Beginner looking for advice

Bird Dogs, Wholesaling
1

Hi everyone, long time lurker and first time poster :slight_smile:

I’ve been thinking for some time now about getting into real estate, specifically the flip and sale of distressed properties. I have a long history doing maintenance in the multi-family industy with a focus on renovations so I’m not new to dealing with distressed and damaged property and making it look new again. I’ve also flipped a couple investment houses for my old boss for considerable profit into his pocket.

The biggest setback that has prevented me from investing in flipping real estate has been my lack of funding for the flip and knowledge about the pruchase and sale of such properties. Though I have good credit (above 700) I have very low savings. I also have no idea how to find distressed property, or find the funding to purchase and flip it and need advice in these areas. Thanks in advance for any advice you guys can offer and feel free to ask me any questions.

-Owen

2

Most rehab lender will do 65 to 80 ARV( After Repair Value)

Here is the calculation:

Offer= (ARV x 72%) - ( Repairs + Holding + Closing cost )
Note: if you want low closing or no closing cost will require higher rate.

530,000( ARV) X 72%= 381,600 is enough to buy $380,000 short sale but not enough to do repair of 38,000. ( see below) That 38,000 down is your repair.

10,000+18,000( example: 386,000@ 10% = 38,600 divide by 12 months. Hold for 6 months $3216 IO X 6 months =$ 19,299) +Closing cost $10,000 = 38,0000

What if the property sit longer. Where is your reserve to cover your ass.

381,600 - 38,000 (10,000+18,000+ 10,000) = 343,600 Offer

Some lender max at 80% due to borrower cash. If you had gotten a higher % of ARV, you would not have to put the cash.That is leverage. the 38,000 I would keep just as emergency to cover my ass if the property will not move. Pad the repair alittle.You pull the wall, sudddenly you have water damage behind the wall.

530,000 -418,000( 380,000 to buy short sale + 38,000- Repairs ) = $112,000 profit

3

Thanks Johnny! Yeah, I’ve been in the business of rehabbing long enough to know that once you start opening up walls anything can happen! :o

That formula is really helpful! :slight_smile: I have been looking around to find a few lenders that will do a 65%-80% ARV loan, as well as looking for some local realtors that specialize in fix/flip properties. Thanks again everyone for advice! I’m hungry for knowledge and really want to get into this! 8)

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THANK YOU!