OK, here are the numbers:
I did sell it for $180,000...but I bought the house for $81,000...
This was $15,000 OVER my MAO.
How could I do it you may ask???
I could do it because I had a sweet deal with my contractor...and I had an even sweeter deal going with my banker.
So here’s why I did it:
Here's how I did it:
Even better, with no money of my own, I got a bank loan for $107,000 and actually had the money in hand BEFORE we sold.
So I literally bought that coffee with the profit I had already made BEFORE I sold it!
Here's how you can do it too:
Hey, guys. It's Mike, with House Flipping School. Welcome to this week's whiteboard lesson. We were recently talking about a property we picked up in Middleborough, Massachusetts. Now I want to go ahead and breakdown the numbers to show you how we arrived at the purchase price for this particular deal.
Ryan: Hey, everyone. Ryan, here from House Flipping School. I'm with Mike. One thing that we get a lot of emails about is new investors wondering how to go about finding their first house to flip. Mike, today I want you to pretend like I'm a new investor; I'm looking to get into this. Let's talk about your most recent flip, and particularly how you went about finding this house to flip.
Ryan: Hey, everybody. We're here talking with Mike about a recent deal that will be closing in about 40 days. Mike, I know you did some renovations on this property. Walk us through the rehab process, in particular, apply it to somebody who's just getting into this as a new investor.
Ryan: I'm back with Mike, and we're talking about the onset property which you picked up for $65,000, $20,000 of which went to the wholesale fee, which is not typical from what we're learning here. Now, Mike, how did you know when you got into this deal for $65,000, that at the end you were going to come out on top and make a profit?
Mike: That's a great question, Ryan, and I really wanted to know that myself. This is actually my first deal with this particular wholesaler who is very experienced; and like I mentioned earlier, I tried to see if he would take $60,000. He was pretty quick to say no which meant he had other investors that were lined up to buy it at that price. I learned right there that we were not going to negotiate much, and I definitely wasn't going to find out how much money he was making on this deal.