1st Deal Came and Went

[SD Newbie]

Greetings all,

I wanted to post my experience of my first deal attempt to get feedback on what I could do better the next time, which should be real soon...

It was a fixer that I planned to flip for a profit.  They were asking 350K 'AS-IS' and I knew I wasn't even going to think about offering that.

I went out and viewed the property with my buddy who was a licensed contractor.  It was an old property - built in 1921 - no upgrades anywhere.  The tile used to build it originally was asbestos so that need to replaced with stucko to say the least.  A new roof was needed, but it was going to need about 50K worth of improvements done to the property.  It was a 2/1, 850sqft, foundation was cracked... it had some issues... now here is where I ran into a problem...
I planned on using a HML to finance this and knowing how the interest rates are with those guys I believed I needed to make an offer that was at least 100K less than the asking price for it to be profitable for everyone, but the seller wouldn't go below 300K.

Making that as an offer using a HML I dont think I would have made a profit...

I think the answer to my problem would to have had a different private lender who would have partnered with me on this deal and we just split the profit after the sale....

Anyway, I have more opportunities available but i need to find me a couple  of private lenders outside the realm of HML's that I can get access to that would want to partner in on some fixers...

Any of you gurus have any advice for me?  I'm jumping out there and trying to make this happen in the midst of the competition...

[ARamirez]

Newbie,

WOW! 350K for a 2/1 w/ 850 sqft? Are you in California?

Well looking at those numbers they are pretty big for me, mainly cuz I am a REI noob myself and I want to know I can cover the payments if all heck broke loose. I hope you are taking precautions such as that.

Anyways, analyzing the deal you are for sure taking on a MAJOR rehab. Also, are you familiar with the abatement process for those tiles? I am not, however I know that it takes licensed professionals to pry them babies up and dispose of them properly (permits, special enclosed dumpster, men in suits and gasmasks and saran wrapping the house from the inside while it is being done).

BUT if you are ready for the MAJOR rehab challenge and that the house would appraise for over $380K-$400k... I would want to know if the owner has any equity in the house and if he does, does he have to have it in cash right away. If there is no big rush for him to get cash see if he can carry back a 2nd on the property.

Well there is just a lil to think about, but this deal to me seems like a lot of work with ALOT of zeros at the end of the numbers and 'I' would rather rehab 2 or 3 $80k-$100k homes and make the same amount of profit.

Just my $0.02...