Mark's Journal

Hey Mark I noticed that you mentioned you have a broken water valve. Just a little info from me. I had this same problem with a foreclosure I bought. I didn't catch it before closing. The city wouldn't pay for it and of course neither would the bank. It can be very expensive to fix. Maybe $2000 or more. Try to get the bank to pay for it before closing. As soon as you close on it your stuck.

Yaeh.. we have already caught it. I have told my realtor that I wont approve the inspection without the water being on and my plumber going in to look at the property.

The bank's agent is already working on getting the bank to fix it and on extending the inspection time. (The bank had countered with a short inspection time. That was fine at the time but with the broken valve, no time to do anything except reject the property based on the inspection.)

One more post about my state of mind re. the water valve. If this does not get fixed (and NOT by me) I WILL walk away.

Whenever I look at a deal, I am always of the state of mind that I can take or leave this house. There is always another one.

But in this market it is even more critical to think like that. In a super hot (seller's) market, you may need to accept something that you aren't thrilled about, knowing that the house is appreciating and you can sell it in 6-12 months if need be.

In this market, there is NO reason to think like that. If there is ANY concern at all, just tell the seller that you will walk away. There are not enough buyers that the sellers can afford to turn away qualified buyers.

I emailed my realtor and told her that either I need a signed addendum extending the inspection period by Thursday night or I need to reject the inspection. She is tracking it.

I overnighted the earnest money check for the property that I have approved the inspection on. (Seller changed the Title Company).

I signed preliminary loan docs for all 3 properties.

I keep a 1003 on file with my mortgage broker and a couple of items were wrong/out of date so I emailed her with changes.

I faxed over docs (investment statement, trust agreement, information authorization) to my mortgage broker. I had forgotten how complicated I made some of those transactions. :oops

I faxed over a nasty-gram to my pool servicing company. They are "this close" to being replaced.

Last night I was thinking about my exit strategy for the 2-3 properties I am currently buying.

At first it was buy and hold till the market turns around (that is still viable and possible).

Then I was seriously considering a 1 yar LO just to get my cash back out (basically a triple in 1 year).

That brought up 2 questions.

What if the market continues to decline? A couple of ways around this. Either re-write the option at a lower price (but still good for me). Or just go back to a straight rental. Or even put the option on hold ie extend it at the same price till the market turns.

The other problem seemed more serious and that was qualifying the T/B. I could work on their credit with them, clear that up. SHow a good history of rental payments etc.

But what about the down payment? I am thinking FHA may be the way to go. I think that is still 3% down and seller can help.

I have an email into my mortgage to clarify what programs are out there.

I would think that you might want to consider writing it at current option price or current market value at the time of option execution or which ever is lower. I have recently seen that done and both parties agreed but they also extended the option from 1 yr to 3 yrs because of the same issue you are having.

I would be worried about doing that. I would be concerned that forcing myself to sell at the lowered price might wipe out any profit.

Not likely to happen but possible.

ohh...my mistake I thought you were the buyer, did not realize you were the seller.

Mark, let us know what you find out about available programs.

And I was wondering: Do most of your properties have pools? Is that kind of standard down there?

I did get a reply. FHA is indeed the way to go. Seller can gift 3% to a non-profit which then forward it to buyer. Also, seller can concede 3% in closing costs so NMD to the buyer.

And there would be plenty of room in my deals for that 6% (especially since there would be no realtors involved.)

Pools are a definite no-no. I have one and it's a frequent pain in my bee-hind.

Funny that you should mention that.. but MANY times I have had sellers or realtors try to sell me a property with "oh and it has a lovely pool" (thinking that is a PLUS). Their eyes bug out when I drop my offer based on that.

Until I point out the liability issues, the maintenance issues, problems with the city, expense to fill it in and on and on. I WILL buy a house with a pool but it's a definite negative so the deal has to be better.

The FHA thing is really great to know. Thanks.
As far as the pools, I was just curious. I'm trying to think if I know even 1 person with a pool up here. We just have above grounds and drain them in the winter. I guess you could use it for a skating rink for 9 months. lol

Yeah.. that's one of the benfits of being down here. No winterizing. I have never had the pipes freeze etc.

Emailed more info to my lender and FedExed back the loan docs.

One property is now locked in.

The other one is looking good. The bank is going to eat the plumbing valve repair. Fix to be in today. And my realtor is going to take care of the re-inspect fee. That should happen in the next few days.

The inspection clock hasnt even started. Sheesh. Does this bank want to deal or not?

Hey Mark,

I was wondering, when you get a number of applicants for a house and you've decided on the one you're accepting, do you call each of the others back? I usually tell them, "If you don't hear from me in a couple of days you're welcome to call back" and then on my phone message I put "If you're calling about (whatever house it is) I'm sorry, that has been taken." The message is mostly for all the new responses to the ad, but do you think that's a rude way of letting people know they didn't get it? I mean I answer if they call back, and I talk to them. But if they don't call, I don't necessarily call them. The reason I started doing this is that I used to call everyone back, but as soon as I said "This is Rina" they were all excited thinking they got the house. And then I would have to say, no we gave it to someone else?

What do you think?

I got I bet 30 calls in the last few days for this most recent house! I didn't even answer my phone today.

I think I really need to start buying some more!

I have to admit that Im not consistent on that.. If they DO call back, I will talk to them directly and tell them they didnt get the house.

In the past, yeah I have called back peopel who really seemed interested in the house. Other times, I havent called back.

And yeah.. if you are getting 30 calls then you should be buying 10-15 times more than you are.

SLOW day , yesterday. (oops.. sow = slow)

The inspection report was confirmed- and paid for by my realtor. Happening this weekend.

The loans are still in progress. It seems like we are on track for 3 closings around June 1.

My realtor did send me 1 new property to look at. Im calling it over-priced.

on the 3 places!

(what's sow day?)

Realtor sent me 2 more properties- both with list prices UNDER 50% of FMV. I was going to take a breather after these 2 closings but I cant pass up these deals so I told her take a run at them.

She warned me that one of them may be priced to attact offers ABOVE LP. The one thing Im not doing is getting into a bidding war.

Areas wre bad/declining on these 2. Realtor said she didnt even go in. I love that about her- that she has MY best interest in mind all the time.

Plumbing inspection came back good on the 2nd house we offered on (neither of these 2). No real problems. Good to close on that house as well.

You are knocking them down. I am so proud of you. I read you post everyday and it give me good ideas and strategies to use in my own dealings. I am glad to see that you have such a good Realtor as well. Thy are hard to come by.

Lender emailed today and asked if seller (bank) was going to fix the hole in the ceiling or the glass sliding door. Appraiser is freaking out... AGAIN.

Ummmm..no?? That's why Im buying it at under 60% of FMV...

Lender will require funds to be held in escrow till repairs are made (immediately after closing). Not a problem since of course I was going to make the repairs AND was going to use those funds to do it.

Just another hoop jump through. Need a glass and drywall estimate prior to COE. My realtor is working on it. (Will be less than 1K. Silly to make such a big deal out of something so minor.)

Oddly enough, this is the "better" looking property but for some reason the appraiser had a problem with ut but NOT with the other property that has an A/C unit from the 1600s (that is a 4K replace).

Ceiling repair came in at 181 big, swinging dollars. This is one of the 2 repairs that the appraiser was freaking about.

You'll have to dump the deal.

pretty redicuous, that the APPRAISER was freaking out over a $181 repair!@#$!, YOUR HERO,SULLY.

Well.. the sliding glass door will be more. Im guessing ~500. But yeah... the 2 repairs are under 1000.00 so the appraiser is over0-reacting jsut a tad.

i didn't read about the other repair, but STILL under a G ( $1,000 ) that is still rediculous...SULLY.

The other repair was for a sliding glass door. I got the first estimate today: 675.

Total repair will be 856 or less.

Emailed my realtor over the weekend.

Again, we are on the same page. We are both thinking that we should start leaning on the lender by mid-week or so.

We are supposed to close the end of NEXT week.

The other glass company looks like they will come in around 340 to replace the door. So they win.

My realtor emailed over a doc we had previously signed/initialed. Apparently, we were NOT supposed to sign inside the circles that my realtor had stamped on the doc but rather ON the indicated lines. So the bank threw a fit. Sheesh.

Also, the bank is demanding proof of funds to close (ie down payment). I sicced my realtor on my lender. She has ALL the funds. (I could fax them over a brokerage statement but just dont feel like it.)

Thank you for posting the daily details. I think that's helpful for people to see it usually isn't just a slam deal, sign a paper and you're done. Keep up the good work and congrats again on your new holdings.

Rina

P.S. And thanks, too, for all the technical advice you give people. I'm learning a lot from your posts.