Shirley's REI Journal

I hope so... I'm living off a small SS check and what's left of my IRA.... which is not much as I keep having to dip into it. In fact, I was going to use the rest of it for this deal and if it had fallen through, then what? I'd have to move in to the house I bought(on a not so good side of town) and wouldn't even be able to fix it up!! So I WILL find some deals... however and whatever it takes. Thanks for the encouragement... that always helps!

Today I looked at 2 more properties that I would like to make offers on.... just need some basic questions answered before I do anything.

First property is a HUD property. When I told realtor that I wanted to place an offer, he was not happy... not that he wasn't happy with me.. he just said they were -------s to deal with. Oh well, he'll get over it.. LOL.. On the addendums area, it is stated "FHA insured with escrow $2750.000. Property to be conveyed 'as is with all faults'." I asked him what the $2750 statement meant and he said he thought that was earnest money that had to be deposited, but he said he will find out. I told him I would not pay that much e/m on a $35000 house. I asked another realtor and he said that's how much HUD will allow for repairs on the house. That sounds reasonable to me. Which one is correct? Aso, the statement "as is with all faults".... does that mean they are acknowledging that the house needs work and I cannot use anything like "subject to..." as an escape? I haven't been inside the house yet, but the outside looks okay and it is in a fairly decent lower income area.. not like you would think, but homeowners around do show pride of ownership. It is a brick house between 1000-1200 SF with a carport and outside storage building... nice big shade trees in the front and a fenced in back yard. So $35K sounds reasonable. They have already reduced it by $10K. It has been on the market 145 days. Totalview shows $63,223 and Zillow $66000. I think I'll offer $28k. Has anyone had much experience with HUDs. Are they hard to work with and does it take longer to get a response? I just want to know what I'm up against.

Property #2...This is an estate settlement. I did go inside this one. It is a brick house that has had an add on room and an add on double carport that was never finished. The didn't brick it outside either.. they used some kind of particle board and painted it. The add on room was shingled instead of bricked. It needs new carpet and flooring, there are several leaks in the ceiling...roof doesn't look all that great, needs exterior and interior paint, one bathroom needs replacing all around,the other could use updating, and 3 windows needs replacing. It is 2057 SF (this includes the ugly add on), it sits on .9 acres and has a partially filled in in=ground pool...still about 4 feet from surface. It was probably filled in long ago because you can barely see it due to a tree and a large bush growing out of it. The asking price is $100,000, but comparable sales are only from $99K - $120K.. The RE agent told the children selling the estate that they might not get that much. I KNOW they won't. I would venture to say the house needs $20 - $25 in repairs. I don't know yet how to figure %age for an end buyer. I understand they need 30% off FMV.. in this case $70K... Am I correct so far? It is free and clear (no mtg) so $100,000 minus $25000 (repairs) minus $6000 (re agent comm), minus $3000 (my fee)minus 2000 (oops factor)= $64K - my offer. Of course this will all be subj to the inspection. Does this sound reasonable. So now the percentage would be 33% of FMV if I wholesale it for $67000. Am I doing this right? What if I want to assign it. Should I still use $3000 for my fee? Sorry for all the questions....

shirley that's great, thats the way to do it. There are a lot of deals out there just waiting to be worked on, you'll do fine.

Gloria

??? comments, suggestions, answers??

I really need someone to comment or offer suggestions. I'm just trying to make sure I'm on the right path to these potential offers... re: # 33. Any advice or suggestions will be greatly appreciated.

I had not thought about doing lease options right now, but after reading another DGer's post and using her same ad on CL, I now have 5 buyers that are wanting to do lease options or owner financing. BTW, I don't remember who posted it, but I used it and it worked!

Now I have some questions that I need answered since I'm changing my train of thought, so to speak, on getting to my end goal... closing a deal! I hope somebody out there can help me out if you've had experience with lease options.

1) How do you prevent your buyer from going behind your back and purchasing a house from the listing agent (if it is listed)after you show it to them? I know not everyone would do that, but some would. I have explained to all that I am not a realtor and when they see a sign in the yard, how will they respond I wonder. This doesn't really apply to just lease options of course.

2) How do I go about asking a buyer/realtor if I could do a lease with option to purchase when it is for sale outright? Are most sellers open to this given the market right now? Is there a magic statment I can make if the seller says they don't want to lease because they're afraid if they do, the renter(leasee) won't stay and tear things up? I had a seller just say that to me. I just told her that the beauty of a lease option is that the tenants will take better care of a place they are renting to own because they already feel like it is theirs.

I have all the criteria for each buyer..now all I need to do is find a house that matches their needs and that a seller will agree to lease. Any suggestions or comments??

Wow, in just a few days I have now talked with 5 buyers that are counting on me to find them a property that fits their needs and that can be owner financed or are lease with option to purchase. I was sick all last week and didn't accomplish much except to read DG forums all week and post ads on CL, which I'm glad I did.

So I have all my buyers' criteria, their names, addresses, telephone numbers, and email addresses in a little book. I have been going through properties to try and find something that is owner financed or lease with option to purchase that matches their needs/wants.

Does anyone know of a good way to find this type of seller without going through each and every listing I receive from realtors? Also, I need questions answered from above post if anyone has some advice. I don't know what to do first. I guess I'll call the realtor and go look at the homes myself, then if it seems to be a match, call the buyer and have them meet me and the realtor to look at the house. I guess I need to find some FSBOs in order to make this work better. It just seems that by the time I look at a house and then coordinate with the realtor and buyer to look at it again, I've wasted a lot of time. I could do the latter and just look at it the first time with the realtor and the buyer, but again as I asked before, how am I going to be sure that buyer doesn't go behind my back and work directly with the realtor on the house? I might not even have that problem unless the seller is willing to do a lease option. All these buyers cannot get loans through the bank and one is actually paying $1200 month in rent and states they are comfortable with $1200 payments. So they have jobs and money, just bad credit.

Please give me any suggestions or advice you may have on this subject. I need to get busy on these and get my first deal hopefully!!

hard to find. I've seen a few but they aren't ones that match my client's needs. arggggh! Will just keep looking.

CraigsList for sellers advertising that I do lease purchases to help get the house sold quickly. Hopefully I'll get some responses.

I rode around looking for FSBOs today for a while but didn't find anything. I am beginning to think that is what I'll have to deal with to meet the requirements for getting lease purchases for my 5 buyers. I saw one lease with option to purchase but it was not what any of them were looking for price-wise and # of BRs. Well, tomorrow's another day. Hopefully I'll find something. I'd at least like to get one of them in a house in the next 2-3 weeks.

See # 37.... please

This is a 2 BR, 1 BA mill house.. habitable but needs lots of TLC and upgrades. Wiring needs replacing, windows are in need of repair/replacement and wood siding leaves a lot to be desired. Locked up for $14000. Will make a good investment property,going for $400/month according to owner's knowledge of surrounding properties.... but not sure how I want to market it. The owner wants to sell and be moved out by end of June so they can go home to Alabama. They have been living in the house for 16 years and no updates have been done. it does have hard wood floors, but other floors need repair.

Since this was my first contract to write up, I don't know if I filled it out correctly or not. I had her sign as purchaser.. first mistake.. and I didn't have but one contract like this so, in essence it's not a contract yet. I have to re do it and have her re sign it after I sign as purchaser. I think I'm going to assign it, but not sure how much to get. I cannot find any comps and the property is not listed on Totalview or Zillow or eappraisals. Any suggestion? I have until June 15th to close.

Tomorrow will make offer on a home that is being offered as lease purchase. My question on this on is how do I place a contingency or escape clause since it is a lease purchase? The house won't be available until Aug 2. Renter is moving out Aug 1 so I have some time.

on your first deal - sounds like a lot of expensive rehab is needed. If you have no idea on the comps, how can you know what its worth? Do you have a realtor to help you figure out the value? To decide if $400 a month is good, you first have to know the total investment - purchase plus repairs, so you can figure your ROI. Do you have a buyers list for your potential assignment? Does this house meet the criteria they desire? Don't get the horse before the cart. It doesn't sound like a house I'd want to get stuck with - too much work and apparently out in some remote spot if you can't find comps online.
On the lease/purchase - you can write whatever you want into a contract - you could offer contingent on finding a tenant/buyer within a stated time period. Maybe there are better ways someone else can suggest. Again, I'd ask, do you have a buyer's list of lease/option candidates? Are you looking at doing a sandwich lease? Or you could go after just getting a fee for finding a tenant/buyer.
Your post makes me a little nervous for your sake. Make sure you have exit stategies and buyers and you have to determine property value somehow.

I think I sometimes have the famous "paralysis of analysis". I STILL haven't done anything on the lease option house. I don't know why I am so afraid of it!! Supposed to talk with realtor again tomorrow. I just don't know how I can write an exit clause into L/O... especially this one.... It can't close until Aug 3rd so renter can have time to move out. If I drop a fairly large option fee, I'm wondering if it will be held in escrow until close. The asking price is $104,000 recently reduced from $114000. Comps are around $114000. It is not bank owned or in foreclosure, but is through a realtor (my realtor). I chose her when I went to look at this house. She said she worked with investors a lot and isnt afraid to make low offers. Woot Woot... finally I think I have a good one. We'll see. As I was saying though, not sure about this one. It is definitely worth the asking price, but she said the going rent in that area is around $950. (I know that sounds high for this house, but it is a desired location.) Most of my L/O clients do not want to pay that much with the exception of a couple of them but the house doesn't fit them. So if I set up the L/O with $950, I'd have to get at least $1050 in sandwich L/O to cover my payments and have $100 cash flow.

The realtor on another house I looked at a few weeks ago called me to let me know they had reduced it from $100K to $79K. It is a 3 BR 2 Ba Brick that needs some work. The problem is I'm not sure how much the repair costs are yet. Again, P of A. I feel like I'm in a rut right now... don't know why I feel this way. I guess a lot of it has to do with my own condo going into foreclosure soon. I have advertised it for L/O but so far no takers. Something has got to change!!

I heard from one of my investors and he said the house needed more work than he was willing to do. The other one I contacted said he will look at it this week. I've been running an ad in Craigslist.. Just waiting,.

Hi Shirley,
I've enjoyed reading your journey so far.
Sorry to hear about your condo going into foreclosure.

Regarding not being sure about rehab costs on the 3BR/2BA brick house. I have seen numbers all over the map on some of these rehabs. Sometimes a wholesaler will grossly underestimate the repairs. Here is the thing though. Your investors (rehabbers) are going to have a pretty good idea of what they think it is going to cost to fix it. They will know if your numbers are out of line. I would recommend that you go back to that investor who said the house involved more work than he wanted to do. Ask him what his/her frank assessment is on what they think the cost will be to do all those things. They might even be flattered that you would ask.

Roger

The house he said needed too much work was the one that I have under contract which is a 2 BR 1 BA Mill house. I have it under contract for $14000 and want to wholesale it for $18000. Owner wants to close by he 15th of June... tick tock... The Brick house, I have not put under contract and have not had anyone look at it to estimate repairs. I suppose I could lock it up if owner accepts my offer and then try to wholesale it. They were asking $100,000 and have now reduced it to $79,000. Comps in the area are from $100=115K. I think I'll offer $50,000. It is owned free and clear. My guestimate for repairs is about $25000 but it could be more. I have had a problem getting someone to look at it and give me an estimate. I think they have figured out that I am not the owner and just want a free estimate and aren't willing to do that. Not sure what they would charge. I just assumed most of them would do an estimate and charge nothing.

I think I will take your advice and ask the investor what he thinks the repair costs would be. The only question in my mind about this is that he only did a ride by. He did not go inside the house. How would he know unless he just figured the outside needed lots of repairs. There are a lot of large and high shrubs around the house so you really could not see it that well from the road and it is on a very high area. (It has a full walk in under house area... that's how high up it is).. Just puzzling to me!

I think I get it now. I did not realize it was the Mill house that your investor had visited. Sounds like a good idea about getting the brick house under contract. Since you don't know what the rehab cost is you might even go lower. Perhaps this is the exact kind of house that investor is looking for! On the positive side, you have already learned one additional thing about that investor and what his/her requirements are. I like that you are not afraid to take action! It's the only way to really learn this.

Roger

Hi Shirley,
A couple of things. I mentioned that taking action is the only way to learn this! Around two months ago I had a house under contract that I determined I was unable to finance and would not be able to close on. So, for the first time ever, got up and advertised a property during our REIA meeting needs & wants time.
I did not get any response from anyone for that deal which was surprising to me but I learned something anyway.
For example, when I read some of the comments in your journal by other persons (michaelmangham) and he mentioned: "So many never take that REAL first step. Like I always say, the hardest part of this business is finding and getting a REAL deal under contract and the flipping it to someone that actually has cash" When I read that I could relate to it because that was my experience too. I had a REAL deal but I now know that the other piece of it, flipping it to someone that actually has the cash, is not necessarily so easy. It made me understand what the importance of having a good buyers list is.

michaelmangham had a lot of good advice in the earlier part of your journal. Also, I looked under his profile and he has some great response there to someone about building his buyers list. It is so critical in this business that you get the RIGHT information and I really felt like his advice is sound. I also liked Gena's (steinway024) comments too which makes sense because she is an active rehabber.

Anyway, there's a lot to learn but it all comes as we keep moving ahead! And you are definitely doing that.

Oh, to follow up.... even though nobody jumped on the deal I offered them at my REIA club, it was such a good deal that I did eventually find two Hard Money Lenders that got in on the deal.... one of them in second position for the rehab!! I only had to put up about 5% of the total cost of the project (about $7K) so I was able to afford it as my own rehab project.

Roger Schafer
Jaguar Investment Group, LLC

Thank you for the good information, and yes, Michael had some good info too.

I have been on a little mini vacation and haven't been on here until recently. The mill house is still sitting there. When the 2 weeks was up, the contract was voided because I didn't have a buyer and was going to see if she would extend it. But she told me she had someone coming to look at it who was actually going to look at it the same day I put it under contract. Well after a week, she called me back and said she was going to reduce the price to $8000. So I'm trying to assign it for $12000... not trying to be greedy, but thought I'd at least have some wiggle room. She is under the wire and we need to sell it in a hurry. She wants the money to move before the end of the month. I have contacted all the buyers I know and even went on ****. I also contacted some investors I met at a local REI meeting last Thursday.

Keep your fingers crossed for me!!

I attended my first REI meeting last Thursday while visiting friends in Columbia, SC. It was the closest one I could find online. After I got there, I met a guy who said he had attended a Greenville REI meeting recently and said there were 150 members present. Greenville is only 25 miles from Anderson. The organizer of the meetup encouraged me to start up a group in Anderson. I'm thinking about doing that but not sure what kind of response I'll get since the one they had previously in Anderson fizzled out. But I might just start attending the Greenville meeting instead. Anyhoo, I met a lot of nice people and really enjoyed networking with them. Some were from as far away as Charleston.

Well, the house I had under contract that expired June 15th was not sold. The owner called and said she wanted to reduce the price from $15000 to $8000. I started running ads again. I wanted to go get a new contract signed, but did not have another contract. I found an identical one with the help of someone on this forum and started to print copies. My ink ran out and I was going to get a new ink cartridge on Saturday and take the new contract to be signed. I called the owner to tell her I was coming and she said she had just sold it to her neightbor. BUMMER! I've been feeling like crap ever since. I just knew I had that one!!!!! All of a sudden I have lost my confidence and I'm not in a good place... but I'll pull out of it sooner or later.

down today but everything happens for a reason.
When one door closes another one opens. Just don't stare at the closed door too long or you'll miss all the open ones.

Yeah, I know, super 'clichey' but it works.

I'm usually a glass half full type of gal, but lately it's been like half empty, but you're right.... When God closes a door, He opens a window. I just have to get off my hiney and go through that window!!!

I have so missed you guys... I've been having DG forum withdrawal. I can't believe I haven't been on here in about 2 months. But it wasn't because I didn't want to. My computer went haywire and it has been in the computer hospital twice. The first time I got it back, it wasn't fixed... had to take it back the second time and just got it back again.. Well, now my caps key doesn't work... I have to put on caps lock just to capitalize a letter, but the numbers caps doesn't work so i can't send emails because I can't capitalize the 2 which would be the 'at' sympbol.... it comes up just as a '2'. anyhoo, i can at least now watch videos. i tried to watch all the videos on my phone but for some reason it wouldn't play videos.. so i missed all the good stuff that was out there the past few weeks.

I have been on here reading for the past 2 1/2 hours trying to catch up with all the latest rei tips and tidbits. It is now 3;45 dst here in sc and i have been making notes and reading like somebody crazy. I have made up my mind to close a deal come hail or high water by the end of next month. Pray for me because i need to do a deal and i need to do it quickly..... I'M BACK...

Hi Shirley, great to see you back in action!

I've trained to be a computer tech a few years back and I suggest that you find a different computer repair facility/technician. From reading your post it sounds like you have a laptop? Having your keyboard not working properly is a sign that somebody either doesn't know how to assemble/disassemble a laptop or doesn't care to take the time to do it properly.
I also wanted to point out, if you weren't aware of it, that there should be another 'shift' key on the keyboard. You usually have two 'shift' keys, one on each side of the keyboard. Although I'm unfamiliar with Apple products (but not a hater! lol) I could be wrong with some of my assumptions.

About you "...reading like somebody crazy." all of us dg'ers are crazy, for the world has told us so for getting into real estate. With that being said, Welcome Home!

May I suggest the 30Days QCF thread to get you up to speed?
Here's the link: http://www.deangraziosi.com/real-estate-forums/everything-else/86517/30-...
There's a link for the table of contents in my sig. Read post #733 for another way to get going again (just one of many options).

Hope to hear from you soon and good luck!

I think you're right. I still have to take it back because they did not fix the caps key at all. I specifically asked them when I picked it up and he said yes, it was the sticky key causing the problem and proceeded to explain the sticky key to me. Well when i got home, guess what. I have to hold down the caps lock key to capitalize any letter, but it doesn't work for the numbers... so i have to copy and paste my email address in order to use the 'at' symbol. It's very frustrating. And both shift keys don't work unfortunately,.

But thank you so much for the information. I will definitely use it. I have gotten in a rut and I need to get myself out of it in a hurry.

Good to see you back. I had wondered what happened to you.

I am sure you will be back out making offers again very soon.

Karen