D-HI REI Journal

Gets rid of the HELOC, they do owe 37K, and 51,500 was the original amount.

yeah I hear ya about the time limit, but I feel in my area that price will (are already) increase and I will have no problem selling in 5 years or less.

So I basicly get this house for 37k with an 800 dollar payment for 60 mo. ($48k). I'll rent it for 4 years at 1400 (about 300 cash flow a month x 48 mo. ($14,400 profit) after expenses, taxes, ect) and then fix it up in the 5th year and sell it for roughly about $325k.

We're watching in anticipation.

Rina

recent offer update.

Well these owners must NOT want a quick sale! They would rather rough it out and wait for something better. They turned it down! I really believed this was a good offer for both paqrties, I didn't low ball them that much and I gave them a solution to their problem......but I guess they are either ignorant to the current market conditions or they are just plain playing hard ball.

oh well, I told my REA to keep my offer on the table as is, if they change their mind it's there to accept.

On to the next one....I feel I am always saying that!!!!! (one to the next one)

I WILL get a deal, I won't stop till I get one. So everyone reading this KNOW that it takes time, commitment, and patients. Don't quit, keep on going. A deal WILL happen...

Can you explain how you factor in the 35K down payment. You are owner financing so I assume you don't have the 35K cash (please correct me if I am wrong)? Can you, or anyone explain that for me?
Thanks

yes I am putting 37 total down cash! This is to pay off hi current heloc, thus making it able to owner finance the rest (210)

Thanks D. So to take out a HELOC, you pulled equity from another property you own to fund the down payment of this?
slowly getting the hang of all this!!

sure...I can take a heloc on my own prop to cover the 37k down pymt

hello all....

I found another house to put an offer on. This one is a 3 bd 21/2 bath short sale. ARV RIGHT NOW is 220k(quick sale)235k(wait for it) I offered 164k. Needs about 20k in repairs.

So I'd be in it for 184k plus costs to buy it, about 7k...totaling 191k

If I sold for 220k right away, I would profit after all costs $12,500.

BUT..I plan to rent this for atleast 2 years at $1250. Then sell in the range of 245-265

mortgage 131,200 @ 6.5
P&I - $829.27
T&I - $158.33
possible managment co - $108

total costs - $1095.60

cash flow - $154.40

Sounds good D, good luck, let us know what happens.

Keep us posted, Mr. Landlord.

a DONE deal, well the bank finally approve it! Now I have make sure my financing goes through and wait for the settlement 12-22. Then I'll start to worry... :\ It needs a little work and some cleaning up. The prior owner started some projects and never finished them. After I fix I will try and rent it. This is where my fear comes in, what if I cant rent it!!!???? I can't afford to carry the mortgage along with my primary homes mortgage...I dont really want to sell it in this down market because I wouldnt really make much with the repair costs, the realtor fees and closing costs! I got a great deal 70% of market(ARV) but still...

Any tips on renting, and making sure it rents and to a good person??? I know that alot to ask for.

Thanks

p.s this is a different short sale from my 7-10-08 posting.

I just read thru the first page of your journal. What an education we all can get just by reading each others journal. Thanks for sharing, and may others be encouraged to do the same.

Get that worry out of your head. It's all gonna turn out great! One step at a time, my friend. Are you going with a property manager? If so, give them the heads up. If not, start putting feelers out for tenants. And you never know about your market. You could always try to FSBO it for what you want and see what happens. Or consider lease/option. NOW you get to have some fun!! YOU are the boss. ENJOY!!

Rina

Seems as a good deal to me. Especially in this market to still have at least $160. cash flow per month, is not bad. Good luck, please let us know how everything turns out.

Sandra

Sanbern sorry for the confusion. This short sale is a different one from my 7-10-08 post, that one didnt get accepted. The numbers for this new short sale are as follows:

purchuse price $150k (Todays Market ARV $215-$225k)
mortgage $120k
interest rate 6%
term 30 yrs
PITI @ $870
Managment co. $110
Rent $1200
Monthly Cash Flow $220

After a while I am going to try and do a refi and get my downpayment and closing cost money back. Refi for 160k which will give me about $100 cash flow.

This is STILL on the market..lol They should ahve accepted my gracious offer....(I am glad they didnt..that house wont sell!!!)

Congratulations, I hope it all goes well with that deal.

update for the short sale on 11-25 post.

So all looks good for the mortgage, that all went through...so far. But it was just appraised and the main bath is not in woring order. Missing toilet, sick tub...(its gutted) so I got an email today with a little set back. My mort broker says it needs to be fix before closing, or I can do it within one week after closing but the lender will with=hold 10k from the bank that is doing the short sale until it is proven to be fixed.

So I am going to meet with the current oowner and see if he will fix it or allow me in to fix it prior to closing.

anyone ever have this happen? (lender wont give mortgage because of condition of house) and how did you habdle it?

thanks

" This is where my fear comes in, what if I cant rent it!!!???? I can't afford to carry the mortgage along with my primary homes mortgage...I dont really want to sell it in this down market because I wouldnt really make much with the repair costs, the realtor fees and closing costs! I got a great deal 70% of market(ARV) but still...

Any tips on renting, and making sure it rents and to a good person??? I know that alot to ask for."

Well, I am getting smarter with each tenant but still not perfected it. Would love to hear what others have to say but my suggestions..

1. Listen to your gutt..if it's saying, these people seem like they could be trouble, listen. The one time I didn't listen as I wanted it rented immediately, I ended up with my worst tenant.

2. CHECK REFERENCES

3. Ask to personally see their current residence if feel necessary

4. Try to rent to someone who seems handy and put in the contract that tenant pays for first $35 of repairs to prevent unnecessary stupid calls

5. Think Positive and picture your perfect tenant in your head (you know that law of attraction stuff..it works..sold my store to the people I pictured would be my ideal buyers)

6. If you can convince them, get 2 months deposit. (you must pay interest on one month if so). This is my latest for my last tenant who approached me to rent my own home I had for sale. He is in car sales and I just didn't feel comfortable in this market so I said I would only do it with 2 months deposit. Even though evictions happen timely in my city (not that I have had to), an extra months deposit helps me sleep better. I'm pretty protected if they start to get behind.

7. Be FAIR, HONEST but FIRM (I need to get better at this..the firm part)

8. Make sure the house is as up to date and neutral as possible and people will want it if it's priced fair.

Good Luck

D, I agree with Kate on all points. The only one I haven't tried is #4, but most my renters have automatically done that. I think they prefer NOT to have the landlord involved. If you get a good tenant they will treat it as their home, and you may not hear from them at all, except for monthly rent checks and a Christmas card. lol

1. One thing I would add is when choosing a tenant, take a number of applications over a weekend or a week's time and then, after calling references, take the best fit for YOU. That way there can be no accusation of discrimination because nobody knows who came in what order nor why you chose the winning tenant (you did not REJECT any individual).

2. Kate, do you usually do credit or background checks, or just reference checks? I've only done employment and landlord reference checks, and have not asked for SS numbers. My investor, however, wanted a line on the app for SS#s just in case. I was very surprised that NOBODY has questioned this and have been very free with giving their numbers. So I started asking on my apps, too. Just in case it is needed in the future. (Of course, property managers always run checks on their applicants, I found)

3. Another thing that I have found helpful is asking for an "in case of emergency" number on the app. People usually give their nearest kin (mom or dad) which is a good source of "reaching" a tenant if you need to after they move out.

Also, you're right, driving by their previous residence is a great idea. If I have question of their character and they live within a reasonable distance, I will drive by.

Of course, using a property manager probably eliminates the need for all this. But I like the interaction myself, and LOVE it when I find someone that fits the property perfectly and are super excited about their "new home". I know I'm set for quite awhile.

sorry for the book. (Hey, Kate, you and I should write one. lol)

Rina

I like the in case of emergency suggestion..will add that and you are right on the first point as well. We have to be careful about discrimination

I have always asked for ssn# and never received an objection. I have only pulled credit on one tenant as most people spill the beans once you tell them you are going to. Let's face it, many people rent because they have bad credit and cannot buy but that does not always mean they will be a bad tenant.

I did want to check credit on my last tenant but the law had changed and I could no longer take my application (which authorized me to) to the credit bureau like I had done before. I found a different way to do it but I learned my property had to first be inspected and it was going to set us back 10 days and I just didn't have the time but I am going to look back into it for the future. I like to have the option of being able to verify their honesty in this way.

I would LOVE to have a property manager as I am just too easy..I rarely enforce the late fees (guess what, I rarely get ontime rent with 2 of 3 of my tenants too..duh! I know why.) There is a fine line right now..I know people are hurting financially now and I don't want to add fuel to the fire, plus there are a lot of vacant homes people can go to even though they are probably not as nice as mine so I don't want to stonghand tenants. On the other hand, I don't like being taken advantage of either...UGH! Right now though, I am just too frugal to pay a property manager. (I suppose the collected late fees would cover most their costs..HA!) But I am also blessed to have a significant other who can usually take first look at any repair/maintenance issues too so that helps. Maybe in the next few years.

One caution I have is to becoming their "friend". While I like to respectful and friendly, I have found it is best to keep it business and set the proper tone.

One question I have just thought about adding to my application is Have you ever been involved in a lawsuit? I need to research if that is legal. I think we would all like to avoid sue happy people..

The book has continued. Anyone else want to write a chapter?

anyone have this happen and can share what happen?

Thanks

While I haven't run across the EXACT same thing, I might have a suggestion. Is the bathroom the ONLY thing that's holding it up, or could the bank give you more surprises? If it's just the bathroom, ask the owner to fix it or, if that's impossible (since obviously they are not in a great spot financially) just line someone up to do it right after closing. DON'T put any of your own money into it before hand (because nothing is set in stone until it is closed), but if you have to wait on $10K afterward, that doesn't seem so bad to me.

Rina

Yeah we have a call, an email and a certified mail sent to the owner asking him to do it. If he does not want to do it, then he needs to let me onthe property so I can do it. The bank wont give the mortage until the bath is operational period! They said it has to be done by the 15th...so we got 6 days.

I'll let y'all know what happens.

So, in order to get the money the bath has to be fixed BEFORE the closing? hmmm... did they just change that from "the week after"? Can you play hardball and say they already agreed to the other, or was it not in writing? If you have an attorney involved maybe they can go to bat for you. I just hate to see you sink money into something that isn't yours already, especially with a fickle lender.

Dean spoke about this in reference to one of his deals when he wanted to buy a rental and a unit needed to be repaired before the bank would agree to the loan. This is a great opportunity to capitalize on. Way to go. Good luck and God Bless.

Sandra

I completed my first deal. The short sale is final. I settlement was on 12-31. I have been renovating the last week. I have quit a bit of work still left to do. I want to be done and get it rented by 2-1-09.

http://www.deangraziosi.com/ufiles/firstdeal.jpg

And thanks for adding the picture (Can you show me how to do that?)

Keep us posted!

Rina

Here is how you can add a pic to a post....

Go to My Account (left hand side under Main Section)Then go to the user Profile tab. From there, scoll down till you see FIle attachment. Add your pic/file. Then copy the URL (http address) that will show under the description field. Then just copy/paste it in any post.

Hey, I have been pretty busy rehabbing and havent had a change to give the details of my first deal...so here there are:

So I had some issues with the appraiser and the current condition of the house. The main bath needed to be functional before closing...a week later, we worked it out with the seller and he finally agreed to make the bath operational. So I went back to my Broker who went to the lender and told them it was good to go. The appraiser went back to the house the inspect it. The appraiser told the lender there was no floor (just plywood) in the bath, also the some dry wall was in need of repair, ect.... So then the lender tells the broker, and broker tell me, that now the lender wants the WHOLE house in average condition before closing. I said to the broker "what!, what the hell is the matter with this lender. The name of the game is buy first then fix!!" I said "then get another appraiser", lender said a new appraiser means new lender. So I said "fine, you're fired"! So the day before closing (Friday 19th) I called my realtor and we got together with a broker he often uses. The new broker said she would be able to close by 12-31. I said OK, do it! (wow, new broker, new lender and will close in 8 days!!!) Looks like I found a new broker! So anyway, my realtor called the short sale bank, Chase, and asked for an extension. My realtor kept the closing date of the 22nd live. He went and meet with the lawyer and the seller. The seller signed and did all he needed to do, so his part is done. The deed was signed, so he is no longer the legal owner. He moved out on that day (22nd). I legally could now start any rehab work, even though I did'nt fund the deal till 12-31.

Ok the deal, it was a short sale. My realtor did all the work putting together the short sale, dealing with the seller, and the bank. The comps are 215-225 after repair value in TODAYS market. I picked it up for a about 68%...not bad huh!!! Initially I thought it would need about 15-20k for repairs. Looks like I can get away for about 4-8. Its a ranch with 3 br, 2 full baths, eat-in kitchen, full basement, in ground pool, and sits on a cul-de-sac.

#'s

PITI - 860
Pool Maint. - 50
Rent - 1250
Potential Cash Flow - 340

Will refi after 3 months and put the closing costs, down pymt, and the rehab money back in my pocket. Then Cash flow will be about 120. then on to the next deal...

Thanks,
D