DFW REI Club

 Dallas/Fort Worth Real Estate Investor Club

OFF MLS Brick 4/2/2 in North Bedford

  • 27 Jul 2017 10:06 AM
    Message # 4998080

    Property Type: Single Family House; OFF MLS Brick 4/2/2. CASH BUYERS ONLY ~ (210) 744-3635

    HEB Schools! Great comps immediately surrounding the subject property. Very LOW DOM, great curb appeal, and wonderful schools make this a deal for anyone with the cash to close.

    This house is in need of cosmetic updating, a new HVAC, and HVAC ductwork will need repairing. Kitchen and bathroom have been updated already.

    Est. After Repaired Value:$290,000
    Asking Price:$205,000
    Est. Cost Of Repairs:$30,000
    Est. Profit Potential:$55,000

    Last modified: 27 Jul 2017 10:08 AM | David Hammond
  • 27 Jul 2017 9:41 PM
    Reply # 4999054 on 4998080
    Robin Carriger (Administrator)

    Just a quick word on this... I haven't comp'd this house, but, if we assume the other numbers given are accurate, the profit potential is going to be less than $55K due to closing costs, realtor fees, holding costs (taxes, insurance, utilities, debt service...), etc.  I know we're still in a seller's market, but we mustn't forget the basics.

  • 31 Jul 2017 9:10 AM
    Reply # 5003745 on 4998080

    Thank you for clarifying, Robin.

    For those looking at this post, I posted those numbers assuming that an experienced home buyer/investor would estimate those costs and apply them accordingly. 

  • 01 Aug 2017 10:24 AM
    Reply # 5006288 on 4998080

    David, its just very misleading to post like there are no other known fees, especially to new people that are not as versed in the costs to do the deal as Robin points out.  Certain websites do this as well as pretty much all wholesalers. Just running quick numbers on a 12%/2 point hard money loan, it could be close to $10k or more to close, holding costs could be $3-3500k a month, then commission & such selling costs could drop your profit down to $15-20k making you 7-10%. Not going to make you rich, and that does not factor any expenses higher than $30k. 

    In order to make a nice return, MAO in this case is a purchase of $173,000.00. Buying at $205,000.00 eliminates great profits, FYI...  

    Last modified: 01 Aug 2017 10:25 PM | Robin Carriger (Administrator)
  • 02 Aug 2017 11:34 AM
    Reply # 5008680 on 4998080

    Any investor worth their salt already knows they can't trust a wholesaler's numbers.  They also know wholesalers do not include any costs in their profit estimates.  David did nothing out of line with the rest of his industry.  If an investor is so blind or inexperienced that they believe the numbers as presented, they will learn a hard lesson very quickly.

    Thank you,
      Neil Aggarwal
      NSA Partners, Ltd.

    Last modified: 02 Aug 2017 11:35 AM | Neil Aggarwal
  • 03 Aug 2017 12:57 AM
    Reply # 5009725 on 5008680
    Robin Carriger (Administrator)
    Neil,


    DFW REI Club has always been a place of safety for newbies.  As God is my witness, in every property I've ever wholesaled, I've always subtracted costs in my profit estimates, given honest (not optimistic) ARV estimates, and given accurate repair estimates to the best of my ability.  One of the ways inexperienced investors learn and hopefully avoid the hard lessons to which you referred is taking the time to participate in this Discussion Forum.  Condemning inexperienced investors to simply learn the hard way from their mistakes seems a little terse to me.  Please tell me I misunderstood your last reply.

    Thanks,

    Robin


  • 03 Aug 2017 2:21 AM
    Reply # 5009788 on 4998080

    Robin:

    I was not saying we should let new investors hang out to dry.  We should help them understand the pitfalls they may run into. I was just trying to say that the criticism towards David was not warranted because he presented the info in a manner consistent with his industry. I certainly did not mean any disrespect to anyone.  I apologize if my post came across wrong. 

    Neil

  • 03 Aug 2017 10:42 PM
    Reply # 5011547 on 4998080

    Great conversation with knowledgeable and spot on replies! The unfortunate news is that this game has changed so much since I entered 7 yrs ago.... Investors are here from all over the country in many different forms, entities and corporations, buying group etc. Many with highly sophisticated marketing and cold calling tactics. Wholesalers today are getting buyers with the numbers shown as many large entity investors flocking the DFW these days don't play to basic old rule of 70% of ARV less repairs. They are paying top dollar and hedging on appreciation and/or decent annual returns of 8% or more....So the 70%  minus ARV is no longer in play with wholesalers. Wholesalers know this and they are killing it! Their target market are the investors that look at the purchase very much differently that a rehabber/flippers. Flippers/rehabbers can no longer anticipate finding deals or doing business with wholesalers. If they choose to do so they should anticipate minimal margins. This doesn't mean that flippers/rehabbers can't survive, it simply means that flipper/rehabbers cannot and should not rely on wholesalers but must find their own deals. The old days are gone! Maybe forever. 

    Last modified: 05 Aug 2017 7:42 AM | Steve Labus
  • 08 Aug 2017 10:04 PM
    Reply # 5020064 on 4998080

    At least post it saying "gross potential profit" not "estimated potential profit". Everyone has valid points here. 

  • 16 Aug 2017 6:40 PM
    Reply # 5033168 on 4998080

      Wholesalers pitching inflated numbers is inevitable, really. Think about it. Who wholesales as their primary strategy? Newbies who have no cash, credit, or experience; and people working for wholesale companies that prey on newbies with little to no experience but with some cash and/or decent credit. They're just following that company's training. Please understand that is a general blanket statement which applies to the majority. I have ran across people new to the industry who began wholesaling and actually gave accurate, legit, well researched numbers, and I am sure there are those individuals at wholesale firms who strive to do the same. David may very well be one of them. Those type people have proven to be the exception though, not the rule. Which sheds a bad light on all those who wholesale.

      Wholesaling should not be your main strategy, but rather incorporated into a suite of strategies for you to use where appropriate. You can bet a wholesale deal coming from an investor who owns properties and has multiple other properties under contract with the intent to purchase them will look a lot different, and generally be more accurate, than a one coming from someone working at a wholesale firm or trying to get started in real estate investing.

      ...Just my two cents.

    Last modified: 16 Aug 2017 6:42 PM | Dwayne Modisette

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