Cynical Posted April 29, 2010 Share Posted April 29, 2010 exactly when you buy the house outright...you can call the shots...finding a market that will pay, I've already explained...so wish me luck on my fantasy of bringing the ghetto homes and the ghetto buyers together for a ghettoghettoland investment bankers need not apply Here's the issue. There's is an investment banker. You're it. IMHO, I am with KD and DC on this. You have a good idea but you really need to put some thought into this. As KD stated, you can't ignore the time value of money. What you are putting into and what you are expecting out of it will be diminished over time. What was the interest rate he spouted: 8%? Eek. Dealing with the people you are expecting with to deal with, I would want something twice that. Link to comment Share on other sites More sharing options...
Celtic_soulja Posted April 29, 2010 Author Share Posted April 29, 2010 Here's the issue. There's is an investment banker. You're it. IMHO, I am with KD and DC on this. You have a good idea but you really need to put some thought into this. As KD stated, you can't ignore the time value of money. What you are putting into and what you are expecting out of it will be diminished over time. What was the interest rate he spouted: 8%? Eek. Dealing with the people you are expecting with to deal with, I would want something twice that. Even if I break even...I'm cool with that...and considering I will own the property outright unless they buy it and keep it, I will always break even...I'm only trying to milk a measley 30k a year profit...after all overhead is paid...I sincerely believe that if I will be able to pull that much profit out of flipping 80 or so properties...that's not in the slightest bit ambitious...it's not THAT unfeasable...honestly...people make a helluva lot more flipping property than 30 friggen grand I mean I could just keep the properties and rent them out for 700 a month and most of them are two family homes, that is WAY more money...I'm taking the loss...looking at it that way, but I'm passing on the value to the client in the most fair way I can to keep the CDC running...I'm not hiking up costs to them...I'm taking it out of what money I COULD be making...that to me is noble and will be effective Link to comment Share on other sites More sharing options...
DC Tom Posted April 29, 2010 Share Posted April 29, 2010 He can sell the house for whatever he wants. If it's 400% over FMV, that does leave only 2 options to pay for it:cash up front, or he holds the note (which he essentially is doing). Don't tell him that...if he's holding a note, that makes him an evil banker. Moreso than anyone on Wall Street, since the effective interest rate on his note is over 17%. Link to comment Share on other sites More sharing options...
Celtic_soulja Posted April 29, 2010 Author Share Posted April 29, 2010 Don't tell him that...if he's holding a note, that makes him an evil banker. Moreso than anyone on Wall Street, since the effective interest rate on his note is over 17%. maybe I like being the evil banker... or maybe I'm just not an evil banker because I'm going to appreciate the ghetto and not depreciate it...and I'm going to appreciate it for the working class that live there not for some executive or shareholder...maybe that makes me think I'm actually not evil, but the opposite becuase I'm not using that money for private jets but for more puffing up of prices for my working class brothers in my own hood...maybe...just maybe....if you lived in the ghetto maybe you would understand more what I'm trying to do...and it's far from being an evil banker... or is it muhahahhahahhahahah muahahaahhaahahhahhaahhahahah...no it is different I'm playing Link to comment Share on other sites More sharing options...
Jim in Anchorage Posted April 29, 2010 Share Posted April 29, 2010 This is the most far out pipe dream I have ever heard of. It is a slum for reasons your "home improvements" will never change. Link to comment Share on other sites More sharing options...
Celtic_soulja Posted April 29, 2010 Author Share Posted April 29, 2010 This is the most far out pipe dream I have ever heard of. It is a slum for reasons your "home improvements" will never change. Okay Palin...it's probably becuase "us" people are not capable of rebuilding our own cities...right?...it's a slum because landlords and bankers let them get that way by not properly assessing what these properties could be if marketed to the right people...and establish responsibility and accountability... Link to comment Share on other sites More sharing options...
Celtic_soulja Posted April 29, 2010 Author Share Posted April 29, 2010 I didn't even BRING UP what I want to do to "reform" property taxes through my city connects heheheh...that would really piss everyone offf Link to comment Share on other sites More sharing options...
Jim in Anchorage Posted April 29, 2010 Share Posted April 29, 2010 Okay Palin...it's probably becuase "us" people are not capable of rebuilding our own cities...right?...it's a slum because landlords and bankers let them get that way by not properly assessing what these properties could be if marketed to the right people...and establish responsibility and accountability... Oh good, a Palin crack. That brings a lot to the table. I have no idea who"us" people are. It could be a Irish neighborhood for all I know. The banks created slums? It had nothing to do with the people living there? But since you have a unique ability to identify the "right" people I guess you will not have that problem. And the banks are not in the business of establishing responsibility and accountability. I think thats the parents job. But apparently you think you are up to that task, so good luck. Link to comment Share on other sites More sharing options...
Magox Posted April 29, 2010 Share Posted April 29, 2010 Alright so Magox and DC have been ripping this "ridiculous" idea I have for the working class in the blighted neighborhood of my upbringing...I didn't get into many details about the plan, but I want to post a vague outline to argue some more :0) because I'm irish and we enjoy those kinds of things... Okay, first I have all but secured 2 million dollars in local funding...there are some things I have to do before I get that funding but best case scenario I will get it...worst case scenario I'll only have 100,000 plus what I can drum up with the president of a local fund raiser...sort of like a cheap Acorn knockoff...okay but best case scenario I am starting with 2 million...I plan on purchasing and refurbishing 85 houses with that money...that is scooping up the houses that are boarded up and empty...I will be buying them for under 50k and putting 10k worth of work into them... I only have to pay for materials...I have volunteers that will do the work for free or for a very limited amount of pay...I have a licensed union electrician that will give me a good price on any electrical work I need done (it's nice to have family) and I have another connection that is a store manager at Home Depot for some other material...as long as I get incorporated he can give me a corporate deal that will save alot on materials...I have 15 volunteer workers and I have another 500 or so unemployed "contacts" that will work for fair prices...with ten grand I will be able to update the homes that I am buying...the market prices for these homes are around 120-185k I plan on buying them cash for 30-50k fixing them and selling them to the working class families for market value... Now, DC is saying that I am as bad as the bankers because I'm marking my property up from 60k to 120k...I think the example I gave was a 30k property selling it for 95k, so in some cases I will actually be trippling my money supposedly...however, to purchase these homes I will only charge 500 a month over 20 years for a 120k home...no interest, just the profits I make from getting the cheap run down houses and putting people in them...but my counter argument to me being as bad as any other banker is that I am still selling these properties for what they are worth, 120k meaning if the working class person I "screwed" according to Tom, is that he could turn around and sell the home for EVERYTHING the buyer put into the home...instead of spending 500,000 on a 200,000 dollar house that you would get from a bank...you couldn't turn around and sell the property for 500,000 could you? exactly...so I don't feel like I'm hurting a working class buyer by doing this... This is not even mentioning that the buyer will most likely be a person that couldn't get financing from a bank anyway, if you seen the neighborhood I plan on working with you'd understand...it's a paycheck to paycheck kinda place...most have poor credit and are overspent by the months end...the average rent is 750 a month so buying my houses will save them money per month and they would be able to sell the house for everything they put in...so I feel like it's a no brain situation for them...no interest, no down payment, a low monthly payment, and they get exactly what they pay for... It was brought up that why don't they just finance the 30k and spend even less, but they can't secure financing for the house due to poor credit ratings and a poor debt to income ratio...also, for the properties I'll be buying, banks are not looking to get financed buyers anyway...they need work and they usually won't finance for those types of properties... At any rate, I wanted to know if people would feel screwed if they got such a deal...500/month for 20 years for a home worth 120k... Also I am going to give them financial training....dont' freak out Magox...just simple asset liability management and fiscal responsibility lessons...nothing in depth like "how the market works" we all know i have the market acumen as a muppet :0)... Making 28,000 a year (the average salary of the neighborhood I'm doing this in) you are looking at 2000 a month...500 for house payment, 500 for food, and 800 for monthly bills...you get 200 a month to save...in twenty years, invested correctly, you will have a property worth more than you paid...estimating you're net worth will be over a quarter million dollars...that's never getting a promotion and doing nothing more than working your regular low paying job for the next twenty years, you'll still be able to retire on what you have...a much better deal than what they are being offered currently don't you think?... So c'mon guys, let me have it............................again For the record, I still think you're full of ****. Link to comment Share on other sites More sharing options...
KD in CA Posted April 29, 2010 Share Posted April 29, 2010 He can sell the house for whatever he wants. If it's 400% over FMV, that does leave only 2 options to pay for it:cash up front, or he holds the note (which he essentially is doing). So he's basically trying to create his own little RE bubble. Link to comment Share on other sites More sharing options...
Chef Jim Posted April 29, 2010 Share Posted April 29, 2010 How much will your property taxes on all these places be? I'm not sure if this was brought up. Link to comment Share on other sites More sharing options...
Just Jack Posted April 29, 2010 Share Posted April 29, 2010 I haven't seen anyone ask this question, so I will.... Who is paying the Property/school taxes? The "renters" or you? Link to comment Share on other sites More sharing options...
Chef Jim Posted April 29, 2010 Share Posted April 29, 2010 I haven't seen anyone ask this question, so I will.... Who is paying the Property/school taxes? The "renters" or you? That's kind of what I was getting at. If it's him that could be a big monthly expense. Also how big is this volunteer army he's got and how long will it take to rehab all these homes? Link to comment Share on other sites More sharing options...
DC Tom Posted April 29, 2010 Share Posted April 29, 2010 That's kind of what I was getting at. If it's him that could be a big montly expense. Also how big is this volunteer army he's got and how long will it take to rehab all these homes? And is he willing to pay me a 20% premium on my purchase price after I out-bid him at the foreclosure auctions? Link to comment Share on other sites More sharing options...
DC Tom Posted April 29, 2010 Share Posted April 29, 2010 How much will your property taxes on all these places be? I'm not sure if this was brought up. I haven't seen anyone ask this question, so I will.... Who is paying the Property/school taxes? The "renters" or you? I asked it already. He said he's not worried about it, because it won't be that much compared to the money he'll make on the deals (except that he's not MAKING money, he's reinvesting it in the neighborhood). Also said he wasn't buying property insurance, because it's a scam. Unlike paying $120k/year for a $500k workers' comp policy. Link to comment Share on other sites More sharing options...
Chef Jim Posted April 29, 2010 Share Posted April 29, 2010 And is he willing to pay me a 20% premium on my purchase price after I out-bid him at the foreclosure auctions? "What's going on?" "It's the Dukes, they're trying to corner the frozen orange juice market!" Link to comment Share on other sites More sharing options...
Just Jack Posted April 29, 2010 Share Posted April 29, 2010 That's kind of what I was getting at. If it's him that could be a big montly expense. Also how big is this volunteer army he's got and how long will it take to rehab all these homes? I was still reading through all 4 pages while were you posting. It's good someone else has the same thought. Link to comment Share on other sites More sharing options...
Just Jack Posted April 29, 2010 Share Posted April 29, 2010 I asked it already. He said he's not worried about it, because it won't be that much compared to the money he'll make on the deals (except that he's not MAKING money, he's reinvesting it in the neighborhood). Here in the 'Cuse, my house is apprarised at about $84K, and the combined taxes for one year are about $3100. So with his $500/month rent coming in, half or more that would need to be set aside for the taxes, is my uneducated guess. Link to comment Share on other sites More sharing options...
DC Tom Posted April 29, 2010 Share Posted April 29, 2010 Here in the 'Cuse, my house is apprarised at about $84K, and the combined taxes for one year are about $3100. So with his $500/month rent coming in, half or more that would need to be set aside for the taxes, is my uneducated guess. By his numbers, he'd be bringing in $6k a yearper property, and paying $1k in taxes. So not as bad as a half...but 18+% isn't trivial, and he's not factoring it in to his bottom line. Link to comment Share on other sites More sharing options...
Joe Miner Posted April 29, 2010 Share Posted April 29, 2010 So your parents have agreed to sign these contracts with you right? Because you have to be 18 to sign one all by yourself. Link to comment Share on other sites More sharing options...
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