Posted by Mike L on May 05, 2005 at 14:47:14:
This is good food for thought, thank you Rick.
whats a good profit %?? - Posted by Rick Sferro
Posted by Rick Sferro on April 25, 2005 at 07:49:38:
Hello,
This is my first posting on this website, I must say it is an awesome site, I am currently investing in residental real estate in South western PA, my question to everyone is what is a good profit % to shoot for when flipping properties?? Obviously everyone would like to make as much as possible but what are some minimuims that people strive for? We won’t buy a house unless we know we can “flip it” for at lest 50% of our total costs involve, example, if the house & closing costs come to 15k & we invest 5k in improvements then we need to sell the house for close to 40k, is this too much to be asking for?? To us its not work investing 20k only to sell it for 25k and make 5k, Any help or ideas would be great!!
Re: whats a good profit %?? - Posted by Mike Melvin
Posted by Mike Melvin on April 25, 2005 at 23:24:45:
well the easy answer is “what is your time and effort worth. If a $5000 comes about becuse you spent 2 months on a rehab and it was the only one you worked on for those 2 months then dont give up your day job.
I live by a simple plan and one that i am sure is shared by many on this site. " I make money when I Buy Not when I sell.” the deals that I pursue have to make sense and if you look at enough deals the better deals will jump out. i will no longer look at a deal unless i can make 7-10,000 per month until my exit strategy kicks in for multi unit property, 5-8 thousand per month per single family home or 50 % yield on mobiles.(Im diverse). You set your own goals. these are mine. Negotiate their pants off in the beginning and assume your expenses to be through the roof. If you give yourself that saftey net from the start, you will last a lot longer. Thats my 2 cents. Good luck
Re: whats a good profit %?? - Posted by Mike L
Posted by Mike L on April 29, 2005 at 14:29:40:
Hi Mike
Are you from the Saint John NB area? I think I saw your success story on this site. I have read the carlton sheet course a few times and would like to get involved in REI but I am still alittle nervous. I would love to pick your brain a little about the local market, loans…etc.
Mike L
Re: whats a good profit %?? - Posted by mike
Posted by mike on April 29, 2005 at 14:31:47:
I should also have mentioned I too am from the area (grand Bay) and am lookig to invest in SJ market.
Re: whats a good profit %?? - Posted by Mike
Posted by Mike on May 04, 2005 at 18:49:24:
Hi Rick
Thank you for your kind offer to assist. I have read thru the CS course a few times and it is still soaking in as there is a lot of info for a newbie REI. I feel I should jump in and start into this but have a lot of reservations and concerns about whether I really do need some cash ( I do have some credit cards and a line of credit) or if a bank or other lending institute will just laugh me out of the office if I suggest no money down deal. I see you mention you have done some no money down deals Rick, how did you structure yours? I was thinking if a seller was asking say $60.000 for their home and agreed to sell to me for $55.000 would the seller/bank be willing to structure this as the $5000 as my down payment on the property? Have you ever dealt with a Mortgage brokers?? Are they more flexible than a bank?
I would like to buy a multi family property (probably a 4 unit) as in my area I see this as the only option to have any real positive cash flow. But I see many on the boards saying stay away from multi?s and stick with Single family units?what has been your experience Rick? Will banks allow you to leverage equity in a rental property to buy another? CS says you can but I would like to hear that from someone who has actually done it.
These are just a few questions I have rolling around in my head. I want to think you again for your insights Rick; it is always amazing to me how nice people can come out of the wood work to offer help. Much appreciated.
Mike
Re: whats a good profit %?? - Posted by Rick
Posted by Rick on May 04, 2005 at 08:43:40:
Mike, I’m actually from southwestern, PA and I’ve never bought anything from Carlton Sheets but I’ve heard good things about what he sells, we started our investing by going back to the basics of real estate purchasing & financing, all of our properties we’ve purchased with no money down, if I can be of any help to you, let me know
Re: whats a good profit %?? - Posted by mikeL
Posted by mikeL on May 04, 2005 at 18:51:31:
Hi Rick
Thank you for your kind offer to assist. I have read thru the CS course a few times and it is still soaking in as there is a lot of info for a newbie REI. I feel I should jump in and start into this but have a lot of reservations and concerns about whether I really do need some cash ( I do have some credit cards and a line of credit) or if a bank or other lending institute will just laugh me out of the office if I suggest no money down deal. I see you mention you have done some no money down deals Rick, how did you structure yours? I was thinking if a seller was asking say $60.000 for their home and agreed to sell to me for $55.000 would the seller/bank be willing to structure this as the $5000 as my down payment on the property? Have you ever dealt with a Mortgage brokers?? Are they more flexible than a bank?
I would like to buy a multi family property (probably a 4 unit) as in my area I see this as the only option to have any real positive cash flow. But I see many on the boards saying stay away from multi?s and stick with Single family units?what has been your experience Rick? Will banks allow you to leverage equity in a rental property to buy another? CS says you can but I would like to hear that from someone who has actually done it.
These are just a few questions I have rolling around in my head. I want to think you again for your insights Rick; it is always amazing to me how nice people can come out of the wood work to offer help. Much appreciated.
Mike
Re: whats a good profit %?? - Posted by Rick
Posted by Rick on May 04, 2005 at 21:28:39:
Mike,
When we first started we had the same list of questions, I’ll do my best to answer all of yours. First of all, yes you need good credit & cash does help, I’d stay away from mortgage brokers, they will charge you a % to land you the deal you’re looking for and its def. not worth it. If you’re going to get into real estate I’d start making friends at Banks, with real estate agents and pick a good attorney. I am very good friends with both bank presidents that we deal with, before I started in real estate I had no idea who they were. Find a real estate agent that will locate properties that fit your description & budget, they’ll be able to tell you who is motivated and who is holding out for the asking price. Last find your self a good attorney to do closings, real estate investing is still business and the more people you know the better you’ll be able to network.
About buying investment units, we tend to lean towards single family homes, they are easier to rent, easier to sell and banks find them more appealing than multi-units, there is nothing wrong with multi-plexes, it just limits your market to investors if you ever want to sell.
For buying property with no money down, it actually takes money, but the deal is you get it back, after closing. It does take a few requirements though, the propery you are buying has to be worth more than you are paying for it. Take for example our 2nd property was a bank repo, it was listed at 29k we closed at 14,500 (we always nogotiate a good deal) the propery appraised for 20,500, so we automatically picked up 6,000 in equity the day we signed the papers, because the equity was there, the bank gave us a 2nd mortgage for the closing costs and we put another 500 (with the option to put $4,000) in our account from the deal, worse case you use your own credit to purchase the property the take the 2nd mortgage to pay yourself back. Once you have some equity built up, pay cash for your properties, you’ll save a ton in closing costs, then if you are going to “flip” the property you can take out a 1 year mortage, pay yourself back, make the improvements, sell the property and when you pay the mortgage off, your credit score will skyrocket (big points for paying off mortgages) as you rack up properties & equity, bank will give you a “blanket” line of credit but usually only 80% of the total value,
This might not be how everyone does it, but it works for us, the only other advice I can give you is sometimes the best deal is the deal you walk away from, don’t ever pay too much for a property, you’ll pay dearly in the long run, if you can’t get the deal you want, than move on.
hope this helps,
Rick