First one!

Congratulations of getting your offer accepted! That's great! Good luck to you!

Cheryl & Dave

Correction it's a 3 bed 2 bath home.

ARV, Quick sell it for $240,000
Rehab, we have contractors estimates at $10,000
Buy it for ???
Net xxxx amount on flip OR
rent it for xxxx, for xxxx cash flow.

I don't know how guyers are in your market but here they like to see a minimum of 10% ROI, more like 15%.
$15,000 is pretty low net for an investor on a $240,000 property. What is the buy price?

Remember guys, you have only done 1/2 of your first deal. You must execute your exit strategy (close!) to have a complete deal.

Way to go! This is how you learn in the real world!!

Good luck,
Michael Mangham
MD Home Acquisitions LLC

Do you have to show them the contractor estimates? My husband is a handyman and he figured out the amount needed for the repairs.

I know the profit is a little low. This is the best buy we have come across. NJ is not the best market for this. We're trying to do this in our area but, we may have to branch out to rougher areas like Trenton, Newark or Paterson to get lower priced houses.

You don't HAVE to contractors estimates, but you want to be accurate with the rehab costs. Everyone has a different opinion on how they will rehab/remodel anyway. You want your estimate of work to match what is needed to get the ARV you say the house will bring and let your buyer decide from there. Like I said, every one does things a little different or has a different remodel plan. It is a GREAT selling point to have a contractors estimate AND tell your buyer they can use your contractor to do the work if needed. Contractors will give free estimates after you do this a couple of times! Let them know you will refer them to your buyer if you do not do the work yourself!

Also, on your ARV, you want to estimate on the LOW end. Not the absolute top dollar that someone may pay after 9 months on the market. You want the nicest house on the block at the lowest price if you want to sell quickly in this market. You must base your offer price accordingly!

Finally, what are you asking for the house? Show us how you are presenting this deal to your buyer and how he will make money. Also what you paid so we will see how you are making your money. Is it an REO or direct with homeowner? Assignment of contract, double close?

You are taking action!!!

Good luck,
Michael Mangham
MD Home Acquisitiopns

Allen and Denise,

this property sounds more like one that you could do the rehab and sell it to an owner-occupied instead of an investor...

Are you including closing costs, holding costs, etc. in the net profit that an investor would have?

wishing you success,

Valerie

We have been running scenarios around in our head for days trying to figure a way we could do it on our own. We did come up with 1 but, I don't think it would work. We were thinking we could buy it with a hard money lender, then pull the money back out right away and pay them off. Then we could have a house under our business that we are doing a lease option with someone. Of course we would have to find a small bank that has money to lend and does no-season re-fi loans and have them setup to hand us the money the day after the closing with the hard money lender. The biggest snag I see here is that, I think, the hard money lenders want you to have an end buyer. We won't have that.

If you have other ideas, please let me know. I am all ears! We would love to do this one ourselves. We really need something on the books for our business so we can start getting loans.

Allen and Denise,

Have you contacted any HMLs? The HMLs I spoke with actually wanted to sign a contract for 6 to 12 months, and they included funds for the repairs, not only the cost of the sale; and they did not care if I was going to sell it or hold and rent, but I had to show that I had the funds to pay them.
It can be expensive though, so I was adviced not to do it...

How much are you offering for the property? What are recent sales comps?
If you don't have enough equity in the property when you buy it, you can lose all your profit to the HML...

Remember "you make your profit when you buy not when you sell"

Valerie

Hey Guys,
Your desire to get a deal is admirable. But - I feel like you are doing the same thing I did more than once - the deal "feels" good. $15K "sounds" like a lot of profit. But really - if you work the numbers I sense my buyers would pounce unemotionally like a panther saying "the deal is too skinny". I realize I don't have all your numbers or the comps (how'd you get them?), but $15K on a $240K house is hardly your margin of error. It's so easy in that price range to misjudge the repairs by 10K or the ARV/eventually sale price by easily 30K. I'd move on and count it as excellent learning. I hope I'm wrong - send more details.
Keep on moving ahead - but remember it is a math business.

We are not really get any great feedback on this one so we will probably have to use our exit clause. We have in the contract that the deal is subject to inspection and our buyer's approval within 30 days. Here is a stupid question though.... is it actually 30 days including weekends or only 30 working days? We figure we'll use our exit around day 20. Also, does the time start when we sent the signed contract in or when we go into attorney review?

At least we finally made the leap and tried. We also learned alot!

on the 30 days question - it depends on how you word it. if i wanted 30 business days, then that is how i would word it. if you didn't do that, then i would figure 30 days all-inclusive. i try to be specific, but that might have to do with being a little an%^.

It's 30 days including weekends unless noted otherwise in the contract. Don't give up yet. I have had them go 24 hours from my deadline!

At this point, besides ads on craigs list(with pictures), ebay Etc. I would call each of the buyers on your list personally and discuss your deal and get their feed back.

Was this deal on the MLS?
If so, what was it listed for? If it was shoot me the listed price and I will explain why it has not moved.

The numbers you PMed me showed a 13% ROI for your buyer with your $5000 fee included. This is a decent deal and a REAL investor would take a look.
Now, the real question is, were those numbers accurate? Find out what others see as the quick sell ARV on this property (not just your realtor). Look at the properties you used as comps. Drive by or go in if possible, compare finishes and locations, are they really comps? Was the location ok?

Guys, this is a great opportunity to learn how to do this business and what it takes to actually SELL your deal. When you make your offer you must make it based on what your buyer will make and know those numbers!! Same thing when you are doing the flip only you can pay a little more because you don't have to cover your fee.

This is exciting stuff, nothing to get discouraged about! You will learn more by doing what you are doing (taking action)than by spending 10 years reading REI books, webinars, websites etc!!

Good job, go get your next one under contract, let this one sit, fill up your pipeline, meet new people, market, improve your presentation to your buyers ETC ETC. You WILL get there if this one does not work. Don't get stuck on one deal.

Michael Mangham
MD Home Acquisitions LLC

That's great news! I'm still working on getting my first deal done as well. Quick question, was this a listing that was sent to you by your realtor or did you find it on your own?

It came from our realtor.