PROCESS:
1. Build the relationship with the agent (SJ REI Sunnyvale, exchange cards)
2. Get a lead
3. Run comps
4. Set up a time to see the house
5. Like the house we submit an offer
6. Obtain hard money funding or private
7. If we win then we close escrow
8. Fix it up
9. sell it
Run the comps
STEP 1: Understand the property
2124 Terilyn, San Jose, CA 95122
notes: East san jose, near freeway, not the best not
little congested, new homes, eastridge, pretty high demand, restaurants
buyer: home owners or investors to rent out
vietnamese or hispanic
not too busy street
decent looking, enough parking for everyone
neighborhood: ok 7/10
schools: ok decent 7/10
3 beds | 2 bath | 1,128 sf | Built 1961 | Lot 5,100 sf
1 story | 2 car attached | SFR
notes: roof?????? most likely $10k
STEP 2: Understand the values in the area AS-IS …. ARV
AS-IS = $550k and same sf 1,100 sf 888 sf
Our goal is to get less $550k
$525k
ARV=
COMP #1: 2053 Terilyn (Same street!!)
SOLD for $750k on 2/12/18
3 beds | 2 bath | 1,304 sf (slight bigger ours is only 1,128 sf about 200 sf bigger)
Condition: livable, move in, not updated but good enough for rental
THEREFORE… if this sold for $750k NOT fixed up…. and 1 year ago maybe $750k to $800k
COMP #2: 1542 Pensacola Dr
3 beds | 2 bath | 1,128 sf —- SOLD for $801k on 6/7/18
Condition: Lovely one story Home. Great opportunity for First Time Home Buyers or Investors. Open floor plan. Kitchen has wood cabinets, granite counter tops and tile floor. Living room and all bedrooms have Original hard wood floors. All rooms have crown molding and baseboards. The 2 full bathrooms have tile floors. Double pane windows.
THEREFORE…. we can probably hit $800k because this was a year ago and 2019 prices are still about the same , same exact floor plan
COMPS #3 :
STEP 3: UNDERSTAND THE FLIP NUMBERS OR WHOLESALE
Scenario #1: $525k
Price: $525k
Repairs: $50-75k
Total costs: $600k
ARV: $800k
Gross Profit: $200k
Closing costs: 5-10% = 80k
Net Profit: $120k (IF ALL CASH)
Hard money costs: $800k @ 10% = $80k (let’s say 6 months) $40k in interests
TRUE NET: $80k
Scenario #2: 550k
$55k if we had to go $550k
tell agent to submit an offer $525k…… and then $550k
Q. BRRRRRR
Buy Rehab Rent and Refi
WHY NOT BRR??????
Price: $525k
Repairs: $35k
Total costs: $560k
RULE of thumb: Every $100k in loans is $500 in monthly payments
Q. what is your monthly payment $2,500 round up $3,000
q. how much can you rent a month $3,100
so. NOT CASH FLOW CAN’T
$400k repairs: $30k total costs: $430k VALUE now $750k-800k
Loan payments – $2,000
Rent: $3,100
Cashflow : $1,100
REFI $500k out and pay off the $430k
loan payments on on $500k = $2,500
that’s how you BRRRRRRR
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