All Forum Posts by: Patsy Waldron

Yikes. The numbers don't look very promising on this! From your numbers and description, appears the place will be a money pit before it turns (potentially) into a gold mine. Bit because you are not in a position to shoulder the upfront expense of getting the complex fixed up OR carry the costs of vacant units if you start charging tenants for electricity, this does not seem to be a good deal FOR YOU. I would run! 

Good write-up, concise and clear! I think in this day and age landlords are cutting themselves off from some potentially excellent tenants with a no-pet policy: young professionals. Many in my generation (I myself being one) love pets and consider them family. We are good earners and responsible pet "parents" who take good care of our home as well as our pets. I think charging a reasonable fee is more than enough to mitigate risk. 

Kind of hard to tell one way or the other without some numbers to frame your question or any idea of what you plan to do with the property. Have you run the numbers on the property at the full BPO? Do they work for you- ie. Do you get the returns you want? If it's a flip, do you get the profit you would like? If it's a buy and hold, do your rents provide the cash flow you would want? Run the analysis and you will know whether to offer BPO straight away or something else. GOOD LUCK!

@Luke Diem

If your lender says you can rinse and repeat over and over again, (1) get it in writing, and (2) GO FOR IT!!!! The less of your own money you have in any given deal, the more you can (theoretically) do with a given sum you have, as you can use the rest in other deals (I say theoretically because real deals can be hard to find). Anyway- good luck!

@Brian Pulaski

Beautiful touch! I am one of those who see chair rail and shadow boxes as a great investment- they break up the monotony of walls and add a touch of elegance. Great addition!

@Luke Diem 

Absolutely,, many people get a rehab loan for their first flip or a "live-in flip" with great owner-occupant loans. It's a great way to get into property ownership, as the terms of the loan are so advantageous. I suppose you could sell the house right after you rehabbed it. Just remember that you likely won't qualify for the same loan terms for a couple of years after this (I think it's 3 years from sale)- you'll need to shell out 20-25% on your next purchase after this one. So you want to make sure you won't want the low down payment on your primary residence in that time period.

It's never a good idea to buy overpriced property. Sooner or later you will regret it! If the market cools down in a year or two (as some are predicting), you will find similar condos for $50K less and you'll kick yourself for not waiting. And- you should ALWAYS consider how you would be positioned in case you want to sell (I know you are considering this a long-term hold, but things happen- we move, better opportunities arise, people get tired of holding the same property). If you buy $30K above-market now, as you say, you may not be able to sell when you need or want to because you'd be taking a loss (much like your father's friend). So, I repeat: NEVER talk yourself into paying too much! 

Actually, the 3.5% down loan is for owner-occupied property, NOT FIX AND FLIPS!!! If you are looking for lenders for FLIPS (i.e. you buy, rehab and sell immediately), you will need to find private lenders or hard money lenders. None of them will lend if you don't have any money in the deal- too much risk for them. 

View from the ground: I live near Cleveland and invest in both Cleveland and Columbus. Columbus taxes are lower than Cleveland, it seems to me (although it varies by neighborhood, of course), and there are no annoying Point of Sale inspections in which the city makes you fix every little thing in your property, like cracks in the sidewalk. I also like Columbus more because of job and population growth there, unlike other parts of Ohio. 

That said, neither Cinci nor Cleveland is about to become empty of people- if anything, the number of renters has increased in recent years (presumably because people are wary of buying in a market with low/no appreciation and precarious economy). So they make for EXCELLENT investment areas.

Interesting question. I don't have an answer for you, since I haven't bid on HUD homes and haven't paid much attention to what's going on with them, but I do want to follow the discussion case anyone else has something to contribute!