Hello professionals!!! I must first praise the people who decided to start this group...
Hello you pros !!! I must first commend the people who decided to open this group, every post, gold !! ? Currently I am negotiating with a guy who has flips experience, suggested I enter into the project with him as an investor, I put the money in there work, expect to split the profit 50 / 50 in the worst case sell the break even property. This is an amount of $ 150,000 $ in Pennsylvania and is expected to sell at 220 K
Good Morning
On the face of it the numbers sound excellent.
The paper has a gross margin of 30% from the top.
220 less 30% = purchase and renovation cost (about 150).
Profit sharing can certainly be this way (depending on the deal, entrepreneur, experience, location and more).
I would like to see:
Past deals he did
Customer phone numbers.
I do not understand the phrase max sellers at the price we bought. I would like to see a risk assessment.
Of course there are risks in every transaction.
Usually the two main risks:
1. Wrong renovation price
2. Wrong Sale Price (ARV After Repair Valve).
I believe you were presented with the properties on which the future price is based. Also, the properties to which the developer compares the transaction (apples to apples) should be properly checked
In addition, you need to know how to manage the project as there are other risks such as:
1. There is a risk that the contractor will not finish the job.
2. Wrong form of payment to the contractor when his money and work were done or not completed.
3. Although the contractor performed his work, the work is not sufficiently high quality or not good enough (periodic review)
4. The finishing level of the renovation does not match the location of the property.
5. Do not check DOM Days On Market correctly.
6. Don't read the market correctly (for example, there are lots of properties for sale in the same area multiple days).
Therefore, you need to know how to properly manage the transaction and minimize the risks.
Successfully!!!
The expectation is to buy the house at 50k, and invest up to 100k to renovate
I wanted to ask you as experienced, what are the accepted market conditions, (50 / 50)?
And did anyone go into this kind of investment / project?
What the dangers are here, after all, I am the owner of the capital, and the owner of the profession is the experience
Good luck
If the renovation expectation exceeds 7k the boundary deal is a loss
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