Wholesale Deal #1

The first wholesale deal is wrapped up and on the block for sale. It took a while to get this under contract. The current owners were a bit hard to get a hold of. I noticed a lot of signatures on the contract when I got it back.

This house is at 3801 Larchmont Lane in Richmond. It sits on a corner lot and has a very nice (large for the city)  level lot. My first rehab bid came back lower than my estimate. That was good to see. I know my second will come back higher.

When doing the numbers, someone can pick this up for $53,500, rehab it for $26k & potentially walk away with $21k in profit. Doing the comps, I have it potentially selling at $101k. I am sure it could go for more. That's just the quick sale amount. I have the after repair value at $112,400. Since most of the houses in the area are going for much more, I know this would sell fast.

To anyone interested, I can serve as the project manager for this property and ensure that all the repairs are done correctly. Also, I have already contacted the property management company to potentially manage the house.

The estimated rent for this property is $850 to $950. With a minimal cash out of $7k (65% Loan to Value), you are looking at a potential positive cash flow of $204 a month.

Not to bad. The actual deal is posted in the DEAL link to the right of this blog. I will be placing ALL the deals there.

Contact me if  you are interested.

Bill Rippe
804-484-5995

Out with the family

Today, Kelly had the day off of work. So, the three of us met with our Petersburg, VA Realtor. We looked at 5 different houses.

Each of the houses were in different levels of need.

The first were actually a pair of duplexes. They are on the market for $9,900 each. Wow! That's a heck of a deal! You would think. This is why you go INTO houses. 1) the roof needs lots of repair. 2) the interior needs lots of repair 3) the exterior needs... lots of repair 4) They look big on the outside and are SMALL on the inside. 1 bedroom to be exact. Not what we are looking for.

Next we went down the same street a bit. This house was at the top of a steep staircase with a steep driveway. Looking at if from a rental perspective, lots of work again. My two issues with each of these properties - the After Repair Value would be less than the purchase price plus the repairs. In the hole right out of the gate for an investor.

NEXT, this one was purchased be an investor and is now for sale. There is a lot of plumbing work that has been completed. I addition, most of the walls downstairs have been re-drywalled. The one thing he/she did not do was fix the roof first. This has caused a good mold problem and destroyed some of the completed work. Again, there repairs would have been above our threshold.

Then we went to one that was 2000 sq ft, there abouts. The two upstairs rooms were in good condition. Just some cleaning, painting and floor work. Downstairs, 2 new bathrooms, major floor repair, kitchen and lots of other stuff. We are going to run some numbers on this one. One issue, the seafood restaurant across the street smells like road kill.

It did get better. We looked at another in Dinwiddie County that our Realtor has listed. I am going to get his comps. It has minimal cosmetic work inside and out. It's brick, so the exterior looks good. Perfect for a small rental. We are going to run the numbers on this one and maybe a possible offer.

I need good comps on that one. Online it is not that promising.

When we were out, we saw a few more REO (bank owned properties). I am working on some hard money ideas to get these properties. More to come in later posts.

If you are interested in investing in and around Richmond, VA, please contact me.
Bill Rippe

The next house

Like I said, I would tell you about the next house.

This is first of four that I looked at on Thursday. The second was occupied and needed some roof work. The third we couldn't actually get into. Someone stole the key box. The property itself is one block off a from a street of ALL renovated houses. So, it has some potential later.

The fourth was one that was under contract then released. The layout was very odd. I believe at one time it was subdivided into two 1 bedroom apartments. Needs a lot of work as well.

Back to the first one. This is a 1405 sq ft 4 bedroom cape on what looks like a quiet street. There are several churches nearby and is a block of a major road and the bus line. The house has been on the market for over 200 days (214 if you count today). There is also a very nice level back yard.

The asking price on the house is $42k, which is $30 a sq ft. Doing the comps, I am getting from $73 to $80 per sq ft. I did see in the comps that there was a house that was purchased for $39k and flipped 4 months later for $179k. Additionally, looking on ZipRealty, I am seeing houses sold in the last 6 months comping at $101 sq ft. This places this house after repair potential value from $102k to $141k.

Now for the rehab estimate. I am looking at $34k in repairs. Probably less. I plugged a lot of stuff in that probably won't need to be done. These all depend on whomever purchases the contract.

My initial offer was $33k on Thursday evening. Today I had a counter offer of $40k. This is within my window of purchase. Since I wanted to see if I could get a little more, I asked my Realtor to see if they would take another $2k off the top. If yes, then we are going forward.

I'll let you all know what happens.

Bill Rippe
Looking of opportunities in Richmond, VA? Let me know.

A tough 2 weeks

This post is going out to all my fellow Carlsonians. A smart and successful business man once said,

Whatever you do, do with INTEGRITY.
Wherever you go, go as a LEADER.
Whomever you serve, serve with CARING.
Whenever you dream, DREAM with your all.
And never, ever give up.

Curtis L. Carlson 1914-1999

Well, after the last house fell through with my numbers being so far off, I was in a bit of a funk. Then, Kelly & I decided to pull Morgan out of Daycare and we would home school. Since I am home, we would school in the morning, while he had his quiet time or nap, I would make phone calls & work. Then, if need be, he & I would go out to see houses.

The first week was rough, new schedule, not many houses to look at & not a lot of positive things going on. Both he & I were in a learning curve. Him getting ready for Kindergarten & I the Real Estate investing business. It was tough.

This week, Kelly kicked me in the butt. I can hear most of you going "You go, Kelly," right now. She deserves it. I got back on the horse & started surfing for houses. Two things happened. One, my current Realtor showed my some more houses, one which I have an offer on. More on that later.

Second, I found another Realtor to assist me in another market. He has been working with investors for a while & has several rental homes of his own. He gets many leads before they hit the market. We met today and I think we clicked. Kelly & I will be going out on Monday to see some houses with him.

Again, I am positive about what is happening. "Never, ever give up." I wasn't there. Though I felt low.

My point of attack has changed. I am enjoying everyday with my son, I am looking at houses & placing offers. Morgan is learning along side of me and will see that a strong work ethic goes a long way. After our schooling or our house visits, I am taking the time to show him things that most kids probably won't get to.

In the end, this venture into Real Estate investing is worth it & we will succeed.

Reality of a Rehab

I know it has been a while since I have posted. Which means I have a lot of catching up to do. Let me begin with my last blog. Oh, & I have pictures this time.

When we last left our hero, he had placed a counter offer on a house that was accepted. The next step was to get the contractors out to check my rehab numbers. I decided to get several bids on the project. This was done for a couple reasons.
 

1) It gave me a chance to meet several of the contractors in the area. Get to know their style and some insight into the Richmond market.
2) I wanted to get a good sense of where rehabs were going to fall. I knew from my hotel experience, that you get several bids. The lowest isn't always the best. Neither is the highest.

What type of rehab needed to be done? The big items were the electrical, kitchen & plumbing. Technically, there wasn't any.

So we met. All the bids came in over what my rehab estimate was. One was $10k over and another $30K over. Not good. I had been told that most rehabs run around $34-40k. HA! Not today.
 
Now I had to make a business decision. I was within my 10 day window. When I ran all the actual rehab bids, purchase price, the after repair value together, the numbers were bad. I told my Realtor to void the deal. In order for this deal to work, the seller would have to come down more than $25k off his price. This was Sunday June 20th. The next day, I saw that his asking price had gone down $10k.

It's only business and I am treating it that way. Onto the next house and the next offer.

Just a side note: I have been looking at all the bank owned properties that are around the area. I am going to begin looking at these and running some rough numbers. Why?

To show what is out there and attract some buyers. The amount of houses that are below $30k in incredible. The only issue is that a majority are bank owned and it is tough to get them. If you are interested in getting into some cheap houses, let me know.

Until next time....

Bill Rippe

First win!

Woo Hoo! I am getting excited. This means I need to get my emotions in check. I have been told over and over again, "Keep your emotions out of this." It clouds your judgment. Ok, enough downer!

Let's get you all up to date. We received a counter offer from the owner of the $46k home. Yes, that's the one that was in the picture in the last post. He countered with $55k and asked about moving the closing closer in. My Realtor & I spoke on the phone a few minutes about it. He stated to not give an answer now and give him a call back after I analyze the numbers.

What got me was that $55k was at the top of my offer bracket. I was in a quandary. What to do now. I looked at my rehab numbers and they were strong. About $40k. I did not want to leave anything out. So, I got on the Wii fought some bad guys and walked on the treadmill for 1.6 miles to clear my head and think about it.

I came back to my Realtor and said let's give him $52 and let him know that my rehab numbers need to be inline or this wasn't going to work. He stated, that or he would have to bring the price down. So, we went for it.

Yesterday afternoon, I got my answer. They were going to take the offer!!

Today, I have been attempting to reach contractors to give me an estimate on the rehab next week. I have left a few messages and spoken with a sub. The sub is going to get the General Contractor in contact with me. The plan is to get 2-3 quotes by Wednesday and get my package together.

Additionally, I spoke with the property management company I want to go with in the package. We discussed the potential rent in the area. My estimate was around $850 to $900. His was more like $1050 to $1100. Ok, that's cool. Just using $850 in rent, I am showing positive cash flow. $1050 to $1100 is better.

The next steps are to solidify these rehab numbers and get the package together. When we visit the property next week, I will post additional pics of the inside.

Think you might be interested in flipping or owning this property? Contact me.

Bill Rippe

3rd offer on the way, or is it?

Ok, I am learning not to leave my posts unfinished then come back to them. Too much can change in a day. I need to do a little re-cap before moving onto something else.

If you remember, or read lower down, I placed my 2nd offer on a house. As of Saturday, there was no call or answer on the offer. They must have seen the offer and decided "no." So, I was 0 for 2. On to the next. 0 for 2 was the original title of this post.

My Realtor called her to see what the status of the offer was. Since we had not heard anything. Come to find out, she received it via fax and did not see it until Saturday. Our offer expiration was 5pm Saturday. I let my Realtor know to let her submit it and we'll just extend the offer time. This house is in an estate and a judge has stated they need to sell it. I have offered $25k with not a strong feeling of getting it. I can go a bit higher if I need to.

Again, that was Saturday. Yesterday, I worked up 2 more offers. These I feel more strongly about. The first, conservatively comps out at $137k. With repairs, costs and misc, I have a bid in at $46,900. The house is another where the current owner purchased the house and began some repairs. Now he cannot finish it up.

My Realtor called me today because they had a question about something I had written in the margin of the contract. My initials. HA! Bad handwriting strikes! Need to work on this. I am anticipating this offer to go.
The repairs are not as extensive as the past 2 houses. I am estimating repairs around $40k. Still hefty, but doable.

The 2nd house is currently occupied. The owner has given us a bottom number they will take. This helps a lot. My rehab & comp numbers are close to that bottom. They are asking $45k with a bottom of $35k. The comps on this one are tough. Not a lot to go on. When I average the 5 houses I can use, I get $96.79 per square foot. That puts this house at $119k. I just don't see it.

I am told to trust my gut. The more I do this I see why. My conservative estimate puts it more $80-85 per square foot or $99k to $105k. My Realtor is going to dig a little deeper into the comps to see what he can pull out.

More later.

Bill Rippe

If you are interested in Real Estate investing in Richmond, VA, please let me know.