Residential Real Estate Broker · Indianapolis, IN · Member since 2010 · 28 posts · 1 vote
and wondering if I should rent until things improve? My homes are in a lower class price range($54,900) and go almost completely unshown. I have them priced well below value(where it should be anyway) and they are nearly completely rehabbed. Maybe I bought in the wrong area in this economy, but these should still be getting shown and sold. Any advice or questions for a struggling investor?
One sold for over $80,000 about 6 years ago and the other has comps that hung around $70,000.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
16y
Are they on the MLS? If so, and if they're not getting showings, they're probably priced too high. Are any houses in the area selling? If so, at what price?
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
16y
Are they on the MLS? If so, and if they're not getting showings, they're probably priced too high. Are any houses in the area selling? If so, at what price?
Real Estate Investor · Austin, TX · Member since 2009 · 118 posts · 76 votes
16y
If you're in a position to carry financing, you may want to offer that option. The problem may be that buyers in that area don't qualify for conventional. If you offer to finance the house with 5% down and an 8-10% interest rate, you'll get some cash in your pocket and some cash flow every month. Plus, since you're owner financing, you're not the landlord. You're the bank. Much better situation.
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
16y
I don't know Indiana laws well, but you may consider doing a lease/option too. If you go that route make sure you separate the lease from the option and charge close to market rents or the court could claim that the option payment and/or the above-market rent gives the tenant equitable interest prior to exercising the option.
Mobile Home Investor · Spanaway, WA · Member since 2008 · 1k+ posts · 578 votes
16y
Who are you trying to market these homes to? Decide on your target market and then market directly to this type of individual. I deal with mobile homes, and as soon as everyone knows there is one available, I have people knocking on my door asking to buy it!
Real Estate Investor · Phoenix, AZ · Member since 2010 · 9 posts · 7 votes
16y
Bryan,
I am originally from Indiana and I have a friend who could give you a ton of good information on Rent to Buy deals. In fact, his whole business is dealing with clients looking for a rent to buy home. He won't charge anything and has lots of good info. Let me know if you need his info and I will get it to you. He is in the Westfield area.
Real Estate Investor · Chattanooga, TN · Member since 2010 · 151 posts · 59 votes
16y
Originally posted by Bryan Coomer:
This market is a joke so I've decided to do rent to buy on these properties. Any tips on being successful with rent to buy deals?
Bryan, all we do is lease to own/rent to buy and we use credit repair on every single one of them. We have a very high close rate. I'd love to give you some pointers. The most important thing to know is how to screen clients on the front end. If you know how to screen properly you can put clients in your properties that have a 75% or greater of cashing you out in 6 months.
Investor · Atlanta, GA · Member since 2009 · 35 posts · 49 votes
16y
I invest in this market right around where you invest, Bryan. It definitely is difficult to do flips there. I checked out the MLS listing for your properties and you did some nice rehabs for the area. However, all of the properties I've purchased in the area have been for cash flow. It is tough to do flips around there, to say the least.
I agree with Edwin. Rent to buy seems like a good option in the area. You just have to make sure you can get someone in there that is motivated to getting into a financial place to close the deal. I checked out Edwin's creditcast site and that's some cool stuff, Edwin. I'd definitely like to explore the software you've developed.
Real Estate Investor · Chattanooga, TN · Member since 2010 · 151 posts · 59 votes
16y
Originally posted by Malhar B.:
I invest in this market right around where you invest, Bryan. It definitely is difficult to do flips there. I checked out the MLS listing for your properties and you did some nice rehabs for the area. However, all of the properties I've purchased in the area have been for cash flow. It is tough to do flips around there, to say the least.
I agree with Edwin. Rent to buy seems like a good option in the area. You just have to make sure you can get someone in there that is motivated to getting into a financial place to close the deal. I checked out Edwin's creditcast site and that's some cool stuff, Edwin. I'd definitely like to explore the software you've developed.
Thanks, i appreciate the nod. It's totally changed our business because it sure is hard to sell them the traditional way.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
16y
Originally posted by Bryan Coomer:
They are certainly not over-priced.
I know people hate to hear it, but if they're listed on the MLS and they aren't selling, they are by-definition over-priced (given the condition and location)...
Investor · Atlanta, GA · Member since 2009 · 35 posts · 49 votes
16y
The state of the particular market Bryan is referring to is chock full of foreclosures. I feel like I buy one every week out there! :) But, that's because I have investors looking for buy & holds. The prices out there are highly depressed because 80-90% of the sales in the area are foreclosures.
J, I'm sure you've seen this happening in and around Atlanta, too. I know I have. If you're going to do a flip, make sure the comps in the area are really going to support the value that you plan on adding. Bryan, your particular area has comps ranging from $10-40K, so yes, it is difficult to sell traditionally (via MLS), but there are several options available to you, namely lease/purchases or lease/options, seller financing, or possibly rent it out and flip it to an investor looking for buy/holds.
Residential Real Estate Broker · Indianapolis, IN · Member since 2010 · 28 posts · 1 vote
16y
I truly appreciate the advice guys. It's been a rough start and I just hope I'm able to hang on. I certainly won't invest in these areas again, but I had to start somewhere. Just really bad timing.
I've put all my cash in these homes to lower the payments, so that adds a bit of urgency. I'm a big believer in other people's money, but only when you have money coming in to carry the cost. Hopefully I can fill these homes soon enough. Both are rent to buy.
Question for you Malhar. How much do you charge for down payments excluding rent in these areas? Everyone who sees my homes seem to be very excited about moving in, but it never seems to happen. I'm wondering if I'm asking for too much down. I appreciate your time...
Residential Real Estate Broker · Indianapolis, IN · Member since 2010 · 28 posts · 1 vote
16y
Those comps are all foreclosures, short sales, etc.. When I bought Priscilla comps were $65,000+ when rehabbed and Hartman had recently sold for over $80,000. Timing was not on my side and I certainly missed seeing the crash.
Initially I did buy these to do rent to buy, but after things crashed the banks stopped giving out loans. They limited me to just three loans. I had plans for 100+ homes and doubles. I had to weasel out of three doubles I'd just won bids on. So with my plans crushed, I just tried dumping the homes to get out.
Imo the prices are stupid low, and whenever I tell someone the price they are quite pleased to say the least. I actually offer them at $59,900 on rent to buy. I imagine most investors are still selling their rent to buy homes at three year old prices.
Investor · Atlanta, GA · Member since 2009 · 35 posts · 49 votes
16y
I'm assuming when you mean down, you mean option consideration fee? ... It's tough right now, there's a lot of people who are trying to sell crappy rehabs with "$100 down"... I agree with you it's tough, but hang in there... I usually feel good at somewhere around 3-5% on a rent to buy, but I never say that... the first question, IMO, when they ask how much you want down should be, "how much do you have to put down?", or something along those lines... sometimes, they'll say something high like $10K, in which case, you might want to say, great, that's right around what I was looking for... if they say something like "uh, zero?" ... you'd say, well, I'd need at least X amount down (3-5%, maybe) and see what they say. It just takes practice and once you converse with more buyers, you're sure to learn... experience is the best teacher in this biz... second is Biggerpockets! :)
Another option you may want to consider, Bryan, is finding investor buyers. I know there are A LOT of out of state investors investing in Indianapolis -- shoot, I'm one! The advantage you have is you're there on the ground. That may reassure a lot of investors out of state. I know several investors on the ground out there that work with out of state buyers, many are here, on BP... do a search, I'm sure you'll run into a lot of them. It may be another avenue for getting rid of these properties.
Finally, a last thought. I read that you said that no banks are financing... how many did you try? One day, I sat down and called, literally, every single bank in Indianapolis. I got a whole bunch of "no", but that's because my situation is different than yours. I don't live in Indy. They don't think I am at all invested in a property should the property flop. You have a better situation--you can build a relationship with the bank. Try the smaller banks or credit unions that are local to your investment areas. Explain to them your idea/plans and show them your track record. Eventually, I'm sure you will find someone. Keep your chin up--I assure you, you can do it!
Residential Real Estate Broker · Indianapolis, IN · Member since 2010 · 28 posts · 1 vote
16y
When I was just starting out on my own I was hoping to find investors to flip homes to at a discounted price. That would have been a dream scenario for me. It's win - win.
I've been asking $2,000 down, so that seems about right. The larger down payment was a very attractive feature of rent to buy deals. As far as banks go, I tried Huntington, two Regions, two Chase banks, Federal Credit, and 5th Star. They all had the same thing to say. I was told it was now a lending regulation to limit a customer to just three loans. It didn't matter if I did three here, or one there with two here, etc. Three was the max. I'm not wealthy by any means, but my credit was 789 at the time.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
16y
Those all sound like big banks. Try some smaller banks. Also try credit unions, even if you're not a member. Sounds like you've only tried five big banks (calling two different Chase branches is unlike to give two different answers.) Do some more dialing and you may get a different result.
I've seen nothing that say you're limited to three loans. As for a pointer to some regulation or letter next time some one whips that on you.
Residential Real Estate Broker · Indianapolis, IN · Member since 2010 · 28 posts · 1 vote
16y
Federal is a credit union. I had over $35,000 in my account(at their bank), zero debt, a job, and asked for a 80% loc and ended up getting a no. They told me everything looked great and then pulled the rug from under my feet. It was great of them not to mention this upfront, but they wouldn't lend to me because the property hadn't been in my name for at least one year. I pulled my money out and just gave up on loans after that.
I agree with you however. I can't see the reasoning behind limiting investors to three loans as long as they keep them current. I've never been able to find any regulation on the internet stating such. I have seen banks limiting the number they'd lend to one person, but oddly enough I was told about this at each and every bank. Maybe it's a local policy, I don't know, but I doubt it.
I'd like to get my money back out, so maybe I'll talk with a bank or two tomorrow. If this is mentioned again I'll ask for documentation and post it here. I haven't tried in about a year or so.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
16y
If you've now owned them for more than a year you should be better able to find a loan. That one year time limit does seem to be a pretty hard and fast limit as a minimum time required to do a cash out refi.
Don't give up after just one or two. I suspect if you call 10 random banks you'll only find one that will do the loans, and there's a good chance none of the 10 will. If you call 20 or 30, you should find someone who will. I'd use a sequence of qualifying questions:
1) Do you do investor real estate loans (this may get a quick "no", or may get you to a person who would do these.)
2) Do you sell your loans to Freddy or Fannie?
3) Will you do a cash out refi loan?
4) How long do I need to have owned them?
If its sounding promising at that point, start asking about rates and terms and getting into their detailed qualifications.
Real Estate Investor · St. Petersburg, FL · Member since 2010 · 63 posts · 40 votes
16y
I don't agree with some of the post's here that "if your home is on the MLS and is not getting interest, then it is priced too high". I have my home on the MLS, flat -fee listing at $40K below market value. I think the problem is the price point..and that the properties selling in this area are below that, but I'm not going to give my house away just because the foreclosures are ruling the market right now.
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
16y
Believe me I feel your pain. I have a house on the market, now, too. But the reality is that, regardless of the listed price, if a property is on the MLS and hasn't sold, its just not priced below market value. I have mine priced consistent with recent comps, and its getting traffic, but its not getting any offers. We're going to leave it for a bit longer at the current price, but I'm ready to do a drop to try to move it.
Now, "$40K below market value" means something different if you think comps are $600K than if you think comps are $100K.
It is entirely true that some price bands are doing much better than others. Around here sales are much slower above $250-300K than at lower prices. Moving a $500K house is going to be much slower than a $100K house.
But the reality is that if you're offering a product for sale and its not selling, there is only one of two possible problems. Its possible nobody's interested in your product. Unfortunately with houses, there's very little we can do to fundamentally change a house. Mine's on a busy street, and we've had lots of feedback that the lookers don't like that. Not a thing I can do about it. It doesn't have much of a eating area. Without spending $20 grand to bump out a wall, I can't do anything about that, either. I suspect you and the OP could make similar statements. So the only knob any of us have to turn is price. I can guarantee that if any of us put our houses on the MLS at $1, we would have an offer almost instantly. None of us are getting offers at the prices we currently have on our listings. Therefore the market is telling us we have them priced too high.
A big part of the problem right now, IMHO, is that there aren't very many buyers. Its a bad time of the year. Its hard to get a loan. The tax credit expired. Buyers are few and far between.
Real Estate Investor · St. Petersburg, FL · Member since 2010 · 63 posts · 40 votes
16y
I appreciate your reply Jon. The comps on this house reflect market value of $230K. I'm asking $187K. Do you have any recommendations in possibly selling this house to an investor? I know the numbers probably don't fit for an investor.
This house is in an upscale area located in the foothills with mountain and lake views. It's 2560 sq. ft. main level is 10 rooms, 3 bedrooms, 3 baths. Has a 3 room finished walk-out basement.
This house could be used as a seasonal rental at approx. $1,000 week or an investor could do a rent-to-own in 13 months at market value.
I'm just not sure at this point how to get this house sold. I feel like I'm in the middle. Hold it for a while longer or reduce the price to an investor.
Investor · Sarasota, FL · Member since 2008 · 17k+ posts · 17k+ votes
16y
Originally posted by Deborah Mettler:
I appreciate your reply Jon. The comps on this house reflect market value of $230K. I'm asking $187K.
There are essentially three things that contribute to saleability: Price, Location, and Condition.
If you're confident that the price is right for the type of property, then perhaps the location is bad (on a busy street, next to a crack house, etc) or perhaps the condition is worse than other comparables.
The other possible consideration is that the market has declined since those $230K comps were sold...in which case, this points back to your price being too high.