Foreclosure property

Back yourself up by using other sources. Such as direct websites of the following Trulia, Rentometer, maybe Realtor.com, Zillow , eappraisal. There are others and they are not hard to find. As far as obtaining it. Try one of the "creative" purchase ways with an extended close date you feel comfortable with giving you time to find a renter or buyer after you check ALL your numbers . You've been around long enough to know most of this . Run your DOM too and account for that as you said . Make sure you have GOOD exit clauses.

Hey Shawn,

If it was me I would have my agent pull me mls: actives, pendings and solds in last 30, 60 & 90 days. If you are looking to buy, fix & sell you want a clear picture of what that area is doing. Actives gives you a picture of the weight and your competition and DOM to truly budget appr. for holding cost. Solds will give you an actual current FMV rather than just taking the agents word (no offense but they're just trying to close. pass go and collect his $200 - lol). I love my agent, but it's up to me to verify all aspects of a property. Make him back his claim (estimate) with verifyable unfiltered figures.

Based on your numbers I'd look at it all ways (taking the low end of your estimate of $70k - (to be revised based on solds from agent))

$70,000.00
(4,200.00) 6% commission
(2,100.00) 3% (min) holding cost
(2,100.00) 3% closing
(25,000.00) repairs
(10,000.00) min profit (or whatever you choose)
____________
$26,600.00 MOP (max offer price)

OR

$95,000.00(65%) = $61,750.00
$61,750 65%
(25,000) repairs
(11,400) ~12% closing,holding,comm
_____________
$25,350.00 MOP

so on this basis would come in around a $25k pp with NTE $26k

Some people I see posting get stuck on FMV and ARV. The way I run my numbers if SOLDS are putting it at a sales price of $70,000.00 I don't get hung up on ARV. If sold cma came in at $70,000 and I put $25k into repairs. The ARV on paper would put it at $95,000 right. YES BUT if nothing has sold based on comps in the area for over $70-80k IT WANT SELL at the ARV price no matter how "pretty" I make it or whether or not it has gold faucets (lol) because it's priced high. A property is only worth what someone will pay you for it. To me ARV is for paper and if pulling for HML/PML/REFI, etc.

Plus if you are looking at holding and pulling financing, you're only going to be able to pull % of what it will appraise for. (make sure you take that into account also and work the numbers for the % your lender will lend upon as well). If your holding, know what it will appraise for AND current market rents. Then will rents capture all property expenses and your personal minimum cashflow amount required? If so, then your good.

I would proceed if I could concrete numbers to justify b/f/s or b/f/h (MINIMUM of two exit strategies) (if the numbers work both ways you will usually be able to wholesale if needed, which gives you three exits)

STEPS:
Agent to provide above backup
Confirm your top# (concreted what it will sell for quickly) *if top number is off then all other numbers are off*.
If satisfied then:
10-14 day inspection contingency in PA
which will alot time to A) line up funding, B)secure a buyer if neither are complete within inspection period you can excercise your right to terminate.

just my two cents - LOL

Be blessed,
Jen

one more thought - lol!

If you couldn't sell and elected to hold, you could move it at a higher sales price if you secured the property with long term fund and held the note. Could structure as owner finance with or w/o balloons or L/O.
Leaving you to set higher sales price with higher APR and make money on money you don't even have while assisting a buyer and giving them a fully rehabbed property that they otherwise may not have been able to capture.

ESTIMATE:

$65k Total exposure (provided you lender would go at least 70% of appraisal (banked at $95k) if you choose 30 yr fixed at say 5% puts you at $350 (P only figure)

you structure an owner finance at $95k ++
set APR at say 10% on 30 yr (with or with out balloon - whichever your preference) puts it at $835 (P only)

NOT to shabby.

IF you have a buyer and market merits the $800+ payment. But all flexible, could adjust APR or sale price to meet the needs of course. Even at 8% the payment would be $700.

Could get really creative if you where looking to L/O or utilized the balloon for owner financing and take advantage of an interest only or ARM. You'd have to chose what would best suit you and maximize your ROI and how long you wanted to be involved.

Just a thought to still get you in and out of property with out being the landlord. To fix the toilet if backup - lol! You'd just be the bank.

BUT have this foresight if you are looking at doing this WHEN you enter your mortgage and what you can or can't do (legally) based on your terms with your lender. So make sure you have your attorney review.

o.k. I'm done. LOL!

Thanks for the comments, and all the great thoughts from you too Jen. I am going to work on this and see what I can come up with and have my agent see what the area cma is and the like because I know the area good where the property is at and both rental and owner occupied properties are normal here. It is good for a family as the school is close by, all shopping areas are within 2 miles which saves gas with these prices. As for what I can do with the property the bank I deal with now that has my house financed know what I am looking to do also, I told them I am looking to buy investment properties to rent or flip depending on the property. I was thinking myself that the 30k is still too high but I am running the numbers and keeping an eye on this property to see what comes out with it as it has been listed as a foreclosure now for about 120 days so sooner or later I am hoping that the price will drop some more.
Thanks again for the great info you two have given me.

Shawn

From the agent I know here in the area that I have regular contact with and use when considering properties. On the solds the price range was from 82k to 104k dated back to Jan 1 so that would put the fmv of this property in that price range as well with the minimum being around 82k but after rehab it could put it up to around 95k due to the work to be done. As for active properties they are in the same price range as the ones that have been sold so no doubt would go for what they are asking. Will check into the active listings to see how long they have been on the market as well to see how long it is taking to sell these properties. So buy the info I have received from my agent to me a quick sell price would be around low to mid 70k but still have to finish looking at the numbers tomorrow morning when I get up to see how long properties are taking to get sold then can figure up a good sell fast value and go from there. Will keep posting on this one to let all know how it goes and thanks all for the great input here.

Shawn

Well after running all the numbers on this one it all comes out to be pretty good but now the big problem is the money part like always. Been trying to find HML in the area and no luck. This is what happens when you live in a small area with a population of about 20,000 people. I am not looking to use my own credit to get a loan at this moment nor my little bit if savings either as I just came across a fsbo that would do owner financing with a small down payment on the property which would be easier to find a tenant buyer for and let the tenant buyer cover this so will see how this one goes.

Shawn

Hey Shawn,

Money is just a detail. Re-review your numbers, if you feel strongly you are dead on and confident about your figures and looking to move forward, don't let money stop you. I just did a google search of "Texas Hard Money Lenders" and it loaded pages full. I'm at work now, but if you like I can send you some links to nationwide lenders as well tonight when I get home. Some say they don't do rehab loans and/or want do 100% financing. If your spread is there you can capture both. HML are like people, they are a dime a dozen. Don't worry about the masses, just weed out the junk and find the one/s that fits you.

You have to also take into account their terms, points, interest rates, admin/prep fees, door appraisal, etc. Pulling hardmoney will narrow your profit margin because you will 'pay' for it. You also have to account for hold time. However, if the deal merits it, even if it cost you (ex: $5k +-) to use HM but stood to gain $20k, heck I'd do that any day of the week. LOL

Just have your backup if it doesn't sell. Know what it will appraise at. Refi lender in the hopper if it doesn't sell in your alotted timeframe, so you'll be able to roll out of HM. Worse case: you don't sell have to refi to a NTE cashflow market rent basis, (likely pull cash out of refi), rent, LO or owner finance the property. Then pass go, collect $200 and NEXT..... LOL

God bless,
Jen

Thanks jen and mike for the tip. I did the same search on google as well and did pull up quite a few hml myself. Still have to research them and see what I can come up with to see if they will loan money to take care of the repairs as well. If I had to a refi would not be much of a problem because the arv, fmv and appraisal would come out more than what I have in the property so the bank would not give me much of a problem on this. Will have to discuss this further with my bank to see what they think and would go for too, but I know for investment properties they only do arm loans and no fixed rate loans because I have discussed it with them before that I am investing in properties and what their terms would be. Will go through the hml still and have to call the owner of this one property he has for sale as well and see what his terms are as this property has had a lot of work already done to it so would not have to worry about much on it, just have to get the fmv and the like on this one along with address to see what the numbers are and get a contract on it for long as possible to give me time to find a tenant buyer and contact one of my buyers I have too in the area where the property is. Main thing is if I can rent this out and make a small profit every month to get my down payment out quick and then see if one of my buyers will want it or find a tenant buyer to make money up front, monthly and when it is sold.
As for the foreclosure it may just turn out great too, I have gotten so much help from jen, mike and all the others too. Even if I make 2k or less I am not gonna complain, main thing is that I can close a deal and help some one out in selling their property and help a bank get rid of one on their books.

Shawn

Well been doing some research on this as well, just like I was thinking so far all the hml I have found do not lend money in this area, they all invest in the bigger cities only which are dallas, houston, austin, san anotonio and the other big parts of texas and none in the redneck town lol as they are called where I live. But I am still working on a fsbo to see how the numbers come out on this one. Been running more figures on the foreclosure too and even with a hml my profit would of been between 5 to 10k with a holding time of max 5 months afterwards would have to rent it out and hold for a short time til it is sold so will use this one as experience in looking at foreclosures in the area that are few.

Shawn