All Forum Posts by: William C.

I understand most answers will begin with "it depends" but for the sake of argument that's all the details I'll give. knowing what you know about holding a rental property and or flipping a house, what would you do if you could sell now for a $40k profit, or hold for $1000 net net a month in positive cash flow? And why?

Ok so that's a bit of a loaded question because I have a good idea as to what we did wrong along the way. The reason I pose the question this way is so that I can get some unbiased, candid feedback regarding this project so I can use it to move forward in the right direction. Here is the long story short. Please let me know what you would do differently moving forward to make sure a standard flip doesn't take 11 months. We purchased a foreclosure that had been sitting for about 8 months for $90k. The property needed pretty much everything. We took the second floor to the studs and rearranged some walls to add a bath and make a bedroom for functional. We redid all the plumbing and electric. New carpeting and some hardwood throughout. New kitchens new baths. The home was 2200 sq ft had 4 beds and 2 baths. We purchased in September 2015 and sold in August 2016. The renovations were done by a handy man/contractor. He knows how to do most things, but for example is not an expert carpenter,master plumber etc. He is paid by the hour and we pay for all supplies. If something is needed, he picks it up at Home Depot and we reimburse him. His hourly wage is low compared to what most contractors would charge, but he is guaranteed the work, and in return we get cheap labor. He also worked other projects along the way, so he wasn't at the property all day every day during this time. In order to align our goals, we gave him an incentive of 1/3 the net profit when it was all said and done. This way, he would try to reduce costs where possible to maximize profits. After is was all said and done the budget he gave us when we were analyzing the deal went $30k over budget. A majority of that was due to the length in time in took and labor costs were more than expected. The contractor is also a friend of my partner, and the way he sees it is that for when he went over budget, he was only having to pay 2/3 for the labor because the contractor would have received the 1/3 profit anyway. So he figured he was actually hurting himself by going over budget. Iv suggested maybe trying a new contractor to see if we could get a better deal, but his response is that at his current hourly wage he's cheaper than we would get anyone else to do it. The work when it's completed is pretty good. It's not perfect, but it is competed, safe, and passes a home inspection and code inspection. We pay cash for the home so there are no holding costs on the money. The taxes were about $3200 for the year, so holding costs altogether were not significant. The project in the end was a success, the profit after fees and costs was $20k, but partly due to the market rising and the ARV went up $20k from what we thought it would sell for when we bought. We would have broke even had we sold for the number we all thought it was worth going in. We only have enough funds to do one project at a time using this method because we pay with cash, and then pay for all materials and labor as it occurs. What would you do? What did we do wrong? I know there is a better way, but what is it? Looking forward to a lively debate. Thanks!

Anthony Jenkins is that the Greater Philadelphia ReIA? Can you provide for info about the next meeting or joining? Christopher Munson that sounds like a good venue. I really only anticipate 10-15 people actually showing up but maybe that's a good place to take it if it were to grow to 40-50. My intentions here was to create a more intimate meet up to get to know a few members on a personal basis, rather than show up at a REIA meeting with 200 attendees, for a cost, where I get sold the whole time by that nights speak. Anyone that showed interest in attending and still intends on showing up I will have a venue and date set early next week. Plan for the last Tuesday or Wednesday of the month, somewhere in Plymouth meeting. I was apart of a BNI group that met at Dave and Busters so I'll see about their rooms. I plan to keep it free, or the cost of a drink or 2 at your own discretion. Thanks for all the interest so far. Continue to spread the word, and feel free to bring partners, friends, family, lenders, agent etc if they would find value in meeting other investors in the area. I look forward to meeting everyone shorty and beginning to grow our businesses together.

People THINK they can't buy, but in reality with FHA loans and other low cost mortgage products it os less expensive to buy than to rent. As an agent I educate and convert renters all the time. Iv helped people buy homes with credit scores 570-620. With down payments and closing costs less than $1000. I bought my home via USDA financing and walked away from the table with a check for $500 to buy my home. A $200k house could cost $6-$7000 to buy at closing with seller assist whereas I would require $4500 for first month, last, and a security deposit on a $1500 rental so they are just about there in terms of a down payment. Lower the sales price to $150k and they can do it all day. They would need credit high enough to buy in order to rent so they are not buying because they can't To answer your question, people are always at different points in their life. Personally I look for tenants who could buy, but chose not to for whatever reason at that point. Usually they are just starting their lives together. If a tenant doesn't have the credit to buy a home, they have nothing to lose if they don't pay rent. Where my tenants have the rest of their lives ahead of them to ruin if they don't pay rent and get evicted. Location is important. Condition of the place is another. We renovate everything so the home is the nicest on the market. We get $1350 for a 500 sq ft 2 br apartment in the Philadelphia suburbs. Your right, they could buy and be better off, but people need to rent for all kinds of reasons, I just look for the ones that do not have to do with credit, income and savings, and more a lifestyle reason for not buying.

Would someone mind giving me an example of when a tenant would actually "qualify" for your unit while also receiving a voucher? How on earth do they have the income to qualify, like 3x rents for example, but also have their rent paid for by our taxes through the county? Or am I missing something.

Maybe someone who is experienced with section 8 can explain how you would screen tenants? Correct me if I'm wrong, but are they on a voucher because they don't have the income to pay the rent? If they don't have enough income to pay rent, how do they qualify? I understand the voucher pays the rent for them, but am I missing something? How would they meet the 3x gross rent rule and still qualify for a voucher?

Funny how that's the second time that "pay to play" group was plugged in this thread.  I thought I had mentioned this before when someone suggested DIG, but to be honest I'm not looking to pay a fee to meet other investors in my area.  I'm not looking for an education either.   I'm sure it's a great, but not what I'm looking for.  Anyone else is more than welcome to go join the club if they'd like.    I'm not interested in a "panel of presenters".  I'm interested in getting to know people on a personal level, so if there are hundreds at your meetings, its again not what I'm looking for.   

I'd imagine after hours would work best for most.  Midweek, maybe Jan 24, 25, 26.  I can probably set up a poll to see what day works for most. I'll put together a tentative agenda, but my main goal of our first meeting would be to get to know who else is out there in this area investing in real estate looking to network and grow their business.   I'll look into some places in and around Plymouth meeting that could accommodate us.  

Oh to live in Colorado or Washington and have issues like that...

Sounds like a twin home,or semi detached property to me. I'd treat it as a single deal, or 2 of them. I'm pretty sure the definition of a duplex would be 2 units in one building under the same tax ID.