All Forum Posts by: Derek W.

@Spencer I.  What would the $50k house rent for fixed up?

I successfully negotiated a Citi lien about a year ago. Borrower had done a debt consolidation loan with Citi secured as a second on the property. It was $43,000. I got them to accept a payoff of $17,000. 

I hope @Aaron Mazzrillo can get me to "step up my game".  I recently bought a house for $8,000, and have an entire business model of sub $50,000 houses.  Perhaps I suffer from poverty mentality?

Is the property outside of the owner occupant only time frame? Hopefully he didn't put it under contract during the occupant only time frame. 

What could you offer that's valuable? Time?  I'd love for someone to help project manage my rehabs for free for me. If I had someone willing to make the trips to Home Depot for supplies so my workers could stay on site that would be great value added.  And that person would get amazing hands on experience.

As far as the comment about training your competition, there are lots of great threads on this site about that.  The general idea is there are way too many houses for me to try to work every lead.  It's impossible. Every investor cycles from being money heavy to inventory heavy during different times. If your mentor who trained you is money heavy and you found a good deal, you can wholesale to him. If you need a house, he can sell to you.  You end up having a great synergistic relationship with your "competition" so you both end up winning. I often find myself with a great lead, but already have my crew and my funds tied up.  That's a perfect time to pass it on to someone else for a small profit and we both win.

Since I'm working with limited info, I'm just throwing out a possible answer. If I'm presented a house for $390k and can sell after repairing it for $510k it is very possible there is not enough spread for a profit. What we weren't told is how much of a rehab does it need to get $510k? If it's totally dated and needs a major face lift, in that price range with high end finishes expected in order to attract end buyer it may require a $50k rehab. Then there is a cost of money.  If I borrow hard money at 12% and pay 3 points for 4 months that's $27,300 paid to the lender. Then there's agent commissions and closing costs of approx $40,000. So $510,000 minus purchase price minus rehab and closing equals NOTHING. There isn't a profit at the end of this example. It's possible it's too tight for experienced investors which is why they are all passing. 

Take out any of my expenses,( assume you have cash and don't spend $27,000 on hard money)  and that still leaves a pretty small profit for the risk.

I can understand an end buyer being wary of a double close. It certainly sounds like a sophisticated scam to those not inside of real estate. 

Gutting a house doesn't cost much at all. I can completely gut a house for less than $1,000.  It's putting it back together that costs money. If I'm gutting a house to the studs and fixing plumbing, electric, then new drywall, cabinets, tubs, shower, tile, flooring etc it costs me around $25 sq ft.  So a 2,400 sq ft house would cost me approx $60,000. But remember I'm in a totally different geographic area than you so material and labor can vary. That's why it's important to know what the house is worth all fixed up.  If it's only worth $35,000, for instance, then this won't work. If it could be worth $125,000 then it's a viable deal.

I think @Account Closed is really onto something about getting him to prove his legal interests. 

However...It still feels like a basic title insurance claim. I KNOW the title co said they aren't responsible. But that's their job. Every claim I've ever submitted started with them telling me why it isn't their responsibility and pointing a finger at someone else. But with firm persistence, eventually they will open a case and solve the problem. 

Thanks again for keeping us up to date on the progress. 

@Steve Babiak makes a great point that often times other factors are present that limits how fast you could close anyway. When offering on Bank Owned property, I always said 10 day close, knowing good and well the bank couldn't move any faster than 21-30 days. As long as you are not the one holding up closing, you're still within contract and no one will be upset with you.

You can (and should) still due your due diligence. But I satisfy my due diligence before I write the offer.  By the time I've written the offer, I know I'm good to buy the house without any further inspections.  If someone doesn't have lots of experience estimating rehab and cost maybe removing all contingencies isn't a good idea at first.  But you can have inspections done in one day, so that part shouldn't hold up closing.  It's really whether you are offering all cash, or need to get a loan that affects the closing time.

If it helps...I used to write offers with really short closing times, like 3-5 days. But over the years have tended more toward 15 day or 21 day.  If the seller is in a real time crunch, and that is the catalyst for the deal, I'll modify that.  But otherwise a 21 day escrow has worked well.  It doesn't stress out the seller to hurry and it's short enough to show I'm serious.