Hey BP family, I'd like some quick advice.
I'm going to look at a house tomorrow that the numbers look amazing on. I have two things to ask people.
1. What are some things to look out for while walking the property that most people would miss? I don't want to miss little things like are the outlets 2 prong or 3 prong. Any suggestions?
2. Can I do this deal as a BRRR, and then live in it once it's all said and done? The house is an REO, selling for about 50k, ARV of about 120k-130k (will confirm tomorrow), rehab of about 35k (will also confirm tomorrow), have a HML willing to do 80% of acquisition cost and 100% rehab cost @12% for 12 months (with no prepayment penalty), have a bank willing to give 80%LTV refi for primary residences. All I should need to bring to the table is the 20% of the acquisition costs, right? Assuming that I'll be able to refi and cash out my HML.
Any input would be greatly appreciated. I'm going to view the house tomorrow after work.
it's really difficult to tell you every single thing that i look at. i have lots of experience so i can just make offers based on the listing pictures. even if it's just a single picture of the front of the house. that's cause i buy similar houses and know about how much it would cost. but i have a lot of experience, so nothing phases us.
in addition, when you have a checklist, the agent will know you are not experienced and will question your ability to close.
big things are - kitchen, bath, electrical, roof, concrete.
the rest is child's play.
@Dakoda Spencer not sure if you already went to see the house? I would recommend bringing a contractor with you for the walk-through. It sounds like you might not have a ton of experience yet, so I would be a good idea to get the opinion of someone more seasoned! Let us know how it goes.
I agree with @Anthony Susco on bringing a contractor with you. My current home I walked through not knowing what to expect/look for and am now more aware of what to be aware of. One thing that I have learned is to press your foot down around the base of the toilet, bathtub, or anywhere where water could leak out to feel for spongy or soggy subfloor. A few other basic things are: check water pressure on sinks, light-switches work, heaters work, problems of mold in bathrooms, and mold/water damage around windows and door openings (especially windows if they are not vinyl). These are a few basic things that I have learned to look for, now that I have had to put money into each of those areas....Good luck!
A HML will not lend on an owner occupied home. It is way too hard to foreclose on and get their money back should that come up.
Thank @Anthony Susco , @Aaron I. , and @Mike Hanneman all for the advice. I went and walked through the property with my brother (who has about 8 years in building construction) and my agent. The house was a complete disaster. It would need torn down all together. There were nothing but red flags through the entire house.
Hey Mike, I'm talking to a HML who I showed the deal and explained my plan. He is okay with everything. Now, the deal isn't going to happen because of how terrible the property is, but he was still okay to lend to me even though it was going to become my primary residence. Should I avoid someone willing to do this?
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