170 S 11th St
Lebanon OR
Executive Summary
Deal Highlights
Purchase
Price
Price
$160K
Rehab / Holding Costs
$92K
After Repair Value
$310,000
Hold
Period
Period
6 months
Investor Capital Needed
$120K
Investor Loan
Annual Interest Rate
Annual Interest Rate
12%
Minimum return of 6%
A $40K Loan
Returns
Returns
$2,400
Deal Story
We are seeking $120,000 to fix and flip this 1,242 SF house with 3 bedrooms and 1 bathroom. It was built in 1946 in a neighborhood off Highway 20 in Lebanon.
The owner has advanced dementia, and it's no longer safe for him to live there. For example, they removed the range and only let him cook with a microwave oven after an accident. The RV houses a caretaker, who has been given notice to vacate now that he no longer lives there.
His daughter has power of attorney, but she's overwhelmed and just wants to be done with the house. Further motivating her: her father doesn't have a will! Given his recent rapid decline, they want to sell the home quickly and avoid risking it going to probate.
They also recognize that the house needs a lot of work. So here's the cool part: they don't need a lot of cash right now, so they're willing to accept $25,000 now, and they will get the remaining $135,000 after we repair and sell the house. In a way, it feels more like a partnership with them.
Rehab Project Plan
Focus on the exterior first: replace the roof and gutters, repair siding damage, and then paint.
Pre-list the property based on the exterior improvements.
Fix the foundation issue in the laundry room.
Completely remodel the kitchen and the bathroom.
Replace the flooring and several windows.
Install an HVAC system.
Paint everything - including the garage.
See below for a detailed scope of work.
Sources of Funds
Seller Note $135,000
Investor Note $120,000
Total $255,000
Uses of Funds
Purchase Price $160,000
Closing Costs $2,400
Rehab / Holding Costs $92,600
Total $255,000
+ Investor Note Interest $7,200 (12% APR for 6 mos)
+ Seller Note Interest $3,375 (5% APR for 6 mos)
Total Project Cost $265,575
Key Dates
PSA Executed
June 17th
Funds Due
June 27th
Close Date
July 2nd
Property Overview
Facts and Features
Size: 1,242 SF
Beds: 3
Baths: 1
Vintage: 1946
Lot: 0.18 AC
Water/Sewer: well / city
Parking: large garage
Heating: fireplace
Cooling: none
Hot Water: electric
Additional Resources
Business Plan
Risks
The rehab costs more than is budgeted. We have four ways to mitigate this risk. First, we're working with a contractor who likes us and has done hundreds of flips. Second, we underwrote the budget assuming we used a different contractor for each item instead of counting on the savings from using the same one. Third, in addition to a 10% rehab contingency, we'll also hold $8,840 in reserves. Fourth, James and Lawrence have construction experience and can do the work if needed.
The After Repair Value is lower than expected. We conducted a thorough market analysis (see it here) and underwrote it conservatively. We will continue to monitor market trends and have enough profit built into the deal to be off by 10% and still break even. Plus, we have additional personal funds to ensure our investors get paid.
The project takes longer than anticipated. We conservatively underwrote the deal as taking 6 months. Once the contractor starts, the work takes ~45 days to complete. We also plan to pre-list the property based on the exterior improvements to gauge buyer interest early. And finally, we plan to conduct regular site visits to monitor progress.
Construction Plan & Budget
Financial Projections
Financial Dashboard
We're conservative with our ARV, which is good. The Monte Carlo simulation is run 1000 times and takes into account the uncertainties of the rehab budget, the hold time, and the ARV. Our estimates are in the middle.
The Team
James Furlo
Sponsor
After getting his MBA, Mr. Furlo started working for HP Inc. and actively investing. Over the last 14 years, he purchased over $4 million in real estate. His investments include 10 properties that span apartments, storage, and warehouses. He's also a limited partner in a 112-unit development project. Learn more
Lawrence Potts
Sponsor
While working as a logistics coordinator & warehouse manager for Tigerlights in the agricultural industry, Mr. Potts invested in real estate in Oregon and Louisiana. He also started a Junk Removal company. After successfully selling his Louisiana portfolio and Junk Removal company, he became a full-time real estate investor and broker.
Mr. Potts has flipped several residential properties and continues to pursue specialty value-added opportunities. His focus is on always creating win-win scenarios and fostering long-term relationships. Learn more
Aaron Fulcher
Contractor, Basecamp Construction
Mr. Fulcher has a passion for helping people navigate their real estate journey. He has been specializing in buying, remodeling, and selling residential properties since 2012. To date, Mr. Fulcher has helped hundreds of clients remodel their dream homes.
Next Steps
Critical Dates
PSA Executed
June 17th
Funds Due
June 27th
Close Date
July 2nd
How To Invest
Call, email, or text either James or Lawrence expressing your interest. We'll sign a promissory note, and our escrow officer will send you the wiring instructions.
The promissory note will be with the following terms:
Loan Amount: Minimum of $40,000
Interest Rate: 12% annual, minimum of 6%
Payments: A single payment shall be made on the date of resale on or before the expiration date.
Loan Length: 1 year (though, we're targeting 6 months)
Deed of Trust Security: 170 S 11th St, Lebanon OR 97355
Guarantors: James Furlo and Lawrence Potts
City and State of Execution: Lebanon, OR
Frequently Asked Questions
How do I invest in the deal?
Let James or Lawrence know. We'll sign a promissory note, and our escrow officer will send you the wiring instructions.
Can I invest using a self-directed IRA?
Yes. Investments are accepted via 401K/IRA funds.
What is the minimum investment/loan?
$40,000
Where do I find the banking wiring information, and where is this entity located?
The wiring information is provided after we sign the initial note agreement. If your bank asks, the entity's location that will purchase the property is in Lebanon, OR.
When will the loan be paid?
You will be repaid, including interest, after the property is resold.
How much are the Sponsors investing in the deal?
The Sponsors are providing the earnest money ($100) and will provide any additional funds required to either complete the project or make sure investors are fully paid.
What does a minimum return of 6% mean?
This means you'll earn at least 6% on your money, even if we complete the project in less than 6 months. For example, if we finish in 4 months, you'll still receive 6% instead of 4%. That will increase your effective APR to 18%.
If the project takes longer than 6 months, you'll still receive 1% per month (or 12% APR). It's our way of ensuring you still receive a good return even if the hold period is extremely short.
What is the projected hold time?
6 months. The property is already vacant. We'll take 3 months to rehab the property, market it for 2 months, and 1 month for contingencies.
This document contains privileged and confidential information, and unauthorized use of this information in any manner is strictly prohibited. If you are not the intended recipient, please notify the sender immediately. This document is for informational purposes and is not intended to be a general solicitation or a securities offering of any kind. The information contained herein is from sources believed to be reliable, however, no representation by Sponsor(s), either expressed or implied, is made as to the accuracy of any information on this property, and all investors should conduct their own research to determine the accuracy of any statements made. An investment in this offering will be a speculative investment and subject to significant risks; therefore, investors are encouraged to consult with their personal legal and tax advisors. Neither the Sponsor(s), nor their representatives, officers, employees, affiliates, sub-contractors, or vendors provide tax, legal, or investment advice. Nothing in this document is intended to be or should be construed as such advice.
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