OfflineI can't begin to tell you how excited I am to say that I have had my 1st offer accepted. I know when I read other's posts about their first deal I wanted details so here they are with a little background.
I'm in Southern California and was having a hard time competing with the cash offers out here. Also the market is not what I would consider strong and we have a high unemployment rate. So I began to "Think a little different" and decided to find out where the jobs are. A family member mentioned a couple of areas so I started doing research. A lot of research. I looked at websites advertising jobs, went to Craig’s list in those towns and was able to get a good picture of the real estate and job market there; what was for sale, who was looking for rentals, etc.
I took out a HELOC (Home Equity Line Of Credit) on my home for the money and after doing more homework decided on a property. I talked to the realtor. But before I could move forward the home had sold to a contractor. I told the realtor that if it should fall out of escrow for any reason to please call me. It did and I didn't waste any time finding a contractor to give me a bid on repairs to either make it a rental or to rehab and sell.
I found the contractor by calling a church and asking the Bishop directly for a referral. Since I will probably never step through the front door of the house I bought (hard concept for me to grasp) I am having the inspector come back at intervals to confirm that the work is being done by the contractor as it should be. (Thank you advisors for that idea)
So here is how it looks:
Listed as a 2/1 but will be a 3/2 when the work is complete.
Asking price $71,900 reduced to $55,000. It was sold for cash at $42,000. I offered $38,000 cash and it was accepted.
Estimated repairs and rehab $20,000
ARFMV (After repair fair market value) $120,000
Purchase price $38k
Repairs $20k
Other cost est. $5k
Estimated profit
if sold at $110k $47,000!!!!!
I could also market it wholesale or rent it for $750 to $800 a month. But since my HELOC is adjustable I would rather make the cash and use it for another purchase. I will be getting my buyers list for that town ready tomorrow.
I started learning about real estate in March of this year. To think that I could earn this much was - I repeat - WAS outside of my thought of possibilities.
Even though I am excited I am also feeling calm about this. I know from my hard work that this is a good deal. The numbers work. That's the bottom line.
Merry Christmas to you all!
"Faith is taking the first step even when you can't see the whole staircase."
~ Martin Luther King, Jr. (1929-1968)
GREAT JOB!
Your an inspiration to me. The first ones the hardest they say. Good luck with the next and Happy Holidays!!
Rick
I only have one more inspection that needs to be done and that is of the chimney. This experience is incredible. Doing everything long distance hasn't been a challenge so far. I have had two contractors give me bids and they are close. I've had a structural engineer give me his input, spoken to the assessor’s office regarding property taxes. This county is offering a rehab discount for 5 years. They will come do an assessment before the rehab and that is what your property taxes will be based on for 5 years. Great to know for a rental property. I will ask for it no matter where I buy next. I've researched what building permits cost,(Much less than here in So Cal, I've spoken with the water, gas and electric department to find out what it takes to get those services set up in my name. (Only a $15 fee total) I've talked to an insurance agent and the massonary man. And even though my offer has been accepted I am still looking at property values, trends, and heat maps for that area. One would think I was a business woman wouldn't they? LOL
"Faith is taking the first step even when you can't see the whole staircase."
~ Martin Luther King, Jr. (1929-1968)
www.beaconinvestorsgroup.com
Hello to all and Happy New Year! I closed on the North Dakota house yesterday and unexpectedly was made an offer. After working the numbers and negotiating a bit I decided to accept the offer! I will net $10,000 on my first deal, never stepped through the door of the property, and my contractor never pounded a nail. LOL I find this all pretty surreal.
I knew going into this deal that no matter what my net would be, I would come out successful for the education I received by going through the process. I have learned some very important lessons that I will take into my brighter future. Because I had had such dismal results in making offers with the "and/or assigns" clause in California, I didn't even try it on this deal. That omission cost me $2,800 in realtor’s fees and closing costs. Not too costly but costly enough that I will never make that mistake again. I also learned that there are many hidden costs associated with this business. I knew about them and therefore wasn't hurt by them. But I could see how someone new could easily overlook these so want to list the costs associated with this deal. In different areas and different types of deals these will vary. They didn't ask for proof of funds or even ask that my signatures be notarized. Very different from So Cal. So don't assume anything. Even if something doesn't work one one deal it may on the next.
Bought the house for $38,000
Inspection fee $295
Settlement charges $325
at time of purchase
Settlement charges $325
at time of sale
Holding costs including $800
gas/electric/water
Insurance $75
Realtor commission 5% $2,650
Good will fee to contractor $300
Good will fee to 2nd contractor $50
Total $42,820
Sale Price $53,000
-Costs 42,820
Profit on this deal $10,180
A couple of notes: I will have to do a North Dakota tax return because I did business there. Because I work for an accounting firm I will get this done for free. So this is a fee you would need to account for in your total costs.
I also made numerous phone calls but because I have unlimited long distance, this didn't cost me anything extra. I am giving the two contractors I dealt with a good will payment. Neither charged me a dime but I expect to work with at least one if not both of them on subsequent deals so don't want them to think that I was wasting their time. I want them to want to go out and look at other properties and give me good bids. Even if I was in ND I would still need their experience to get my rehab costs and know what to offer on a house or even when to walk away. I also didn't add in the bottle of Tums (I will have to ask my accountant if that is a reasonable tax deductible item) grin
Ok so we have an offer with no inspection clause and will close on Feb 8th if all goes well. If it doesn't go through...on with the rehab! If it does..on with deal #2! Woooo Hoooo!!!
"Faith is taking the first step even when you can't see the whole staircase."
~ Martin Luther King, Jr. (1929-1968)
www.beaconinvestorsgroup.com
Congratulations on taking action and jumping right in. You are an inspiration to us who maybe spend too much time on the sideline analyzing (like me). Best wishes on the closing; and keep us posted.
JER 29:11 Thoughts of Hope; thoughts of a blessed Future
If the ARV is $120k & you got it for 38k, you did an awesome job with your numbers. That's using a factor of 48-49%...Good work
ARV 120k x.48%=57,600 minus 20k in repairs =$37,600 awesome!
You have Plenty of room if more repairs show up...
Jason S.
San Diego, CA.
**All CASH House Buyer!**
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Hi Jason and everybody,
Yes, knowing a good deal when you see one is half the battle. Knowing what to do with the good deal is the lion’s share of the second half. Dean's book and the stories I have read on this site have given me the launching pad to a much brighter future. I have already told the RE agent in ND to send me more house information. He talked about one but said "You wouldn't be interested in this one it needs a lot of work!" He told me it had been gutted and didn't have any sheetrock. My mind perks up and thinks: Hey; half the work is already done...tell me more! Learning about real estate is like having another world appears in front of your eyes. You know it was there all the time, but you never saw it. Well...my eyes are open now.
"Faith is taking the first step even when you can't see the whole staircase."
~ Martin Luther King, Jr. (1929-1968)
www.beaconinvestorsgroup.com
Nice little profit, Keep up the good work and Don't stop.
"Don't tell me I can't, Tell me how I can."
Good for you on your deal.
The only place to go is up from here, you have the first one off the ground.
Best..