Jon's First Deal!!! An opportunity for you!

Good luck & I hope it works out for you. I like your enthusiasm. Keep us updated on what happens, though.

I have buyers in the Birmingham area. Just going buy your numbers let me know if I determine your buy price. You did say that you have a signed accepted contract from the lender on this REO property correct?
OK, we will use your numbers. This house fixed up will sell for $150,000 and needs $30,000 rehab/remodel so here it is.
Sell for $150,000
Commissions, closing costs, insurance, utilites, cost over runs total 12%
$18,000 in selling costs based on a three month hold.
$30,000 rehab
63765.00 profit
You have it under contract for
$38,235 or less.

When is your closing date? What will be your assignment fee? 5%?

Michael Mangham
MD Home Acquisitions LLC

You are about right on the number...Remember, the Rehab cost (actually, $24,523.51...on the number) includes several "options" that can be eliminated. Such as:
1. HDTV, surround sound, mounted with wiring in Family Room (to help sell) - $1,250
2. Tile in Kitchen is in great shape...but included new travertine / installed to give more appeal - $2,321.10
3. House has granite counter-tops added to Kitchen and both baths...could eliminate bath 2 and keep Cultured Marble top (I actually have a Granite / Cultured Marble company in Montgomery that is family owned...so I know tops and can get them at cost) - $300.00
4. Tub / Shower combo units (acrylic) are in great shape. I added removal, replace with steel tubs and full 7' tall tile surrounds in both baths with borders and cement / waterproof backing. - $1,534.98 (both)

There is $5,406.09 in savings for just a couple of items (plus the amount already below the $30K number of $5,476.49)...making the $30K Rehab number closer to $19,117.42. But I like to make sure that my rehab number is as high as possible (I can send you the full report). So, there are no "cost over-runs" as my Rehab price is detailed, comprehensive and WAY on the top-end of the potential cost. Bottom line is that number is based on the RS Means 2011 Contractor's Pricing guide and does not reflect local knowledge, "bulk rate discounts" that could be used for the project...and is on the absolute high end. I do that to make sure that there aren't any numbers missing when providing numbers to Investors or offers to Banks (helps me show them that I know every dime and every contingency). I have a detailed, room by room 9 page rehab evaluation sheet that can give potential investors the option to eliminate costs as they see fit to more accurately reflect their desired number.

Sorry for the long answer, Michael. Bottom Line on this deal is that the home is structurally great, in a great neighborhood (Rental Range of $987-$1,100) and would make a great investment for someone who can hold it and turn it, or rent it. I would be willing, also, to help someone from out of town with the rehab management (I have all of the construction contacts, DIY knowledge and time) for $5K (or a profit %)and could squeeze that out of the $24,523 number...as the number is, again, full price numbers and does not account for DIY, or "vested interest" labor. this is my first deal and it is very big to me (want the Mrs. to see that the hours and hours of research and total initial investment I am making is for a reason.. I plan on doing this with everything I have and look forward to finding deals and assignments to start off. I have a target # in mind until my first full purchase and want to get there asap to utilize my construction knowledge and contacts to maximize my profits.

I have the property @ $35,000 / I wanted to get $15K out of the deal, mainly to start my company (already have the LLC, 1-800#, signs, etc...), build my website, repay my start-up costs and get my business established with a bank.

I, however, don't want to be greedy...I appreciate your interest. Remember, that I am new and am working through some details....but I am out there, making offers, placing signs and making deals. That's how this works, right?

Please IM me and let me know if you need or want any further information and I'll shoot you my #.

Thanks a bunch Mike...let me know how that looks.

Jon

Based on the LOW FMV # ($139,000) / not the ARV ($150,462), the FULL Rehab, with high grade, full contractors (no DIY / see above) number of $24,523.00 and the 12% number for a 3 Month hold / Selling cost...I am going with an assignment to the buyer of $48,898.00. This allows for a 50% profit / less above, number would be $97,797 / less purchase of $48,898.00 = $48,898.00, or 50% PROFIT (after Rehab, selling costs / commission based on Mike's #'s).

Again, the rehab costs are very high and are meant to allow room for a buyer to do a minimized rehab for around $15-$19K!!! I have the full rehab evaluation report, and ways to cut the costs...I did the Evaluation to insure that my numbers were intentionally inflated (example: it doesn't take $940 to remove and repair 55' of Fascia and soffit...wood is cheap!).

the REI Club members I have met and networked with are thrilled with 35% in this Market and can't believe a "newbie" has arranged this deal (only one DG'er in the bunch!!) and are contacting their buyers about this as well (I will be doing the assignment @ 40% locally, for $58,679 if I get my offer fast.

The 50% number is for DG'ers only in the event someone has a buyer (typical in Birmingham) that will be thrilled with 35% (you could assign @ $63,569.00 on the 35% number @ FMV!). The local Birmingham people know that Helena is "One of the top 100 cities in the US to live in" and that the properties in the $100K to $200K range will move faster than other areas in this range. Also, the FMV (based on Zillow, Homegain and Domania) has shown a +$2,000 gain in the past 30 days.

Again...IM me if you would like the info, the Rehab Evaluation / Repair Report and to talk via phone regarding this "DG exclusive" 50% assignment deal. Get it before it goes...I have the Escrow Promissory Note written for 15 days from today (4/11/11) and am excited to get my business off the ground, and will assign it asap.

If the veterans can see any holes in my numbers, or think I am doing something backwards...I always enjoy constructive criticism.

Thanks All...and wish me luck!!!

Jon