I was planning to budget the renovation at 35k capping the whole project at 100k.

And found Tenant Buyer who puts $20,000 down, pays a premium lease and does all maintenance and repairs Assumption: Goal Is Cash Flow with Eventual Property Appreciation Assumption: Goal Is Cash Flow, captured equity with Eventual Property Appreciation Assumption: Investment Amount $80,000 Assumption: Investment Amount $50,000 Location: Columbus Ohio Location: Phoenix Arizona 2,373 miles from Los Angeles 373 miles from Los Angeles Investor 100% Profits (No Back End Equity) Investor 100% Cash Flow & Back End Equity $$ Investor's Total 10 Year Return (Plus (Does Not include Tax Write Off's) $75,240 Investor's Total 10 Year Return (Does Not include Tax Write Off's) $249,971 Investor Funds LLC $80,000 Investor Funds LLC $50,000 Investor Profits $75,240 Investor Profits $249,971 Less Cap Ex (Roof, AC Unit, Landscaping, Water Heater, etc) -$$$ No Cap Ex (Tenant Buyer does All Maintenance and Repairs) $0 Investor sets up LLC Investor sets up LLC Investor Funds LLC $80k or applies to bank and hopes to qualify Investor Funds LLC $50k Turn Key locates & acquires property Turn Key locates & acquires property Turn Key teaches Investor Subject To, Wrap, Lease Options Investor 100% Ownership Investor 100% Ownership Investor 100% Cash Flow Investor 100% Cash Flow & Back End Equity Investor makes management decisions Investor makes management decisions Investor collects rents, disburses Investor collects rents, disburses Property ARV $80,000 Property ARV $225,000 Purchase Amount $80,000 Purchase Amount $180,000 Cash Out - to Seller $0,000 (Cash Out - to Seller) $15,000 Seller Carry Back $0,000 (Seller Carry Back) $20,000 Bank Financing $64,000 Amount Cash Have To Put Down $16000 (Underlying Note Subject To) $145,000 Monthly Payment Out $419 Monthly Payment Out $995 Repairs & Maintenance $5,000 No Repairs or Maintenance $0 Sell Amount to Tenant Buyer $0 Sell Amount - New Tenant Buyer $245,000 Seller Carry Back (Paid when Tenant Buyer Refinances) $0 Seller Carry Back (Paid when Tenant Buyer Refinances) $20,000 Underlying Note Subject To (Paid when Tenant Buyer Refinances) $0 Underlying Note Subject To (Paid when Tenant Buyer Refinances) $145,000 Cash In – From New Tenant Buyer $0 Cash In - From New Tenant Buyer $20,000 Monthly Payment In – From Renter $550 Monthly Payment In – From Tenant Buyer $1,650 Investor Does Repairs & Maintenance $$$ Tenant Buyer Does Repairs & Maintenance (No Cap Ex) $0 Amount Tenant Buyer Owes Investor $0 Amount Tenant Buyer Owes Investor ($245k - $20K) $225,000 Monthly Payment In $550 Monthly Payment In $1,650 Monthly Payment Out $419 Monthly Payment Out $995 Monthly Cash Flow Investor Total $135 Monthly Cash Flow Investor Total $655 Vacancy Rate 80% Vacancy Rate – None Renters Occasionally Need To Be Evicted -$1,000 Note: Tenant Buyer puts down $20,000 Non Refundable – If the Tenant Buyer vacates the property – another Tenant Buyer is found with an additional $20,000 Non refundable down $20,000 Year 01 Cash Flow Investor - $135 monthly $1,620 Year 01 Cash Flow Investor - $655 monthly $7,860 Year 02 Cash Flow Investor - $135 monthly $1,620 Year 02 Cash Flow Investor - $655 monthly $7,860 Year 03 Cash Flow Investor - $135 monthly $1,620 Year 03 Cash Flow Investor - $655 monthly $7,860 Year 04 Cash Flow Investor - $135 monthly $1,620 Year 04 Cash Flow Investor - $655 monthly $7,860 Year 05 Cash Flow Investor - $135 monthly $1,620 Year 05 Cash Flow Investor - $655 monthly $7,860 Year 06 Cash Flow Investor - $135 monthly $1,620 Year 06 Cash Flow Investor - $655 monthly $7,860 Year 07 Cash Flow Investor - $135 monthly $1,620 Year 07 Cash Flow Investor - $655 monthly $7,860 Year 08 Cash Flow Investor - $135 monthly $1,620 Year 08 Cash Flow Investor - $655 monthly $7,860 Year 09 Cash Flow Investor - $135 monthly $1,620 Year 09 Cash Flow Investor - $655 monthly $6,000 Year 10 Cash Flow Investor - $135 monthly $1,620 Year 10 Cash Flow Investor - $655 monthly $7,860 Cash Flow To Investor $16,200 Cash Flow To Investor $78,600 Repairs & Maintenance (Roof, AC Unit, Water Heater, Painting, Appliances, Landscaping, etc) -$$$ No Repairs or Maintenance (No CapEx) Tenant Buyer Does All Maintenance & Repairs $0 10 Year Principal Pay down by Renter $11,940 10 Year Principal Pay down by Tenant Buyer $28,871 Cash Down - From Tenant Buyer $0 Cash Down - From Tenant Buyer – Goes into Investor’s Pocket $20,000 Tax Write Offs For Investors $$$ Tax Write Offs For Investors $$$ Appreciation Is Investor's -10 Year $40,000 Appreciation Is Investor's -10 Year $112,500 Note: Appreciation on a $80,000 property in Indiana at 5% per year is $4,000 per year $4,000 Year Note: Appreciation on a $225,000 property in Arizona at 5% per year is $11,250 per year $11,250 Year Investor Borrows From Bank$80k to acquire property $80,000 Investor Funds LLC $50k (From Cash IRA 401(k) for Property $50,000 Sell Amount to Tenant Buyer $0 Sell Amount to Tenant Buyer $245,000 Payoff Amount for Investor $64,000 Payoff Amount for Investor $180,000 Creates “Back End Equity” $16,000 Creates “Back End Equity” $65,000 Original Down – From Tenant Buyer $0 Original Down – From Tenant Buyer $20,000 Tenant Buyer – Pay Off Amount $0 Tenant Buyer – Pay Off Amount $225,000 Tenant Buyer Eventually Refinances $0 Tenant Buyer Eventually Refinances $225,000 Underlying Note Paid Off $64,000 Underlying Note Paid Off $145,000 Seller Carry Back Paid Off $0 Seller Carry Back Paid Off $20,000 Remaining Equity $16,000 Remaining Equity $60,000 10 Year Cash Flow To Investor $39,300 10 Year Cash Flow To Investor $78,600 Backend Equity – Investor 100% $0 Backend Equity – Investor 100% $60,000 Total $39,300 Total $138,600 Investor’s Amount Invested Investor's Total Return From Tenant Buyer 10 Year Cash Flow Principal Pay Down Appreciation Back End Equity Total Minus Repairs, Maintenance, AC Units, Roof, Water Heater, Landscaping and other Cap Ex $80,000 $75,240 $0 $39,300 $11,940 $40,000 $16,000 $75,240 -$$$ Investor’s Amount Invested Investor's Total Return From Tenant Buyer 10 Year Cash Flow Principal Pay Down Appreciation Back End Equity Total Minus Repairs, Maintenance, AC Units, Roof, Water Heater, Landscaping and other Cap Ex $50,000 $299,971 $20,000 $78,600 $28,871 $112,500 $60,000 $299,971 $0 Additional Investor Funds to buy Another Property in Year 1 $0 Additional Investor Funds to buy Another Property in Year 1 $20,000 (From New TenantBuyer’s DownPayment) Investor's Net Return Profit $75,240 Investor's Net Return Profit $249,971 10 Year ROI 9.40% 10 Year ROI 49.90% 1st Year ROI Cash Flow 2.03% 1st Year ROI Cash Flow 15.72% 1st Year ROI Including Down Payment 2.03% 1st Year ROI Including Down Payment 55.72%

And yes, there are such things as roof rats!

Where if the project goes longer than anticipated you will be paying a high interest rate for a longer period of time due to using a hard money lender.Hard money lenders look at your track record and want to understand your experience level.

I am working on a commercial project in Kansas City and am in need for some architect referrals.

And then do the bigger project next spring/summer.

This is just the latest in an arduous process, to find the deal under market value on the land, rezone it to multifamily district (long and costly process), permit a six suite rental (difficult with many technical fire code and structural engineering challenges), build the units (using all my experience in home building and every possible favour and technique learned over the years to project manage), get financing to finish construction (from a private lender after the bank lenders totally dried up on this type of financing), and pre lease the units while under construction to quality tenants.  

Short Term Project Long Term Project Lower Points Higher Points Higher Note Rate Lower Note Rate Here is an example for a standard fix and flip loan with a 12-month term.

The tenants reported a roof leak and it’s still raining.

If there was ever a guy who has absolutely no idea about rehabs and fixing houses its me but i had to deal with pesky squirrels and flashed my roof and started with small changes like painting kitchen cabinets to white and painting the hardware and man just that made a difference.I am debt free, no car payment and analyzing deals everyday.