All Forum Posts by: Bill Briscoe

I'm buying a foreclosure for $84K, ARV should be $125-$130K based on comps, maybe a little higher based on quality and condition. 3/2.5/2 1720 Sq Ft, 1988 construction.

The loan package consists of a 6 month IO construction/rehab loan where they will loan me 75% of estimated ARV now, then refi into a 30 yr fixed when work is complete.

The ARV is determined by the appraiser based on comps and based on a list of improvements that I intend to make. My lender told me to just create a room by room list of specific improvements that I will make. Once I provide that list, I must improve to that level or BETTER.

So my question is, what exactly should I improve and to what extent and what should I leave as-is? IOW, which items affect the appraisal the most? This is a very middle class neighborhood, some houses are well kept up and some haven't been remodeled since construction 20-25 years ago. I'd expect no one else to have granite countertops - so that would be an over-improvement, right?

My current improvement plan is:
new roof - its really old and several shigles are gone
new flooring throughout - currently concrete
new paint in and out - 50% brick/siding ext
repair siding on chimney - has rotted away due to water damage
new water heater
new AC/Furnace
repair sheetrock water damage from plumbing leak
replace kitchen appliances
landscaping
replace garage door - wood rot

optional items would include:
replacing various fixtures - which ones?
new kitchen countertops - currently formica - use newer formica? something else cheap?
replace 2nd bath tile (dirty) with bathtub insert
replace master shower (currently cultured marble?? - dated looking) with fiberglass insert
there is a jaccuzzi tub in master as well - not sure if it works - would it hurt value if I pulled it out and put in shelving?
pouring a 12x8 concrete patio in back - currently it is a wood deck raised 4 inches off the ground under a covered porch. Does not look new.

So basically, what improvements/materials give the most bang for the buck in this type of neighborhood? I can link to pictures if that helps.

The goal is to sell as a lease/purchase with a backup plan of keeping as a longer term rental. So I will have this for a couple years, maybe longer.

How many rehabs have you done? I won't do anything with foundation issues right now myself. Maybe when I have more experience though.

I'm buying a foreclosure for $84K, ARV should be $125-$130K based on comps, maybe a little higher based on quality and condition. 3/2.5/2 1720 Sq Ft, 1988 construction.

The loan package consists of a 6 month IO construction/rehab loan where they will loan me 75% of estimated ARV now, then refi into a 30 yr fixed when work is complete.

The ARV is determined by the appraiser based on comps and based on a list of improvements that I intend to make. My lender told me to just create a room by room list of specific improvements that I will make. Once I provide that list, I must improve to that level or BETTER.

So my question is, what exactly should I improve and to what extent and what should I leave as-is? IOW, which items affect the appraisal the most? This is a very middle class neighborhood, some houses are well kept up and some haven't been remodeled since construction 20-25 years ago. I'd expect no one else to have granite countertops - so that would be an over-improvement, right?

My current improvement plan is:
new roof - its really old and several shigles are gone
new flooring throughout - currently concrete
new paint in and out - 50% brick/siding ext
repair siding on chimney - has rotted away due to water damage
new water heater
new AC/Furnace
repair sheetrock water damage from plumbing leak
replace kitchen appliances
landscaping
replace garage door - wood rot

optional items would include:
replacing various fixtures - which ones?
new kitchen countertops - currently formica - use newer formica? something else cheap?
replace 2nd bath tile (dirty) with bathtub insert
replace master shower (currently cultured marble?? - dated looking) with fiberglass insert
there is a jaccuzzi tub in master as well - not sure if it works - would it hurt value if I pulled it out and put in shelving?
pouring a 12x8 concrete patio in back - currently it is a wood deck raised 4 inches off the ground under a covered porch. Does not look new.

So basically, what improvements/materials give the most bang for the buck in this type of neighborhood? I can link to pictures if that helps.

The goal is to sell as a lease/purchase with a backup plan of keeping as a longer term rental. So I will have this for a couple years, maybe longer.

" I wonder if she would accept $35,000 instead of $45,000 due to the $10,000 tax lien? "

How can someone end up owning $10K in prop taxes on a $45K property? Around here, taxes are 1.25 to 1.5% of value max. Even in a higher tax state at say 4% of value (I think only the no income tax states like NH and Texas approach 6%), she would have had to skip her taxes completely for at least 5 or 6 years to owe that much.

So we got a sales agreement at $84K. Now they have a big addendum to the standard sales contract I'll have to read thru. Are those pretty standard when dealing with big banks?

Theres not a lot of upside, and I'm not about to go there, but pretty much any sitation could become a good investment at the right entry price.

Thanks - the market is kinda stratified. Good houses are flying off the shelves. Dumps are sitting forever. Houses like this one that have some potential are probably in between. The investment market is fairly competative in my area and 2 or 3 of my other propects have gone pending in the past week.

Anyway, I asked my agent to counter back at $84 final offer. We will see what happens.

So I'm trying to buy a foreclosure. It needs flooring, paint, siding repair, roof, some drywall repair, etc. I've put all the assumptions into a model and came to a max offer price of $84K.

However, I wasn't totally comfortable with my assumptions so I hedged and went in at $83K. Asking price was $90K. The other party's realtor's first reply was - there are multiple bids, please bring highest and best. I left my bid unchanged. Next day they come back with - the client has chosed to negotiate separately with you, counter is $87,500, addl $1K in earnest money, 7 days for inspections.

I replied with - agreed to addl earnest and 7 days for inspection, but left price unchanged. Bank replied last night with: final counter: $85k

This property has been vacant for 2 years, post foreclosure and for sale since Jan '13. They already dropped the price from $94K and at least one buyer has walked bc it couldn't qualify for conventional loan. I don't think there are any other buyers right now.

So here is my big question - what does "final counter" mean? I'm comfortable going back at $84K since that was my original max bid and that is what my bank has alread written a pre-approval for, but $85K starts eating into my already thin margins. Yes, I would still cash flow if I held it as rental for several year - and there isn't a whole lot else still available of this age/quality/area and $/sq ft. So should I be willing to walk over $2K? Would the bank walk over $1K if I came back with final offer of $84K?

"In most cases, it's the prep work that takes the longest. Once the prep work is done, painting is the easiest part! "

Prep work depends on how dirty/damaged the walls are, whether the room is empty, etc.

If it is a clean room in good shape and you just want to change the color, just unscrew the outlet covers, throw down a cloth and go.

I have to say, I don't understand some of these answers - "Would have taken me 2-3 weeks and would still look like garbage."

I'm not a pro at any type of remodeling, just an average DIYer - I work an office job, but painting interior rooms has to be one of the easiest projects possible. Shelves, cabinets, and kitchens stink, but doing bedrooms and living room in an empty house should take no more than a weekend.

I guess I kinda grew up painting - grandparents house, church classrooms, various other projects here and there, but even as a teenaged beginner it never seemed hard.