Teresa Jo's journal

I spoke w/the owner of the house in Somerville and asked him all the questions. When I asked him how much he was asking, he kind of hesitated and really didn't know, but finally said he would take $5,000. (It is a vacant house and he lives next door.) I didn't act surprised while I was on the phone, but when I got off the phone I was like, Really?!? Wow. Someone would sell a house for $5,000? Incredible. Of course, I haven't seen it yet...LOL! I looked it up and the market value is @18,000. I called one of my buyers and he might be interested. I'm going to go look at it tomorrow and take notes and then call my buyer back.

I left a voice mail for a realtor that works w/investors. Hoping to hear from her tomorrow.

Got another small house to call on tomorrow.

Gonna be a full week!!

Teresa,

make sure you take with you a PA when you go look at the property, so that you can put the property under contract before you show it to your buyer!
On the PA sign your name and then write "and/or assigns"
Also, write in a 14 'business' days inspection period, 'to the satisfaction of buyer and/or buyer's partner'.
Also, give the owner $1.00 and tell him it's just to make the contract valid (which is true); if he insists on a larger EM, give him $20

good luck! you're doing awesome!!!

Yes, I'll take a contract w/me when I go look at the house tomorrow. I'm excited!! And I'll give him a dollar for earnest money.

Thanks!

Also, just to reexamine the possible deal on this house too, distress=motivation. Was this the bank REO? Or a private seller?

The house w/the pink bathroom was a private seller/investor.

Teresa, How much did the Seller want?

Figure out the Sold Comps in the area and that will give you the ARV. Deduct Rehab costs (can be an estimate from the contractor/Handyman)& Investor Profit (10-20% usually)Then Your assignment Fee (5-15k)

The result would be my Max Offer Price Begin negotiation at 5-10% below this figure. This is your "homework" then Make an offer (of course you want to make sure one of your buyers on your list ready to buy it)The worse that could happen is the seller says No. Okay, move on to the next one, but making an offer is just that. you GO GIRL!

The seller was asking $140,000. I had a contractor look at it (the house w/the pink bathroom) and he advised me to not buy it because of all the foundation issues, etc. (I wasn't going to buy it...I was going to assign it, but I didn't tell him that). Plus I couldn't get any sold comps...even the guys at the SA couldn't get me any.

The house I went to look at last night needs to be demolished...LOL! And the "owner" was not the owner at all! He lived next door and was just trying to get money from me. Has this happened to anyone else? I should have researched that house better. 2 big clues: He didn't know the address of the house when I asked him...he had to get back w/me later. He never told me his last name. When I looked up the house on the county website, the owner lives in Houston. One of my buyers might have bought it just for the land, but the house is 30 min. away and in too bad of shape. It was built in 1940.

I contacted a realtor yesterday about working with me, but then I find out from one of my buyers that he has done business w/her and he thinks she has some mental issues. So now I'm going to lunch this Friday with another realtor that is also a wholesaler. I told him maybe we could co-wholesale together. He was kind of discouraging though about trying to use the MLS for deals.

So, this week hasn't started off so well and I'm feeling kind of discouraged.

Discouraging to say the least are the steps that are leading you in the right direction I know it sounds like just words to you now but you ARE making progress Teresa, you are just hitting the bumps on the road that will take you there! Forget the negative contractor (probably couldn't do the work) forget about the Realtor most are that way, they only know retail sales so scratch him and you don't have to meet with them every time just a simple phone call will do. Most in my area do some sort of investing and some are ruthless and do not want to take the time to understand an investors perspective that's ok on to the next one. I made many phone calls myself some thought I was crazy and gave me a 'look' and some agreed and never followed through but I didn't either I was afraid of the next step and so I didn't take it and I lost a couple. Sold Comps can be used from Zillow's website and from Deans tool provided right here at TotalView.com great to use for some sort of comparables until you find an agent who "gets-it".

You could just begin negotiating with the seller by asking if he will consider selling for less if he was paid CASH and what would be the least he would take and let him answer. Then you could tell him the foundation issues could cost him $$$$ (get the estimate from the contractor that's all you need from him anyway just an estimate) and tell the seller the amount; this helps to shed some light in the Unrealistic seller's asking price and he may just come down on his price if he wont budge then he's isn't motivated enough for you and then move on. You have just opened the door to his solution and you might be surprised how many times they will call you back so far I have experienced the call back and it made me 10K
always ask how much (if any) they still owe on mortgage. If he still owed quite a bit then yes Lease Option is another option!! The things you can do are limitless just like your future! Don't let the bumps in the road knock you down let them propel you to the road ahead!

YOU GO Girl!

I might get another estimate from a different contractor...maybe this guy just didn't want to do the work, who knows? What concerned him was part of the flooring in the living room gave way a little when he stepped on it hard and he told me that they would have to pull up the entire floor to see what was underneath and then may have to fix that problem. The house is on pier & beam.

There's a much smaller house in the same neighborhood that I need to look at first that's a FSBO. It would be a great rental property because it's so close to the A&M campus.

You are doing wonderfully! Part of this job is the frustration. Just know that and keep moving.

You don't hit any bumps when you are standing still. So, you choose. Bumpy ride or stay where you are?

I know what you will choose. You have gumption.

Karen

I think I found a realtor to work with...having a meeting w/her this morning. She's "starving" to make money!

Yes!! I found me a great realtor. She's hungry & ready to work for me, even on the weekends! She asked me something about how long I needed her, or something like that. I wanted to say "To infinity & beyond", but held back...LOL! She's already calling me tonight about houses. Yay!

On Friday I met my realtor and we looked at 4 different properties, 3 of them on the same street. The first one we looked at is definitely a fixer-upper. It may be in too bad of shape, so I'm going to check with one of my buyers to see how much he wants to spend on rehab. Should have found this out beforehand, I know. This house was built in the 1940's and needs a total rehab. I'm planning on having my contractor look at it and give me an estimate next week. The owner has 75 cash flowing properties and doesn't sound very motivated, according to my realtor. She talked with him and he ended up saying, "Well, I'm not just going to give them away." Not sure if I should even pursue this. The asking price is $39,900 and my realtor wants to offer $31,000. She emailed me and said she couldn't get comps on it so I'm wondering how she came up with that figure. I don't think she has ever worked with investors.

I spoke with a guy on the advisory line and we discussed BPO agents. I'm thinking I need to get me one! The banks hire BPO agents to assess the value of a home before it gets listed. The agent can offer you the home BEFORE it gets put on the MLS. Now that's what I'm talking about!!! Does anyone else use BPO agents?

I also pulled a couple of sheets from FSBO's and will call on them today. I'm feeling a little overwhelmed right now but I know that's part of doing this business.

I made my first offer today and it didn't get accepted But that's ok, because I found out more about the process of making an offer using my realtor. She had no issues with putting "and/or assigns" in the contract. Didn't even question me about it!

Spoke with Roy on the advisory line and he advised me that I need to get going on making offers. He said he doesn't even go look at the house until a counter offer is made or the offer has been accepted.

Moving forward...

Trying to focus on REI, but with the Boston Marathon bombings and now the fertilizer plant explosion here in TX I'm having a hard time concentrating. However, I AM calling the advisory line every day and asking questions.

Trying to keep in touch w/my buyers. Today I called one of them trying to pinpoint the exact amount of profit he would like to make. I couldn't get it out of him, but he did tell me he & his wife have been doing this for 30 years and he gave me the areas of town that he wants to buy in. Said he has plenty of cash reserves so that's always a good thing to hear...LOL! We talked about the market starting to go up, etc. Don't think he understands the wholesaling concept, but he's figured out that somehow it would be cheaper to pay me than pay a realtor 6%. I probably haven't explained it well enough but he seems to want to work with me so somehow it should all work out.

My realtor sent me some expired listings and we will go look at those next week. I'm ready to make some more offers!

Looked at another house today w/my realtor, but I can't get good sold comps. It's in a neighborhood with much older houses. Going to listen to the calculating an offer phone call tomorrow night. There is a house that is a short sale, but from what I've read I should stay away from those in the beginning. If I'm wrong on that, please advise.

Asked one of my buyers if he wanted to buy in Indiana. He said no thanks.

Got to focus on what my buyers want.

You are correct. You should probably not do SS right now. Ask your realtor for "Standard Sales".

Karen

Will do. Thanks.
Also, she is sending me a lot of listings that were built in the 1940's and 1950's. Are these houses too old for me to make offers on? Should I just look at houses that were built after 1977?

Teresa,

I'm buying houses that were built in the 20's! lol
You should make offers on all properties; you will not live in them, you are assigning them, and as long as it's a good deal, it doesn't matter when it was built!

Also, you don't need to explain further to your buyer; all you have to do is bring him a great deal

Keep putting in those offers... remember,you need to put in 25 to get your deal

Good to know...I guess no house is too old. LOL!

My realtor emailed me today wanting to know when I was going to put an offer in on a particular house. I told her I would later tonight. Got to listen to my "making an offer" call" tonight first! Then I'm going to email her w/some offers. Kind of scary, but I've got to do it. Like Nike says, "Just Do It!"

Thanks Valerie and Karen...ya'll make me keep going.

your Realtor works for you and is your partner so that it's a Win,Win for you both. If the houses are that old there probably aren't any recent Sold-Comparables, so have her expand her search with the same type of house you are prospecting, same sqft., same Bdrm, same type roof, same type building material like brick or wood siding etc... She may already know that particular area and she gave her own price opinion of it when she offered 31k for that one that was listed at 39k. Communication is key when talking with your Realtor so they understand what you are wanting to do. Remember also that you "work" for your Buyers bring them what they want and keep a record of there Criteria so you can refer to it, get familiar with it so when a seller calls you, you'll know exactly which buyer on your list to match them to!

Btw, it was a tragedy last week on the news, keeping their souls first and foremost in my prayers! Keep on Going!

She wants me to offer $37k on it now. I'm going to do my own comps and do like you said...expand my area. I just got thru listening to the offer call and feel more comfortable about making offers now.

Yeah, last week was definitely bad news week for Boston and West, TX.

TTYL!

Teresa,

Perhaps you can use http://www.totalviewrealestate.com/login.php and/or http://findcompsnow.com/index.php for your comps. The Total view site is loaded with information. Good luck (if you need it).

Yes, I've been using totalview and findcomps now sites. Thanks.

Today I went driving for $$ and stopped at a house that I've been watching because it looks like its been abandoned. I spoke with the neighbors because they were outside and they told me the owner is a hoarder and she doesn't even live there most of the time. I'm thinking about sending her a letter to see is she would be interested in selling. Then I got to thinking...where would she put all her stuff that she's hoarding? LOL! If anyone has any suggestions let me know. The neighbor told me that she has some property that she is about to sell so I gave her my business card and asked her to call me when she's ready. Wow, who knew I'd find a seller just by inquiring about a house?!

Got some FSBO phone #'s and I'll call them and see how motivated they are.

Hope everyone is having fun at the Edge.

Teresa,

You're correct in you're thoughts. By just talking to people doing everyday things and giving out your business cards you'd be surprised at the sources of leasds. REAs, laywers, and other business people do it all the time. Also, if you get the chance to talk to the "hoarder" you might suggest a storage unit for her stuff. It certainly less expensive that two mortgages and utility bills. And besides she may make some money by selling the house.

Just some thoughts I have. Good work. Keep it going. Good luck.

Right...I'm getting used to talking to people now and telling them I'm a real estate investor. So true...the more people you talk to the more leads you're gonna get.

I thought about the storage unit for the hoarder already. Good idea. I'm going to write her a letter today.

Thanks to you, Kathy, Karen & Valerie for the continual encouragement. Believe me, I need it.

I need help! My realtor sent me a Comparative Market Analysis for a house and her recommended price is $45,500. I ran the comps and got an actual market value of $36,230.40. So here is how I can up with my offer amount:

36,230.40 (actual market value)
-2,174.00 (6% real estate agent commission)
-1,022.00 (3% market adj.)
-991.00 (3% bargaining adj.)
-961.00 (3% closing cost)
-10,000 (rehab costs)
-2,000 (my profit)
_________
$19,082 (my offer amt.)

This is a foreclosure and another realtor (one of my buyers) told me that we could do a double close and he said I could use his company for the transaction fees. I told him I wanted to assign this, but he said that it is not called an assignment, it is called a double close.

I haven't told my realtor yet how much my offer is going to be, but I know she'll be mad at me for offering such a low amount. Comments/suggestions?

my realtor friend also told me that it would be ok unless it's an FHA foreclosure. He said some foreclosures have restrictions relating to the deed and transfer of deed within ___ days of them selling the property.

If this is a foreclosure, that means it is an REO. Again, when you make offers on REOs, they are going to require EMD (usually $1,000). It is extremely rare that the bank will allow you to assign it. Which, the majority of the time, will mean you have to do a double close and that will take a chunk out.

Is this realtor offering you Transactional Funding? If so, what are the fees? I doubt that that is what he is meaning, but possibly.

A much simpler way to run your numbers and it will work out the same is:

ARV x .85 - rehab costs - your fee. Much faster.

If you are going to do a double closing, you will have to deduct those fees. Not usually worth it on a property this price.

Another tip. DO NOT TELL YOUR REALTOR THAT YOU ARE GOING TO ASSIGN IT. Not their business and often they won't work w you. You are a "cash buyer". Period.

Too bad if your realtor doesn't like your offer. She isn't paying it. She can offer whatever she wants when she is paying the bill.

Good for you for getting out there and ding it, but these REOs and SSs are not good for you starting out. Did you tell your realtor to pull Standard Sales?

You are going to succeed. You have the mindset!

Karen

Here are the guidelines for FHA from 123Flip.com:

FHA 90-Day Rule
56 COMMENTS
Despite the fact that FHA waived their 90-day resale restriction back in 2010, there’s a lot of confusion about what can and can’t be done when selling your rehab property to an FHA buyer. I wanted to (hopefully) clarify the situation very concisely in this article.

The Old FHA 90-Day Rule

Before February 1, 2010, FHA had a very clear and very strict rule that basically said, “If you buy a property, you can’t resell it to an FHA buyer for at least 90 days after you purchase it.”

In fact, in some cases, you couldn’t even sign a contract with a buyer until after 90 days from purchase.

But, as of February 1, 2010, that restriction was waived, and FHA replace it with the following…

The Current FHA Rules

As of February 1, 2010, and at least through the end of 2012 (hopefully it will be extended longer), FHA now allows investors to resell their properties as quickly as they want to FHA buyers. That said, there are some rules that FHA is putting in place for any quick resales. The two big ones for investors are as follows:

All transactions must be arms-length, meaning that there must not appear to be any impropriety taking place between buyer and seller. This requirement also indicates that any prior flipping activity on the home in the previous 12 months may be a red flag to the lender.
In cases where the investor wanted to sell within 180 days of purchase, and where the sale price exceeds the previous purchase price by more than 20%, the lender will be required to take extra steps to ensure the sale is legitimate. This may include a second appraisal and/or a full FHA inspection.
What This Currently Means in Real Life

Now that I clarified the FHA rules, let me explain how this translates into real life for rehabbers:

While FHA will allow quick resales (as soon as you want), not all banks that do FHA loans will do them in the first 90 days. In other words, some banks still adhere to the old FHA guidelines, even though FHA doesn’t require it. There are a lot of banks that will now do FHA loans immediately, so ask around to a couple loan officers or brokers and find a bank or two that will do an FHA loan without any time restriction; most of the regional banks will do these, but even big banks like Wells Fargo are now doing them. So, just because one or two banks say no, don’t give up.
If you plan to resell within 180 days, expect that you will need to have two appraisals on the property. Also note that the second appraisal can’t be paid for by the buyer — so either you (the seller) will need to pay for it, or the broker/lender will need to pay for it. This should be negotiated upfront so there are no surprises.
If you plan to resell within 180, expect that the lender’s underwriter will require you to furnish details of the rehab. This may include renovation details, invoices, receipts, etc — anything to substantiate the work you’ve done.
If you plan to resell within 180 days, you will need to do enough improvements to justify the higher resale price. There are no specific guidelines on how much work you must do, but if the appraiser or underwriter feels that you haven’t done enough work to justify the new resale value, your appraisal will likely come in low, regardless of comps.
If there has been a “pattern of flipping” (in this case, that means there has been more than one title change other than an actual foreclosure) in the past year, the lender will likely reject the loan and you may be required to wait 6-12 months to resell to an FHA buyer. This often occurs when an investor purchases from a wholesaler, rehabs and then plans on a quick resale — there are two title changes from the wholesaler to the flipper to the end-buyer, which will be a red-flag for an underwriter, so be aware of this potential issue when buying from wholesalers.