experience in deals like this) would suggest that course of action.

Has anyone out there done something like what I've described above?

Hi Everyone,

So I'm in the middle of trying to execute my first flip.  I've found a great realtor who has experience flipping houses himself and he connected me with the general contractor that his company uses to rehab and maintain their rental properties.

This realtor has also been giving me advice along the way and suggested I maybe try something I had never thought of before:  he suggested I pay the contractor with a certain percentage of my profits from the flip.  This way I'm only paying for materials on the work he does himself, and he's incentivized to do the work well and quickly so that I can make more of a profit.

Have any of you out there done this before?

If I do this, am I basically partnering with this GC on the deal?

What percentage of the (hopefully) profits would be fair to give the GC? And how do I draft up such a contract?

What are your general thoughts?

Thank you for your time,

Westen

Good deal - I will do that.  I just worked with a great GC who helped us redo our floors, etc. after water damage we had in our own home.  I'll see if he's open to it.  Thanks, Adam.

@Adam Abdel-Hafez  Ok, great - I can't thank you enough for your input.  Is it taboo or frowned upon to ask to let me walk through it with a general contractor before even putting in a first offer?

Thanks, again - this is extremely helpful.

@Adam Abdel-Hafez Ohhhh - I understand now, thank you.  Yes, you are right - I definitely need to look at all these things in detail, re-examine rehabbing estimates, and then go through the numbers again.

Question - how can I go about completing a good inspection on these types of things before we put our first offer in?  Is it simply up to the sellers whether they'll let us have an in-depth inspection done before we put a formal offer in?  Or do we need to have the offer structured in a way that allows us to renegotiate our offer based on additional things found with a formal inspection by a professional? ...My partner and I simply don't have the experience to be making sound estimates off of our own walk through.

Adam - thanks for your question.  We would be funding the rehab with our own cash.

Patti - thanks for your input.  I see what you're saying - with that in mind, we'll look much more closely at the renovation budget once we get to walk through the house in a couple of weeks.  Thanks for urging me to seek out an experienced investor in my area; I will certainly do that.

Hi,

I'm currently active duty military and plan on going full-time into real estate investing when I transition out of the Army.  I'm looking to "get my feet wet" by flipping two houses before I transition, but haven't done a single deal yet.  My business partner (just ended active duty service) and I have our eyes on a specific property, and I'd like to run the situation and numbers past you guys on BP to see if we're thinking about this correctly, or if we're completely ignorant:

The house has been owned outright by an older couple since 1985.  Through a connection with the realtor we're working with, we know the couple just wants to sell it with no hassle when their older children move out in about 2 weeks.  The house is outdated and hasn't been kept-up-with well.  It's not on the market yet and their realtor offered to let us look at it before it goes on market.

Word is they'll ask for around $50,000.  Comps are around $95,000.  We need a closer look, but anticipate ~$15,000 rehab costs, ~$6,000 commission upon resale, and ~$2,000 holding and closing costs.  Is it me, or is following through on this a simple way to net around $20,000 for me and my business partner?

What things am I completely unaware of that I need to be looking out for?

Thanks for your time.