All Forum Posts by: Derek W.

I totally agree. Most of my short sale business is turning from can't afford it to don't want to afford it.

I work mainly on lower end inventory, 100k and below. Sometimes in rough neighborhoods, and the occasional gang land war zone. In the war zones I have had problems with break-ins and graffiti, but not in the other areas. Even these low-end properties now get all new flooring (carpet and 18†tile with deco dots) new appliances, granite counter tops, new sinks and faucets, dual pane windows, new base, casing and crown molding, new plugs and switches, interior two-tone and exterior paint. This typically runs around 10k for the rehab. If the roof is bad, or the heating or cooling needs replacing, or if kitchen cabinets needs replacing instead of refinished it can go higher. It seems that is about as cheap as I can get it and still look nice. It isn’t much cheaper anymore to do Formica counter tops instead of granite slab. And it really helps for renters or buyers to walk in after seeing a bunch of dated gross properties and say “WOW!†I think it makes your house the next best choice to go pending. I have lived in some of my rentals in the past, so I tend to make them nicer than they have to be. I think I attract a better tenant, and one that tends to stay longer if I have a really cute, stylish place that says “home†not “rental.â€

We have been talking about this inventory for months. I was sure we would have seen it by now. Some are holding off on buying because they feel they will be caught by increasing inventory and decreasing prices. Others are buying anyway and hoping to time the lull in inventory right if it holds for another 2 months. Anyone not buying because they are waiting on the next wave?

I am an agent and I write 20-50 offers a week on REO's for myself to purchase. I couldn't imagine asking an agent to do this busy work for me with so little reward. You can then list your own rehab for sale, just don't double end your own rehab and you should be fine. When you get your license ask your broker what language you should use for disclosure and put it in all contracts. It's that simply, really.

The principle reduction loan modifications are sort of like an urban legend right now. I know of a number of people who know people who got principle reduction, yet I have yet to have any success personally or see the proven docs myself to verify any of the case examples. I have also spoken to 4 different law firms that say they are able to negotiate a principle reduction loan modification. McFarlin Law out of Irvine, California is one of the law offices I have met with that are claiming they are doing principle reductions. But when I said “Prove it†they told me it was a violation of attorney/client relationship to show me documentation. (That’s probably true.) I will have to totally disagree with the statement that market value is what a person is willing to pay for a property. It SHOULD be that way, but unfortunately in this market it is not. With all of the loan regulations and the recent change in the appraisal laws, appraisers are setting market value. In a short sale, the value is solely determined by a bpo or appraisal, in an REO sale the value is solely determined by the asset manager who is going off of his bpo’s. In a standard sale, the price is determined by the appraisal. I have too many recent examples of a buyer willing to pay asking price for a property, but the appraisal coming in conservatively low and the lender refusing to write the buyer’s loan for the agreed purchase price. The valuie is “knocked†to the appraised value and the seller can either sell for that price, or end the excrow. Principle reduction loan mods are also determined by an independent appraisal of current market value. In theory the lender can reduce the principle balance of the loan to the current market value and your new payments would be structured from this new balance. That is what the government programs (short-refi) are based on. Government Refinance Assistance
The borrower would need to prove they could pay the new balance of the mortgage and if the resolution is better than the lender taking the property back through foreclosure, then a deal can be made. Again, I have yet to have any luck on these as every lender has said, “Oh, the investor on this loan isn’t doing principle reduction.†It is mostly through a B.K settlement that people are getting principle reductions, and we will see more of these as the rules have recently changed to allow B.K. judges to restructure the loans.
There are two sides to the principle reduction argument. One side says that lenders should be forced to keep people in their homes because they are going to lose huge sums foreclosing on the property anyway, why not restructure the loan and keep the current resident in the home. The other side says this is a sure way to collapse the entire system. If one’s neighbor told you they just got their balance reduced from 300,000 to the current market value of 175,000, every neighbor on the block will want a loan mod as well, and it will set into default loans that might have otherwise remained current.
Just my humble opinion.

Good stuff, J Scott! Thank you. I have actually changed the type of property I am purchasing. Instead of rehabbing median price point homes with the end buyer in mind, I am now going for cash flow rentals and selling to cash buyer landlords. That's the only way my small brain could think to get around seasoning!

I am running into very messy snags with flipping property and am encouraged that you say you are having good luck with them. I was wondering about a few things to see if your info can help me:
Did your end buyer use an FHA loan?
I am guessing not because you said you closed in 30 days and FHA underwritting is backed up now almost 60 days.
So if it was a conventional loan, then there was no FHA 90 hold needed, so you were able to enter escrow immediately after rehab, right? Were there lots of high comps to support the ARV?
I would be very interested in the language you used to get by the 90 hold, as myself and everyone I know in my investor's group haven't been able to find a way around the 90 hold. Thank you.

The flip waiver you are refering to is "Waiver of Requirements of 24 CFR 203.37a(b)(2). This is for a lender who has aquired property through a foreclosure and does not pertain to an investor who has purchased the REO. Is this the waiver form you were refering to?

Saxon is THE WORST loss mitigation I have ever had to deal with. I wouldn't ask my worse enemy to have to deal with them. I have one file that has been with loss mitigation for 7 months now. Don't do it!!!

We can't accept a purchase contract for an FHA buyer for 90
Days from the time we close escrow. I understand what you mean about buying lower, but that would mean buying for 60 percent minus repairs or better, and I haven't had an acceptance on
On anything that low. We do list for sale as soon as rehab is done hoping for a conventional or cash buyer, but 90 percent of buyers are FHA.