brian-gibbons
01-06-2005, 09:27 AM
This was one of my coaching emails.
The student is in upstate NY (his name has been changed), a great market of cheap 3/2 B homes. This is a LO/CFD hotbed of opportunity!
Here is his email:
================================================== ======
-----Original Message-----
From: Bob Johnson[mailto:bob@stny.rr.com]
Sent: Wednesday, 5 January 2005 2:11 p.m.
To: 'Brian Gibbons'
Subject: land contract
Hi,
Can I have a copy of one of your CFDs? I’d like to pitch one to a house listed with a realtor. The purchase price is 60K. I want to put 3K down and pay 8.5% interest, then flip it to a contractor who is looking for a house and can put down 10K. I could type up one from the document you gave me, but I’d rather get a blank one if you have one.
I suppose I’ll also try to offer a lease/option. However, the house needs a ton of work.
Cheers,
>BOB (name changed)
================================================== =====
My response:
Hi Bob:
I think we need to have more info.
Here is a Property Analysis form and an analysis xls.
Fax# to fax is Wilmington Delaware: fax 302-691-4762 USA Or scan and send, please PRINT NEATLY
The motivation of the Seller is most important, not the property.
We need to buy renovation project houses 20% under market (IF NOT MORE) of APPRAISAL IN BAD SHAPE done for the Risk involved.
Here are some numbers I worked out as an example:
OFFER #1
DUMP APPRAISAL $45,000
Work Needed $10,000
LOANS NOW $15,000
Equity $30,000
New Appraisal (after Labor & Materials) $80,000
x .80 $64,000
LESS costs $10,000
LESS LOANS $15,000
=========================
Offer $39,000 ALL CASH
Owners Get $39,000 - Loans $15,000 = $24,000 CASH after loans paid
OR
================================================== =====
OFFER #1
Lease Option a Junker with an Equity Split Offer
Offer to pay PITI for 12 months
Ex) Say the loans are only $200 a month PITI
You pay that for rent
You pay $1 for option With rights to improve and rights to sub-lease and sub-option
You record the option NOW to protect yourself
You both agree to a mechanic's lien to protect your improvements
You need your money right away when you improve the property
So you preserve your cash flow and servicibilty issues with loans
(Does everyone understand servicibility? Bankers only care about TOAL LOANS vs TOTAL VALUE. They only give you 70% or so of collected rent to SERVICE the loans. Alot of time THAT IS RUNNING AT A NEGATIVE CASH FLOW).
AND.....
If you can get a builder to CARRY his labor and materials for a 25% EXTRA JOINT VENTURE BONUS for 180 days
Labor $5,000
Materials $5,000
=====================
Total $10,000
Joint Venture w Builder 25% more or an extra $2500
Say something to the GC (Gen Contractor)
"Hey, I make money with my words and my pen, not hammers and nails and lumber.
We want you to profit if you help us with cash fllow.
You buy the materials, but order from our account at Home Depot (whatever) and pay it on the 1st of the month.
You need to pay the account on time or you lose the bonus of $2500.
If there is any delay over 3 business days, it'll be a penaty of $100 a day off of your bonus.
Making 25% on your money is good businees, cuz we do a ton of these quick fast renovations.
A good builder is hard to find.
Are you interested in Joint Venturing with us?"
Your OUTFLOW is
Lease $200/mo x 12
Option $1
No Outflow for Labor and Materials
==========================
Builder's OUTFLOW
Over time Pay for Materials and Labor of $10,000 ================================================== ==
NOTE: You set up the MATERIAL's ACCOUNT at YOUR HOME DEPOT, and have the BUILDER PAY THAT ACCOUNT ON TIME EVERY 30 DAYS.
CONTROL THE COSTS AND MAKE SURE IS PAID ON TIME.
================================================== ========
Look at market rent for property
See if you cant rent out to someone for CHEAP RENT while you improve.
Get the Master Bath and Bedroom done COMPLETELY first.
Have them live off of a HOT PLATE like a dorm room in college for CHEAP RENT.
================================================== ========
Say it takes a year
DUMP APPRAISAL $45,000
Labor & Mat: $10,000
-----------------------
Total IN $55,000
DUMP APPRAISAL $45,000
LOANS NOW $15,000
----------------------
Equity $30,000
New Appraisal $80,000
LESS Builder Costs -$12,500
LESS PITI costs ($200 x 12) -$ 1,200
Less Contingentcies (10% Gross) -$ 8,000
---------------------------------------------
Your Gross Profit +$58,300
Minus Purchase -$45,000
---------------------------------------------
Net Profit FOR YOU $13,300=========================================== ===============
I'll get the CFD doc.
Brian
`````````````````````````````````````````````````` ```````````````
We would like you to experience our FREE E-BOOK at http://www.creiu2.com Happy Holidays and a Brilliant New Year to all of our clients and students!
`````````````````````````````````````````````````` ```````````````
Sorry if I missed anything.
You can do this deal with no banks and no credit, even BANKRUPTED.
Dan, do you have an opinion of this approach (or any other rerader at magicbullets)?
Brian
The student is in upstate NY (his name has been changed), a great market of cheap 3/2 B homes. This is a LO/CFD hotbed of opportunity!
Here is his email:
================================================== ======
-----Original Message-----
From: Bob Johnson[mailto:bob@stny.rr.com]
Sent: Wednesday, 5 January 2005 2:11 p.m.
To: 'Brian Gibbons'
Subject: land contract
Hi,
Can I have a copy of one of your CFDs? I’d like to pitch one to a house listed with a realtor. The purchase price is 60K. I want to put 3K down and pay 8.5% interest, then flip it to a contractor who is looking for a house and can put down 10K. I could type up one from the document you gave me, but I’d rather get a blank one if you have one.
I suppose I’ll also try to offer a lease/option. However, the house needs a ton of work.
Cheers,
>BOB (name changed)
================================================== =====
My response:
Hi Bob:
I think we need to have more info.
Here is a Property Analysis form and an analysis xls.
Fax# to fax is Wilmington Delaware: fax 302-691-4762 USA Or scan and send, please PRINT NEATLY
The motivation of the Seller is most important, not the property.
We need to buy renovation project houses 20% under market (IF NOT MORE) of APPRAISAL IN BAD SHAPE done for the Risk involved.
Here are some numbers I worked out as an example:
OFFER #1
DUMP APPRAISAL $45,000
Work Needed $10,000
LOANS NOW $15,000
Equity $30,000
New Appraisal (after Labor & Materials) $80,000
x .80 $64,000
LESS costs $10,000
LESS LOANS $15,000
=========================
Offer $39,000 ALL CASH
Owners Get $39,000 - Loans $15,000 = $24,000 CASH after loans paid
OR
================================================== =====
OFFER #1
Lease Option a Junker with an Equity Split Offer
Offer to pay PITI for 12 months
Ex) Say the loans are only $200 a month PITI
You pay that for rent
You pay $1 for option With rights to improve and rights to sub-lease and sub-option
You record the option NOW to protect yourself
You both agree to a mechanic's lien to protect your improvements
You need your money right away when you improve the property
So you preserve your cash flow and servicibilty issues with loans
(Does everyone understand servicibility? Bankers only care about TOAL LOANS vs TOTAL VALUE. They only give you 70% or so of collected rent to SERVICE the loans. Alot of time THAT IS RUNNING AT A NEGATIVE CASH FLOW).
AND.....
If you can get a builder to CARRY his labor and materials for a 25% EXTRA JOINT VENTURE BONUS for 180 days
Labor $5,000
Materials $5,000
=====================
Total $10,000
Joint Venture w Builder 25% more or an extra $2500
Say something to the GC (Gen Contractor)
"Hey, I make money with my words and my pen, not hammers and nails and lumber.
We want you to profit if you help us with cash fllow.
You buy the materials, but order from our account at Home Depot (whatever) and pay it on the 1st of the month.
You need to pay the account on time or you lose the bonus of $2500.
If there is any delay over 3 business days, it'll be a penaty of $100 a day off of your bonus.
Making 25% on your money is good businees, cuz we do a ton of these quick fast renovations.
A good builder is hard to find.
Are you interested in Joint Venturing with us?"
Your OUTFLOW is
Lease $200/mo x 12
Option $1
No Outflow for Labor and Materials
==========================
Builder's OUTFLOW
Over time Pay for Materials and Labor of $10,000 ================================================== ==
NOTE: You set up the MATERIAL's ACCOUNT at YOUR HOME DEPOT, and have the BUILDER PAY THAT ACCOUNT ON TIME EVERY 30 DAYS.
CONTROL THE COSTS AND MAKE SURE IS PAID ON TIME.
================================================== ========
Look at market rent for property
See if you cant rent out to someone for CHEAP RENT while you improve.
Get the Master Bath and Bedroom done COMPLETELY first.
Have them live off of a HOT PLATE like a dorm room in college for CHEAP RENT.
================================================== ========
Say it takes a year
DUMP APPRAISAL $45,000
Labor & Mat: $10,000
-----------------------
Total IN $55,000
DUMP APPRAISAL $45,000
LOANS NOW $15,000
----------------------
Equity $30,000
New Appraisal $80,000
LESS Builder Costs -$12,500
LESS PITI costs ($200 x 12) -$ 1,200
Less Contingentcies (10% Gross) -$ 8,000
---------------------------------------------
Your Gross Profit +$58,300
Minus Purchase -$45,000
---------------------------------------------
Net Profit FOR YOU $13,300=========================================== ===============
I'll get the CFD doc.
Brian
`````````````````````````````````````````````````` ```````````````
We would like you to experience our FREE E-BOOK at http://www.creiu2.com Happy Holidays and a Brilliant New Year to all of our clients and students!
`````````````````````````````````````````````````` ```````````````
Sorry if I missed anything.
You can do this deal with no banks and no credit, even BANKRUPTED.
Dan, do you have an opinion of this approach (or any other rerader at magicbullets)?
Brian