All Forum Posts by: Don Hines

I wonder if the fee includes a new lock box? My agent has called and I have tried to call. It has been over a month on my most recent FNMA purchase and the lockbox is still on the door. I am going to remove it with a grinder.
BTW
My closing was delayed because of the "encumberance" clause. Their attorney said he wouldn't close until we followed the contract. Maybe the rekey fee was in the contract as Jason stated. But, it was totally unexpected at closing by me or my attorney. We closed anyway without me paying for it. I don't know if my attorney absorbed it or if he got it waved.
Don

I don't have that many deals under my belt. But, I can tell you what is going on with my current project.
First of all, if you ever get a FNMA under contract, watch out for the word "encumber". This is in place to keep you from profiting in 90 days; or something. I don't know what it does for them. But, I have a near $30k budget for the rehab on this project for 90 days. Following the contract keeps me from financing the deal completely. I either have to come up with around $15k out of pocket, or find financing that will not "encumber" the property. Good ole Home Depot raised my LOC to $14k the same week I closed. Lowes gave me $7500 in a LOC. So, now I have more than enough to buy materials. My son has agreed to take his part after the resell for his help.
I hired a contractor to do the exterior. I missed the estimate by $2500. But, now I know not to hire them again too. I am more than making up this $2500 with all of the work I am doing myself. I had planned to hire most of this project out.
I did the initial inspection because the damage to the house was pretty obvious. I knew the shingles were fairly new. A neighbor told me the roof is not 3 years old. But, furthur inspection reveals rotten deck underlay. I don't even know how they got a nail to stick into it. So, now I am faced with a new or patched roof. I don't feel good about leaving this damage even though it is not currently leaking. I am sure an inspector will write it up.
Don

I ain't smart enough to try to figure taxes on money I ain't made yet. I put 25% of the net away for the IRS after each transaction. After last week, I might start putting 30% away.
Don

1st of all...congrads on the deal. Your numbers indicate you haggled to 71% of asking. I am not that successful with FNMA.
But, my numbers indicate you still paid about $9k too much for a simple flip. You should be OK because I think your rehab numbers are very conservative.
The sure enough landlords will say your returns are too low at 1.39 percent (rent/investment). But, that is about as good as I have seen while looking at long term. I ain't been looking real hard though.
Don

I would pull the carpet back and air it out. I would more than likely replace any padding that got wet. It depends on what kind of padding it is. If it is as new as you say, it is probably a pastic foam cell type that will dry out. Any other type needs to be replaced; just the wet stuff.
Don

The things I mentioned before are just to up grade the appearance. I refer to rotten floor joices, underlays, previously installed new shingles over rotten decking, ETC is all ugly stuff to me. All of this stuff has to be repaired before the pretty and fun stuff starts. I am forced to DYI almost every detail of this one and use my LOC at Home Depot and Lowes because of the wonderful deal I cut with FNMA. One of their stupulations in the deed basically said I could not borrow enough and use the property as colateral until 90 days after I bought it.
Don

Before some one busts your chops, give us some more info.
High income? Mid?
I am in the middle of a lower to mid income rehab here in Little Rock. I will put it up at $124k. I am using Laminates and carpet for the flooring. Tile in the baths. Gutted the ceramic tile shower and replacing with new tile (leaked). That is just the pretty stuff. Do you want to hear about the ugly stuff?
Don

The fix could be as simple as letting a fan blow under the carpet. (I said under; not across.) It depends upon how old the carpet and padding is to replace it or not. If the padding has absorbed a lot of dirt through the years, I would replace it.
Don

I have thouroughly enjoyed this thread. You don't see Corvette shops like I used to hang around whn I was a kid living in Houston TX back in the '70s.
Before I was 25 I aquired a '63 split window basket case. I put it together, sold it and bought a '69 L88. Then the racing bug got me. I sold the L88 (saw one on Ebay at around 500k recently) and bought a '66 coup that already was stripped and had a cage and fender flares. It started life as a 427 with power windows. I had less than $30k invested in all of these cars. They would bring between $750k and a cool million in today's dollars.
But, I was a dumb kid and the future was too far away back in those days. Plus I got to race SCCA and IMSA for 10 years. Funny, I didn't have the money to do it right back then. But, I had the time. Now, I don't have the money nor the time. My wife wouldn't understand the racing lifestyle neither. It consumes more time than rehabbing houses.
Don

Your comment "Even if we were to replace marginally suspect pieces of siding it would not be more than 20-25 pieces," has me wondering if the siding is indeed suspect.
Two things come to my mind....
1. Hire your own independent inspector for their comments. Not an installer. I wouldn't let another $300 kill the deal.
2. Offer a home warrantee policy.
Don