All Forum Posts by: Jack Cheadle

Thank you for the feedback sir. @Mark Fedorov

I just listed my house a few days ago, the realtor still has not even put pics online nor have we had an open house. She has showed it three times and she just sent me three offers. Bad ***, right? Two of those offers are from her own clients which is whatever. I am feeling some trust issues with her and want your opinions please. She is pushing me a bit to make one of these offers work, but in my mind, could the price be driven up even more if we wait a bit? This is the email she sent me:

"Hi Jack,

Please see the offers below from buyers and advise on which offer you would like to respond to.

The 1st buyer is the buyer I showed the house to and now she wants to move forward. She is approved with Wes Barr with Ameris Bank and her pre-approval letter is attached to the email.

Buyer 1:

Offer price is $138,900

Closing cost $7000(you are actually paying $3000, the sales price was increased by $4000 to cover an additional the closing cost)

Inspection period 20 days-allows time for repairs

Finance contingency period 40 days-to get appraisal ordered after the bathroom is completed

Earnest Money: $500

Lender Required Repairs: $500-(would be the repairs we discussed. If those are done prior to the appraisal being done then there shouldn't be any repairs required.)

Seller to provide a home warranty for $560

Closing date: March 10th (She could close earlier, but she is allowing time for the bathroom to be done and then the appraisal completed)

FHA Financing

Buyer 2 ( He is aware of the bathroom being remodeled and I told him that it would be mid Feb but I couldn't confirm the date):

Sales Price is $134,900

Closing cost is $4047

Inspection period is 15 business days (19 days)

Financing contingency period 30 days

Earnest Money $1000

Seller to provide a Home Warranty of the buyer's choice(The agent did not put a cap on it, if this offer is countered an amount will need to be entered most warranties cost between $500-$600 depending on the features, but they can go up to $800 depending on the additional options selected.

Lender Required Repairs: $1000(This is if the appraisal list any repairs)

30 day finance contingency period

Closing date: 2/17/2017-( USAA usually don't close loans no sooner than 45 days. This date is not realistic, plus this date may not work for the bathroom repairs. If you respond to the offer this will need to be changed.)

VA Financing and buyer is approved with USAA (The lender is not local)

Buyer 3-(The buyer never saw the home-this can be bad because once they see it after you accept the offer they may decide to terminate and the other buyers may no longer be around)

Sales Price-$136,000(Nets about the same as offer #1)

Closing cost $4080

Inspection period 10 days

Financing contingency period is 20 days (Not Realistic)

The home is contingent upon the buyer receiving dreammaker funds from the City of Savannah. The buyer will get a traditional inspection and an inspector from the City of Savannah Dreammaker Program. You will have to repair every item off the dream maker list and if you do not the buyer can terminate and keep the earnest money. The buyer can negotiate repairs from there own private inspection, but for the appraisal and the dream maker program all repairs are mandatory.

Earnest Money $500

Home warranty $550

Closing date March 17th

Conventional Financing for the 1st loan and 2nd Loan City of Savannah Dream Maker program"

Am I being silly to not just take one of these? I suggested that we at least counter that they pay their own closing costs but she disagreed. The big issue to me is that I feel we may have priced the house too low to begin with, but I was going with her judgement on the listing price. It was very difficult to find comps because homes in this neighborhood do not sell often. I am the second owner and it was built in 1969. 

Any advice on how to proceed would be helpful, thanks in advance. 

@paul martin They are here.

https://www.biggerpockets.com/buy_and_hold_results...

https://www.biggerpockets.com/buy_and_hold_results...

At this point my offer is in and accepted. Here are my numbers using the rental calculator for a 15 year mortgage and a 25 year. 

I did not have much of the current owners financials to go off of, they would not release them until I made the offer. Now that I have them, the numbers are not as attractive to me. This is all of my cash reserves into this one property. $55,000. The deal is off market, which I was hoping would mean it was a good one. The monthly expense numbers are pretty accurate based off of his past 3 years P&L's. Please let me know your thoughts on this deal.

Thank you in advance. 

bump @Ian E.

OK, thank you, that helps. 

Sorry if I sounded overly like a conspiracy theorist. I have just been doing some research on what Fannie and Freddie are and how that is different from my community bank just loaning me money, like a savings and loan would. 

Let me try to get my understanding correct and please help me where I am wrong. 

1. Loan officers for conventional mortgages, no matter which bank, don't really sell you the money from their bank. They sell you a Fannie or Freddie mortgage and the loan officer/bank makes a little on the spread and that is how they profit. Which means, most every conventional lender is just a middle man between us. 

2. Fannie and Freddie are government funded programs full of tax money and pretty much everybody in America's mortgages. And this money is either our tax dollars being sold back to us or is not really money at all and just numbers in a computer. 

3. Those mortgages are packaged up and gambled against on Wall Street, where our mutual funds from our retirement accounts are making their money. 

Conclusion: Loan officers are puppets for the government and we are letting the government control the interest rates in the country by using conventional mortgages.

Does that sum it up?

Half of the battle of owning any business is keeping the money make. Never attempt to write anything off in a dishonest way, but always write everything off that you possible can. Great book is Tax Free Wealth. 

https://www.amazon.com/Tax-Free-Wealth-Permanently...

The government wants you to spend your money to grow your business. Therefore, anything you spend toward that effort should be labeled as an expense and written off. 

Since SCAD is an art college, the historic yet slightly rough look of those Victorian homes actually goes over better than an uber beautiful renovation. I would most certainly keep it as a dupex. Rentometer says a two bedroom down there rents for an average of $1,200 a month, and that is pretty accurate. 

Truth be told though, I am still early on in my REI career, so take what I say with a grain of salt please. (2 house hacks and 1 rental property under my belt). But, I am a business owner in town and have done extensive research and made many offers on places here.

You have a gem there. You sure you won't sell it to me??!!? ;). Any multifamily in the downtown area is of high value due to SCAD. It may even be a better buy and hold for you. Rents stay high down there. I've been trying to breech the multifamily market here for awhile not but have not had any luck because those properties are so overvalued. Good news for you though!