All Forum Posts by: Jessica Hood

Hi there!  I am considering selling my property as For Sale By Owner.  I have never done it before, but I am very good with document processing, marketing, and learning new things.  I am a marketing consultant anyway.  It is definitely a seller's market here too.

What are the pros and cons of doing FSBO, besides the obvious money savings advantages and lack of professional hand holding?

Are there things I should know that maybe newbies learn the hard way?

Do you have any advice?

With it being a seller's market and there are pretty much NO houses for sale in my neighborhood/price range, do you agree it should be fairly easy to find buyers without MLS? Use social media, real estate websites, craigslist, etc instead of MLS? I do realize the benefit of MLS is huge.

Am I putting myself at major risk by not using a realtor?

Thanks!!

Looks like I am on my next adventure!  I would like to share a little background first for those who are having trouble getting started in investing due to credit or capital issues.  Then I will get into the flip I just started.

I am currently living in my recent 203k renovation property that was purchased July 2015. I have had to be creative in my methods for investment growth, due to little capital and minor credit issues. FHA 203k deals have been my way to get my foot in the door of investing in real estate. Little down payment and lenient on the credit issues/debt to income ratios compared to conventional loans.

This is why I have used the FHA 203k program to get me started. It has its limitations, but it worked. It took me two years to finally pull it all together. Two years of credit hurdles, losing bids to better offers, and being outbid on good deals. Let me just say that being an FHA buyer in a cash investor foreclosure market is not easy! Then I finally scored a good deal which resulted in instant equity/profit!

The downside is the length of time FHA requires you to own the property. I believe it used to be two years, then one year (that was when I bought my property), and now it is reduced to 6 months. I am happy they reduced it to 6 months because that means I can now sell. It makes it much more useful for me.

I have about $50k+ in equity in my current property, but cannot access it via HELOC due to debt to income ratios. Talk about frustrating!

Hard money lenders and Crowdfunding platforms have turned out to be unobtainable because of the 15% to 20% down payment requirements. I project that I will have access to those options after this next flip.

It seems my only option at this time is another 203k renovation with a 6 month time frame.  

I would like to mention the importance of having a good mortgage guy on your team.  I have followed my mortgage guy from Union Savings Bank to Wells Fargo to Prime Lending.  While the bank policies are important, having a trusted mortgage guy that is always there when you need him (weekends, late nights, last minute) is SO useful!

So, I set out to find another property and found one on Hubzu (where I got my last property).

During my hunt for lending sources, I had an interesting conversation with a contractor/investor about this property. He told me that I probably did not stand a chance at the auction because he had insider information that I would be going up against a big time cash investor. He was certain I would lose out to the cash investor because of my FHA financing. Let's just say I am far too determined to give up that easily.

I was up until well after midnight last night in a bidding war with 4 other bidders.  In the last two hours, it came down to me and one other bidder.  We were certainly pushing each other's limits!  I nearly gave up.  I was right at the cap limit of $155k that I had set for myself before the auction started.  The other bidder finally dropped out an I won the auction at $152k!  Victory at last!

Purchase price with Hubzu fees:  $159,139

Expected renovation costs:  Less than $15k

After repair value (ARV): $230k to $240k

Holding costs:  I don't consider holding costs since it will be my primary residence for the duration. Monthly mortgage is just a normal cost of living in my opinion.

Projected profit: $45k give or take after end sale expenses

This home is in a good neighborhood and the houses are all well kept.  It is structurally sound and the mechanicals appear to be in really good condition.  It just looks like most of the work is minor and cosmetic.

Now it is time to wade through all of the FHA financing documentation and close this deal!

 Yes, I do agree with you.  I am aware of the pros and cons of DIY.  I ask about it, not necessarily because I intend to do it ALL myself.  But I want the flexibility of picking and choosing what I do and what I pay others to do.  I am keen to what is best for contractors to do and me to sit out.  I just don't like being in a position where I have no options to do anything myself.  I am quite knowledgeable and experienced with renovations, thanks to my father.

 Thank you for the information!  I am not looking to get reimbursed for my labor other than the profits of the sale.  I just really prefer to be as cost effective and hands on as possible.

@Pyrrha Rivers  Awe, thanks!  I am all for empowerment of women!  Anyone really that needs motivation to know that if someone else can do it, so can they.  That is my motto!  If someone else can do it, so can I!  Or at least, I will try my hardest!  Glad you like my contributions!

@Lee Smith  Thank you for the information!  I am comparing all possible avenues, so that is good to know.  I am looking for options that will allow me some freedom to do general work myself.

@Brad Smith  Yes, that is exactly what I had in mind.  I do know that certain things must be done by licensed professionals.  It is the other things I am wondering about.  Thank you for the information!  I appreciate it!

Is it common place for private lenders to allow for DIY renovations by the borrower? Or do they typically require contractors to do everything like most banks do?

I want to also share my experience with my general contractor.  He seems like a good guy, but I suspect there was something going on in his life that started to pull him away from his work near the end.  There were several things that he was supposed to still do for me, but he just disappeared.  He gradually started taking longer and longer to respond, then nothing at all.  He was supposed to replace some windows, fix some remaining siding issues, and sand the drywall he replaced in the garage.  He just disappeared on me.  He did not get paid for it, of course.  I haven't heard from him since before December.

I later found out that his guys had installed the hat vents over the garage backwards.  I did not catch that until the roofing company pointed it out.

The roofing company did a great job, with only minor issues.  I had brand new gutters installed before the roof and they dented one.  They are going to replace or fix it.  They did not install some of the trim as it was before, but they are fixing that as well.  Other than that, things look good.

I will post more as we progress.  :)

We also had to have contractor fix two windows with bad seals.

Here is a little side story for you!  I got a letter from Nationwide insurance just before the contractors started their work.  They said they were dropping my insurance because the house was in such poor condition.  I had to fight with them not to cancel my insurance based on the fact that I bought the home with a renovation loan and that the issues were going to be fixed.  

During the winter, we had a problem with ice damming at the front of the house.  Water started pouring into the bay window in the living room.  Then in the spring, we had two wind storms come through and damage the shingles on the roof.  The roof was old and had three layers of shingles.  We also had a roof leak on the back patio.  Integrity Construction came in and got Nationwide to replace the whole roof!  Now the house looks amazing!

I still have to hand paint all of the stone on the front, the front door, replace the front porch light, and apply accents to the garage door.  But the outside is almost done!