All Forum Posts by: Tom C

James,

How old is this email?

So are these new FHA rehab loans OO only or can we get them for NOO's?

"That fix and flip stuff gets mighty old when you are old enough that your knees hurt and your back is screaming by the end of the day. "

Heck, I am only 38 yrs old and I have this problem.. :)

I don't understand your question. If you buy a HUD during the "all bids" time frame, then you can do whatever you want with the house. If you are going to live there / OO, then you can qualify for HUD's programs. If you are buying it NOO, then you do not qualify for HUD's programs.

I am not aware of any type of penalities that you talk about. You can refi or sell that house any time you want if you buy it NOO. The only penalities come in is if you lie, buy it during the only OO period and say it's OO, and turn around and don't live in the sucker. You can go to jail for that. I believe you have to live in the house at least 12 months. Renting it to somone qualifies as NOO, not OO.

Hope this helps..

Are you working with a basement, crawl space or slab? If its a basement or crawl space, then you should be able to see any major issues that would stop you from buying. If it's a slab, then you may have more work, then you will be able to see. Most of the vacant homes that I buy have some type of mold and it's not a big deal.

You know that you have a serious issue when you walk in the door and see everything covered and you can smell the mold. I am assuming that the mold around the windows is on the wood and not on the drywall?

Have you check in the attic? Is in growing between the rafters? Just get in with a flash light and check everything.

My current REO project wouldn't have made a bit of difference if an inspector would have come in or not. Some of the problems that I have encountered would have never been picked up my an inspection without turning on the water.

As an example of things that I found after turning on the water. Someone broke off the plastic over flow on the bath tub on their way out the door. So I turned the water on, turned on the bathtub faucet and heard a god awful noise down stairs. I ran down stairs to see my kitchen ceiling fan pouring down with water. Nothing major, but this actually happened in my last rehab, in the kitchen over the ceiling fan, but it was a broken water pipe.

After pulling the access panel, it was clear that someone kicked and broke the over flow off and then replaced the access panel. Very clever I must say. Then after days of clearing the black pipe water lines, installing new shut off's and faucets. I discovered a leak running down the sewer pipe in the basement from somewhere upstairs.

This explains why the home owner decided to install a toilet in their dinning room on the first floor. (Yeah, pretty freaking walking in and seeing a toilet sitting in the middle of the dinning room floor, but I assumed it was because they were handicapped) Finally after ripping out the kitchen cabinets, I found the leak in the 6" cast iron pipe. The whole 6 foot section of pipe had a crack running from one flange to the other. Needless to say. If you know nothing about Okra (sp) and liquid lead, then the best way to handle this is to cut the pipe, boot it and put in plastic.

So far the expense hasn't been anything major, but the amount of time and effort that has gone into plumbing in this house certainly has exceeded my estimates. I buy the same as MikeOH.. Although I will watch a REO sit on the market sometimes for months, then after the price has dropped a few times, then I walk in, spend a few minutes and if it's a winner, make an offer. I don't go back a second time, if I didn't make an offer the first time.

Jug,

You can throw out all of those $100 Dp's and other programs if you are not going to live in the house. Those are only programs for OO. When you buy a HUD home you are buying it as is as an investor. There are many great deals on HUD's, but many you will also find completely trashed once you get inside the house. Trashed meaning full of mold and other issues that will require a total cleanout. So far my worse deal was a HUD home, but it was my first deal. If you planning on making an offer on a home, make sure you have POF letter, your broker cannot submit an offer without one.

To address your equity question. Everything you see other then the listed price and posting date on HUD's web site, don't bother. The appraisal value, inspection report and condition report are junk. The 2 reports are the same all the time, I don't think the inspector really even looks at the homes.

The equity you have in the home is based off what the local comps are for homes of near condition and detail as the home you are looking at. Then you figure in how much rehab is going to cost you and how much the home is worth after rehab. You take all of your expenses and subtract that from the after rehab value and theres your equity. As an example on my first deal which was a HUD

Purchase price = 21k
CC = $1500
Rehab = $8K
Holding cost = $600

total in $31K way too much!!

Appraisal for refi came in 5 months later for 64K. My equity = 33K. Not a bad deal for my first one, but all my mistakes came in during my first inspection of the house. Things I should have spotted, I missed which raised my rehab cost.

Also keep in mind if you are buying homes for less then 30K, you will not be able to get a loan for these. You may have to take my route and find the cash for your first purchase, then pull an equity loan out of that to make another cash purchase and just keep the ball rolling. As long as you buy them low enough and your ARV is high enough, you can continue to cash out 20 to 25K for your next purchase and rehab, while holding small loans on each property and still making them produce a fairly nice cash flow.

Yes, Larry seems to be a respectable person. He has some great pod casts that I listen to often. I wouldn't pay for any of his material or bootcamps, but then I wouldn't pay for anyones boot camp.

Interesting Tim... She told me that the bank told her that she was still responsible for the house, including maintaining the yard.