In this video, I am with my student Ansar at his first fix and flip. He purchased this house for $170,000 and I personally loaned him $145,000 as a private lender in order for him to be able to do his first fix and flip (this is one of the advantages of being my coaching student).
I often get asked “how to find deals” and the answer is you can find deals in multiple places. Ansar found this house by posting on Facebook in a Yard Sale Group. His ad stated that he was looking to buy a house for cash “as is” and if anyone knew of a house for sale to contact him.
Initially, there was no response but a month later, someone commented on that Facebook post that they had a relative who had recently passed and that they knew that they wanted to sell the house. Ansar responded via Facebook Messenger and then they set up a phone call to talk about the property. This individual put Ansar in touch with the executor of the estate (this was a probate).
There were 10 heirs who all needed to sign off on this deal in order for Ansar to be able to buy this house. The initial post was in March. The response was in July, but it took until last month for Ansar to close on this house. That’s a lesson in follow-up! Ansar went back and forth with them (mostly by text) over a period of 6 months before buying the house!
The ARV on this house is $300,000. His rehab and repairs should cost him around $30,000. So he should do very well on this house and clear around $60,000+ on a fix and flip. I went to the house to review the house with him and make sure it was a good deal. Since I was lending my own money, I wanted to personally see the house (I do this with every house that I lend money on).
We reviewed the house and discussed whether he would be better off keeping the house and renting it, fixing and flipping the house for a profit, or keeping the house as an Airbnb. The house does have a nice big backyard, so if he put a pool in, he could probably net $80,000 a year on this house as an Airbnb.
If he kept it as a rental he would net $2,000 a month so this could also work as a Buy, Repair, Rent, and Refinance. If the house were to appraise for $300,000 then he should have no problem getting a mortgage for 75% of that which is $225,000. Since he only owes me $145,000 he would have $75,000 left after he paid me back (assuming 5k in refi fees). That means he could reimburse himself on his down payment (25k) plus his rehab (30k) plus and still have $20k leftover! Even after accounting for insurance, closing costs, points, fees and interest he would essentially be out of pocket zero cash and still have money left over. Or looked at another way, he would have $75k to deposit into his checking account plus he would still have $75k in equity in the house! (300k value less 225k mortgage)
This is how you get wealthy! This is how you become a millionaire. Don’t wait to buy real estate. Buy real estate and wait! Congratulations Ansar on your first deal!
Ansar will be at our next Fixing & Flipping Houses Boot Camp! If you want to attend call our office at (561) 948-2127