All Forum Posts by: Jeff B.

That's a pretty good deal. Did you go online and check for a UCC or lien on Sunbiz? In Palm Beach County contrary to what you may have read there are a lot of investors buying property left and right.

The one thing that puzzles me is you talk about the loan balance? I don't care what someone overpaid for a property in 2005, 06, and 07. I only care about how much money I can make rehabbing and flipping, or buying and holding the property.

I always fill out a new lease and have them sign it. Just incase things go south then you have less chance of a lawyer disbuting the lease then you will an addendum.

The lease would be from June 1, 2010 - May 31, 2011 not June 1, 2011

You've left out a lot of details.
What is the tile guys SOW. Are they installing Durock, removing existing tile, supplying any of the tile, grout, or thinset?

If they are providing any cement board that's needed and providing the thin-set and grout and installation then 2.00 a sq ft is good. In South Florida we can get Porcelain tiles for as low as 1.25 a sq ft.

Originally posted by Nick Dunin:

My father in law's dad died two years ago. He owned an old 1940s house.

Just my advice. I would Not get involved with trying to buy a house from your father in law or another family member.
The potential for lawsuits, verbal assaults, and not being able to go to family get togethers is very high. If you buy the house at a fair investor price, rehab, and sell it for a profit they will always accuse you of scamming them and look at you as someone who is profiting due to a family members passing.

As a concerned individual I would illustrate the cost of holding, and maintaining the property if it is not occupied.
The costs include taxes, insurance, maintenance such as the lawn, fixing any leaks, utilities since you don't want the pipes bursting when it freezes and don't want mold growing all over the place. Then there is the potential for additional losses due to vandalism.

This could be a good opportunity to gain some experience if the executor will let you get involved.

Originally posted by Nick Dunin:

My father in law's dad died two years ago. He owned an old 1940s house.

Just my advice. I would Not get involved with trying to buy a house from your father in law or another family member.
The potential for lawsuits, verbal assaults, and not being able to go to family get togethers is very high. If you buy the house at a fair investor price, rehab, and sell it for a profit they will always accuse you of scamming them and look at you as someone who is profiting due to a family members passing.

As a concerned individual I would illustrate the cost of holding, and maintaining the property if it is not occupied.
The costs include taxes, insurance, maintenance such as the lawn, fixing any leaks, utilities since you don't want the pipes bursting when it freezes and don't want mold growing all over the place. Then there is the potential for additional losses due to vandalism.

This could be a good opportunity to gain some experience if the executor will let you get involved.

I agree with using a GC on your first couple of flips and remember to add 10 - 15 % to the estimate for unforeseen things that will pop up. Since you are starting out I would also make sure that the rehab is Not to extensive. If the rehab estimates are around $5 a sq ft then it will be a good rehab to start with.

Also understand that once you start rehabbing the place you will have the urge to want to update other areas which will blow your budget. Make sure when the GC is giving the estimate that you take your time when inspecting the major items (roof, foundation, HVAC, electrical, plumbing) and look for signs of termites.

The last thing is to educate yourself on the basics of carpentry, plumbing, tile installation, and drywall. You can check Amazon for highly rated books on these subjects and check the local library to see if they are available. Some GC's will cut corners if they can get away with it and by just talking some of their lingo and knowing how things should be done will avoid potential costly problems down the road.

Brian,
I think the one thing everyone is missing is that wanna be investors were helping prop the market up with the banks money while flipping.

Fast forward to today and banks have gotten really picky about who they will lend to. The other thing is that most banks will not loan for a house that will not pass inspection. The total amount of investors has shrunk considerably compared to when the market was overheated. So it's supply and demand, the banks, and the economy that is driving the market now.

Originally posted by Bryan Alenky:

What impact does this have on normal sellers who just need to sell? Will this not perpetuate the foreclosure crisis?

Ideally I want to sell my flip for the same price as the comps (normal sellers) are getting without a discount. The problem with some normal sellers is that they have an emotional attachment to the home and price it above the comps because they either paid more for their home, believe due to location, improvements, or just simply that someone will pay more than the comparable current market price(greed) for their home.

The other thing is that everyone is looking for a discount. Why else are homes that are priced below market value being sold in under 30 days and others taking 60 - 90 days. The investors are getting their discounts also from spending the time and negotiating a short sale with the bank instead of waiting until the bank either pre approves their lowest price or buys it back after foreclosure. Most people don't want to invest the time and effort it takes negotiate with the bank, get rehab estimates, negotiate with creditors, and lien holders and then close on a property 3 or 4 months after they located it.

Originally posted by Demetrius Bradley:

Realtors are the true cause of the housing bubble and crash. Realtors who claim they had 5-20 years experience misled sellers into believing their houses were worth 200-300% more then what they had original paid for them

This wasn't caused by the Realtors, no one had to buy a home when the prices were inflated. They could have rented a place until the market correction. Something is only worth what someone is willing to pay for it. If you bought when the market was high and now are crying to bad. Some of the people who are bailing on the loans are people who have finances available to cover the loan and are trying to get a free ride. I hope they realize the bank can sue and get a judgment against you for the difference in the price it sold for and the amount owed. The bank can also have the judgment attach to your future wages and bank accounts and renew the judgment multiple times to make it last 10 years or more.

It seems everyone who bought when it was high thought the property was a good deal then. Even if they were qualified for a loan that was outside their means to repay doesn't mean you have to accept it. Do you think most of the investors on this board are extended beyond their means? They use numerous formulas and calculate for unforeseen items to avoid any potential losses due to purchasing property without enough profit margin.

There are a lot of Realtors out there that shovel a lot of BS. You have to weed through those and find the good ones who are out for long term relationships not a one shot deal.

Yes you want an insurable title and title insurance for this purchase. A Quit claim deed is when someone transfers their ownership rights to another person. A Quit Claim does not have any warranty that the person you bought it from has actual legal right to the property. It also doesn't give any protection against any liens that are in place at the time of transfer. Quit claim means they are giving up any right or interest in the property in question.

The main reason to buy title insurance is because it's a small price to pay when someone overlooks a lien or judgment against the property you've just bought.

Most Bank owned REO's have all liens and judgments settled prior to deeding the property to the grantee so in general they are safer than a short sale or foreclosure.

After researching your posts I see your strategy is buy and hold with short sales, reos, or foreclosures.

You say you've been educating yourself on this forum but don't specify how we can help you. We all have our areas of expertise and areas we need advice on and finding your weak areas should be your focus.

I would keep a notepad and write down or type and save them and keep adding to them, research the answer myself or ask these at the next REI meeting.

For someone doing buy and holds you must understand the 50% rule. The 2% rule and what comparable properties are renting for in that area to determine if it will cash flow. When figuring your expenses consider the vacancy rate, age and condition of the condo or house and it's appliances, HVAC, and plumbing.

It's easy when new to investing to think a property is a great deal for a buy and hold and overlook something that can kill your profits for the next 1 or 2 years. (roof, HVAC, foundation)

What some new investors don't understand is that in some areas of the US the buy and hold strategy works, buy, rehab and sell works, or just flipping short sales works. This doesn't mean that each one is going to work in every market that is why the experienced investors will change their focus to other markets and strategies to keep making money.

I would check the local library or purchase a good Landlord legal book and find your states landlord law section of their website. Nolo has some good landlord books and you might be able to find them in your local library.

Lastly you need to create your system on how you will market, maintain, and manage the property you will be renting.
Collecting or creating the forms and editing them for your needs will help you avoid potential problems later on.