OfflineLast weekend, (3/13/2010), I looked at about 10 REO properties in Lakewood Ohio, and submitted offers on 5. Most of the offers were below list price and WELL below FMV. One of the properties was listed at $59k. It's a nice 3 bdrm 1 fb with a 2 car garage. I offered $49k cash. After a week of fierce negotiating they accepted $51.5k. The bank was really pushing to get the sale price up to where they had it listed, but I stuck to my guns!
The house could be lived in as-is, but needs to be updated to make it really nice. My fix up estimate is about $40k to make it picture perfect (windows, siding, kitchen, bath, landscaping, HW floor refinish, AC, and paint) Similar properties on the street are selling between $110k - $125k, so I think I got a really good deal.
Option 1:
I'd really like to move in to this house, but I don't qualify to refinance and I don't want to tie up my $. I'm going to do some research and see if a local bank will give me a HELOC without seasoning. My credit score is decent (680+), I have a good job, no depbt, but I filed for BK and 3 had foreclosures in 2005. Nightclub business gone bad. I'll be eligable for standard financing again June 2011. Until then it's cash and creative financing.
Option 2:
I might try to sell it using the "auction" strategy that I learned in Dean's email video. I don't think bandit signs are legal in Lakewood, so I'll have to use some other ways to advertise the auction. I would start the bidding at $40k and hope that the winning bid is $60k - $65k. That would be a nice profit for a few hours of work.
Option 3:
Rehab the house over the next 2 months, list it with a realtor, and sell the property for $115k conservatively.
$115k - $51.5k - $40k - $8k (carry/closing costs) = $15.5k
Thanks for any advice/tips/tricks in advance.
dm
fixing it up somewhat to LOOK nice but keep the costs down would be what I would consider..Maybe 10k in repairs & sell for $65-75k?A little paint goes a long ways
Thanks pinballdan!
I talked with a local bank today and they said that I should qualify for credit line - 80% of purchase price w/no season. Then in 12 months we can restructure it based on appraisal value. Interest rate is prime + .99. Cheap.
Before I commit to option 1, I'm going to try pinballdan's strategy and make it look pretty. Then advertise the house for auction and see how high the bidding goes. If the offers get attractive I'll let it go. Has anyone tried this method?
Thanks for any advice/tips/tricks in advance.
dm
If you want to keep your costs down, go with young kids in the form of high school or college landscapers and painters; they're cheap labor and will work extra hard to keep your business
As far as windows, etc, find a place sells refurbished windows and sidings
I keep submitting offers on properties and the banks always counter back with "Highest and Best". They never specify a number. Be glad you don't live in California.
BRE #01956371
I am thinking that if you purchase all cash, you could live rent free with only taxes and insurance, fix up at your own pace and use your rent to reinvest. Another could be a HELOC on the property to reinvest. That is just my thoughts. God Bless.
Sandra
"You can never get to the top, if you are not willing to climb. Do not look at the difficulty of the climb, only anticipate the view from the top."
"Can't even walk without you holding my hand." (Song)
"Is anything too hard for the Lord ..." Genesis 19:14
"In all things, wait on the Lord."
"Think not of your own deliverance, but trust in God who will give in abundance."
"When you are down to nothing, God is up to something." Unknown
"Our lives begin to end, the day we become silent about those things that really matters." Dr. Martin Luther King Jr.
Yes I am currently renting. I forgot to mention this as part of "Option 1". I'm in a 2 bdrm 2 bath apartment downtown Cleveland @ about $1000 p/month. So, moving in to the house will SAVE me about $750 a month. The taxes on the house are $270.
I have a good chance of getting approved for a 80% HELOC which would allow me to pull back out $40k. Almost enough to buy another 3 bdrm foreclosure! Strike while the iron is hot. I think that might be my new tag line.
dm
STRIKE WHILE THE IRON IS HOT!
Do it
Thanks! I like your "on the cheap" tips. I have a team that does great work at reasonable prices.
One of my flip strategies for property in the Cleveland market has been to: (a) update everything and (b) price it cheap. I don't make as big of a profit, but they move fast and allow me to get my money back out quick.
dm
STRIKE WHILE THE IRON IS HOT!
Man,
Throw in "a friend of mine works for the Cavaliers and told me that LeBron is staying but wants to finish out the season before making his decision. Alot of white collar professionals are moving in the area in anticipation. This area is really growing"
Make the buyer realize they are the ones that are benefitting from you, not the other way around.
and move into it while you prepare it for sale..If you have flexibility to keep moving into these properties while you figure out your exit strategy, you are going to save a lot of money..
There is something to be said for being frugal, especially when you are first starting out. If you can eliminate 700-800 a month, you've just given yourself a pretty nice raise. Plus, it will make the next one a must..because you will NEED a new place to move on to when you this one is sold.
My 2 cents
"Whether you think you can or can't, you are probably right" Henry Ford
Thanks for all the tips.
dm