Thom's Deals

Thanks for stopping by and posting. I have been reading your posts since you got started a year ago and am always very impressed by your commitment and dedication to learning and having the courage to take action. Keep up the positive attitude and nothing will stop you! I look forward to meeting you in the future and I know you have what it takes to make this work for you! The only way we fail is if we give up and that is not an option!
Best to your continued success!
Thom

Thanks for the kind words and for all the advice and help you have given me over the last year+. I'm hoping sooner than later we will make it back up to the pacific northwest to check on our home in Newport and visit my high school friend and his family in Seattle, then we can stop by and catch up with you and Dan. We are very excited for you recently going full time into REI! I've set a goal to do the same by Feb '15. Sometimes it seems a little scary but I know I can do it and people like you help me to have confidence, thank you!

Awesome! Thanks for the the great post! You continue to impress me with the hard work you keep putting in and the action you are taking. I look forward to meeting you at one of the DG events in the near future too. Joe and Stacey helped us stay accountable with the make every day count journal and are always so inspirational so lets keep inspiring each other to keep taking massive action!

This deal was a lead from a bandit sign! I had meet this owner a few months previously when I went over to her house to discuss the 20 properties that her and her daughter own. They want to sell but they are wanting 2006 prices for them and it was hard for them to realize what their houses are worth in today. We concluded that they are not ready to sell and would wait a few years until the market goes up...I sent them a thank you card in the mail.

A couple months after we meet they called because one of their houses burnt and they just wanted to sell it. They had insurance which paid off the mortgage. They were asking 29,500 and I offered 15k. We settled at 16,500 for a burnt 3/1 1150 ft2 SFR. After getting a few estimates for repairs it was concluded that the numbers were not quite big enough to flip and to hold as a rental so we decided to take the Greg Murphy approach and "knock the ugly off it" and put it on the market. I ordered a large dumpster and put a labor add on CL for 10 hr plus lunch. I qualified 5 good day labors and we pulled down all the burnt drywall, kitchen, floors, hosed down the inside and outside all in about 5 hrs. This cost me about $500. The labors were happy to work and get fed. The house really cleaned up and it made it easier to sell the value. The back 1/3 of the house was still salvageable. Shortly after we put it on the market for 32,500 with my agent who had done a lot of free work so far so I wanted to let her get paid on a deal. A few weeks after listing we had an offer at 28k, countered at 29,500 and we had a deal. This was great deal because the owners got some extra money and no hassle, we made money of the flip 8500, my agent found a buyer and therefore was able to double end the deal and the new owner was happy to have a project to work on. Also because I had told the original owners that if i sold it quickly that I would give them a little more i gave them another $500. I figured that they still own 19 houses so when they are ready to sell i want to still be the one they call! here's the final numbers:

Purchased: 16,500
CC: $500
knocking the ugly off: $500
payback to owner: $500
All in @ 18k
sold 29,500
CC and commission on resale: 3k
Profit: $8500
split 50/50 between us and private money partner. We used non of our own $.

lessons learned: CL is great for day labor but be careful on liability.
Contractors would rather say a house needs torn down than rebuilt. We had several contractors say that it must be torn down which was not true, they were just being lazy and trying to pad there paycheck. Bandit signs work in CA and maintain all relationships with any landlords they are potential sellers and buyers of deals. Send thank you cards to people they really appreciate the effort and it helps them remember you because you will stick out in their mind and they will trust you.

This deal was brought to our attention by our contractor from deal #5(Kibby). He mentioned that he bid some work on an old house for a guy who just inherited the property from his mother dying. My dad, brother and I looked at the house and it was in BAD shape. We looked at the outside and through a couple windows but we did not meet the owner. After a month or so I ask our contractor for the owner's number and then called the owner and set up a walk through with him to see the inside. It was built in 1897 as a SFR sears and roebuck kit. In 1950's it was remodeled into a triplex and a 2bed/1 bath SFR was added onto the property. So it is a triplex and a 2/1 SFR on one lot and we call it a 4plex. The 2/1 SFR was rented for 400 a month and the triplex was vacant and in need of serous repairs. We estimated it needed 40-50k repairs, rent ~2000 month and ARV ~160-175K. I negotiated a 77K purchase price with $1 earnest money (thanks Matt!). We used the cash out refi money from deal #4 (Newport) and partnered up with private money again for 50% cash flow and equity. Purchased in Sept 2013 and repairs completed end Feb 2014. Here's the current numbers:
Purchased: 77k
closing cost: ~1K
repairs: 40k
All in for 118k
rents: 450+450+525+525(one vacant) $1425 currently
Insurance: $125
property management: 140
maintenance: $100
water/sewer/garbage: $200
Cash flow: $860
Working with small community bank on cash out refi. Thanks to Andrea and Gena from the masterclass sessions we found a good cash out refi bank we are moving forward with.
Obstacles: insurance was difficult due to age and amount of repairs needed to house. Roof needs replaced in order to get better insurance rate. Had to get the pipes snakes several times and have had some drain issues that are now getting repaired. Not the best area of town so we have had to be patient with finding good tenants and we still have 1 place that is vacant. Put this property in our LLC which now prevented us from doing a refi with our old mortgage company from previous deals. Had to fix a few things in the 2/1 and then we raised the rent to $450, this one still needs some work and then would be able to get another 100 in rent.

I appreciate it. I am definely not GIVING UP! Each my momentum INCREASES!

Opened up a bank account for my 8 yr old on Tuesday with the money he had saved and earned from selling eggs door to door. He was so excited! Teach your kids or grand kids to save and then to invest their savings!

Thom you are amazing that's for sure!! Keep those deals coming. Next year you and I will have plenty of stories to swap. Isn't amazing how things start rolling and POW things start happening. Good Job Thom

Amazing story !

That's right we can do this! I'm so close to freedom i can taste it! Its just going to be hard to wait 6 months but I'll be patient. I've slowed down on the deals lately as i have been trying to get organized to be able to walk away from the day job, FREEDOM!!!

Thanks Gary and Jill for the kind words and for reading and taking the time to post. I appreciate all the deals and wisdom you have shared on this site. I have read many posts from you, thank you!

Best to your investing!
Thom

You're welcome, breaking down your story & deals is giving insight to all & is inspiring to all that are beginning their journey!

In my name the r and n are connected to make an m, lol.

So your name.....

Really is tho r n (THORN). ?

It's THOM and there is no AS in this THOM. I'm just another 4 letter word! Lol

Okay I understand.....

THOM..... So I take it the H is silent?

Believe me pronunciation and grammatical errors are numerous both on a written level and in dialogue

Yes its silent, pronounced like Tom.
Make it a great week!
Thom

Where has the time gone? We have been pushing hard to get refi's done. Lost some deal momentum and enjoying lots of time with my family for the summer. I'll post some others deals this week.

Thom, keep pushing it. You are one of the people I love to see posting on forum. Thanks for the update.

Patrick

This deal we looked at Friday after Thanksgiving 2013. We posted bandit signs in the afternoon after looking at about 7-8 properties. This one was list for 125k and had a funky layout but was 3 bed 2 bath 1800 ft2. Just before Christmas it had two price reductions and was listed at 99k. I offered $76,200 and they accepted. Owners were 3 siblings who had inherited the property from their parents. It needed about 10k in repairs including exterior/interior paint, flooring, some windows replaced, lite bathroom remodel, carport demo, lite landscaping, dry rot repair, and misc patches. During the inspection period we noticed that the neighbor was encroaching on our property. We submitted an addendum with a 6k price reductions due to the encroachment being undocumented. They verbally agreed but then never signed the addendum. A few days later they told us that they would not take any less. I had my agent go over and talk with the neighbors to discuss the encroachment because I could not access one of the back wall of the house without going onto their property and using their gate. They said we could access it anytime and that years ago they connected the fence and house to keep people from running through their yards. It made sense and they were nice people but my understanding is that if an encroachment goes on for a certain amount of time and it has been established for many years than it can become legally someone else property. Anyone have an knowledge on this? Grandfathered in encroachments?

Anyway, we closed the deal as a rental and have a tenant in it for $995 month. We are currently finalizing a cash out refi on this one so here are the current numbers:

Purchase price and cc: 77,200
repairs: 10k
All in for 87,200
ARV: 110k
Cash out refi in process for 82,700 at 30yr fixed 4.6% (leverage the banks money and look at the ROI)
PTI: 525
water,sewer/garbage: 100
management 99.50
maintenance/vacancy: 100
Monthly cash flow: $174 X 12 = $2,088 annual return
Cash left in: $4500
ROI: 46.4%
Equity: 22,800

This is a joint venture, partner provided cash for purchase and repairs. Partner gets money back from refi and then we split the property 50/50 equity and cash flow as buy/hold. No Money Down and an infinite return!

Onto the next, I love REI!

Just checking in to say "hi". Looks like you are getting after it! Hope all is well and God Bless.

Michael

Hey Thom,

With your refi you mentioned above, are you getting 30 years with an LLC or in your own name? Love reading about the deals! THANKS

Thanks for the kind words and encouragement. Lets keep pushing forward!

Great to hear from you! Hope you had a great summer! All is well just picking up momentum! Thom

Those 30 yr fixed are in Lisa and my name to get the loan and then we will quick claim deed them into our LLC. We have insurance and are working on an umbrella policy to help with potential liability. Currently the deal #9 (4 plex) and deal #11 (duplex) are in our LLC. We have had to call ALOT (50-60) small community banks who hold their portfolio loans in house and do 5-7year arms over 20-25yr, loan to LLC, on appraised not purchase price, no seasoning, etc that Dean and Matt teach. We think we finally found our unicorn bank that will do 75% LTV so we can get a couple more refis finished, so we have started to move forward with them. The journey continues forward! Always great to hear from you! Thom

Just got the appraisal at the end of last week and it came out at 190k!! Wow, not sure it would sell for that but the bank said we could refi for up to 142k but this would kill the cash flow creating app -$150. However, the investment capital is very tempting to get it working now making more money. Cash flow Vs. investment capital

Any thoughts or advice out there?

Thanks,
Thom

Hey brother my fellow San Diegan in arms, gosh good question I don't know about that, you could take out just enough so that you are not negative cash flow right. LMK & see you tomorrow night at the REIA, or are you going to that one? Hope so I am set to go.

God bless, check out my journal for my update too ok. Give my love to Lisa

How does the partner play out in a negative cash flow scenario? Does he get half of the cash out refi and half of the negative cash flow?

Hey thom

Check with a realtor (if your partner agrees) to see what are the current comps on sold and list the property, if it sells where you guys can get a healthy return do it,if not you already have cash flow and re invest to other properties, or keep it riding as Dean said since things will improve.

Love this awesome share

Yes partner splits 1/2 negative cash flow and half refi amount over what he has in it so he would get back all his money and we split extra refi amount but we would do another deal together with the $.
Thoughts?