All Forum Posts by: J Scott

If possible, add a bedroom, bathroom, or half-bath. Perhaps add additional parking.

New cosmetics help a good bit, especially when there are a lot of low-end comps in the area (e.g., a lot of foreclosures). For examples, new light/fan fixtures, new plumbing fixtures, new cabinets, new flooring, etc.

Lastly, make sure you're there when the appraiser is doing his appraisals, and do your best to point out everything that was replaced, repaired or upgraded. While creating a social rapport really shouldn't help in theory, in reality if the guy likes you, he'll do his best to help you out (in other words, make sure he knows what price you're shooting for).

In fact, you should take the opportunity to pull comps that you help your case, and have those avaialble for him when comes to the property. Use it as an opportunity to ask him questions about how he does he comp analysis, and at the same time, make sure he sees the comps you pulled.

Those terms are pretty horrendous, and I'd certainly find a better financing option if at all possible.

I don't know what your credit looks like, but I sent you a PM a couple months ago with some names of rehab/portfolio lenders in the Altanta area. One of them will lend at 6.75% for 12 months, interest only, with 1.25 point upfront (assuming you and the deal qualify). They require 20% down.

The other one will lend at about 11% for 12 months, interest only, with 2 points upfront. They require 10% down.

Both will lend against acquisition and rehab costs.

Also, if you're really able to get all-in for 55% ARV, you shouldn't have any problem selling quickly. In my experience, there are plenty of first-time homebuyers in the $100K and under market using FHA in the Atlanta area.

You could likely be in and out of this deal in under 6 months with the numbers you're talking about.

Just my experience...

Didn't mean to be a "naysayer"...just hadn't heard anything in a couple of weeks...

Just out of curiosity, if you can really get this property for about 22% of ARV (and 35% of ARV *after* repairs), why would you ever consider wholesaling it instead of purchasing with your own cash!?!?

Even if you have to sell it for 30% below market value (for a very quick sale), with all fees, commissions, and costs, you should still be able to make $20-25K very, very quickly (more if you're selling it FSBO).

And if you can't make a quick sale at 30% below market, you probably don't have realistic comps.

In fact, if these are the real numbers, PM me and I'll partner with you in a heartbeat...

Originally posted by nationwidepi:

I "suggest" you make sure you post current information from your sources before trying to discredit me.
I just went to the link you used to state I am wrong and noted that the article is from May of 2003! That is 6 years old!

Just because a rule was written six years ago doesn't mean it's not still in effect (sorry, thought that was obvious). Instead of arguing with me, why don't you just do a little research. If you did, you'd quickly realize that you are wrong.

Don't feel like doing the research? Let me help...

Check out Section 203.37a(b)(2) of the current FHA regulations.

Yes, the rule was written six years ago. Yes, the rule is still in effect. No, this is not an obscure rule...every investor I know who rehabs houses is all too familiar with this rule.

Originally posted by nationwidepi:

I'm not wrong. I was quoting an article on the web. If it is wrong or outdated, then so be it.

So, if you quote something that is incorrect (i.e., you don't check your facts), then it's not your fault?

I would suggest trying to take a bit more personal responsibility for your actions and your words. There's nothing wrong with admitting when you make a mistake, but denying it only makes you look untrustworthy.

Just my $.02...

Originally posted by nationwidepi:

I will read the link you sent. How are you so sure that your link is the current accurate doc and not the one I quoted?

Because I don't just rely on what I read on the Internet...I rehab and flip houses for a living. And every time I put a house under contract to sell to an FHA buyer, his/her lender forces me to wait 90 days before the deal closes.

That said, I wish I was wrong about this (as do all the other rehabbers I know). It would make my business a lot easier.

And if I am wrong about this, not only will I happily admit it, I'll jump for joy.

Will,

You're wrong on this one:

http://www.hud.gov/news/focus.cfm?content=2003-05-02.cfm

"Re-sales occurring 90 days or less following acquisition will not be eligible for a mortgage to be insured by FHA. FHA's analysis disclosed that among the most egregious examples of predatory lending was on "flips" that occurred within a very brief time span, often within days. Thus, the "quick flips" will be eliminated."

Well, it appears that this really is turning out to be a realistic example of a typical real estate investment...the investor loses steam and no deal gets done...

New Investors -- Let this be a lesson...success in this business means TAKING ACTION!

Why not just ask for a "due diligence" period, whereby you can do whatever DD you need, and if you aren't happy with the results, you can choose not to move forward with the deal.

Just to give an idea of one of my projects, here's the most recent gut-job I finished:

http://www.reistartup.com/house-pics/the-second-chance-house-staging-pics

The "before" pictures are linked to at the top.

Basically, other than three of the four bedrooms, the house was torn down to the studs. New kitchen, bathrooms, real hardwood, carpet, fixtures, HVAC, a lot of plumbing and electrical, a new back deck, a new parking pad, paint inside and out, a lot of basic landscaping, and appliances included.

The house is about 1400 sq ft and the total cost of the rehab was $36,622, or about $26.16 per sq ft.

This *didn't* include a new roof and didn't include much exterior (besides paint and landscaping). So, it was pretty much an "interior gut."

Hope that gives you an idea...

Lee,

In my experience, most lenders will want to see everyone on the loan also on the title.

Just out of curiosity, why would the bank refuse to accept a future offer of yours just because they rejected a past offer? I've never heard of this, and it doesn't really make much sense.

In fact, I can't think of too many REOs that I've purchased where my first offer was accepted, and given this logic, I never would have been able to purchase them.