OfflineSo, I have been watching a property in one of my target areas for some time. It sits across from a lake and a commercial property. It went to a foreclosure auction today. I set the limit I would go to and the auction never reached that price! I WON the auction! I AM NERVOUS! To say the least!
I found out the 'commercial' property across the street is being rezoned to residential... and is on the market for $1M!!! Now that ought to be a good thing for this property's value. 
Here's the info:
4bed/2 bath
1465 sq ft
Price paid 43,000 + 2500 for costs (New price I'm trying to renegotiate is now 5K in light of the findings and would require a total rebuild (basically buying land)
Conservative ARV: $180-200K
EXTREMELY LOW rent: $1200
Estimated (VERY)repair costs: 40-60K
I'm paying for the property through my self directed IRA and going to secure a private lender for the fix up of the property. I'm not sure if I'm going to flip this one or hold on to it. If I hold on to it, I stand to have a positive cash flow of over $500/month. If I flip it, I will have from 70-80K upfront. I'm not sure which option I'll choose. I looked on a few advertising sites, and there are many people looking for rentals in the area, so its very tempting to do a buy and hold. Especially if I could hold on to it until the property across the street sells and is completely converted to a SFR from what appears to be a restaurant.
It was sold by Fannie Mae, and guaranteed to have an insurable title.
I'm NERVOUS! EXCITED! ELATED! PRAYING! ANXIOUS! JUMPING UP AND DOWN LIKE A NUT!
~Faith is being sure of what you hope for and certain of what you do not see. Hebrews 11:1
Your spirit is amazing. Thanks for sharing, keep it up!
JT
Tammy We are happy for you. You give hope for the rest of us that are still looking for that diamond in the rough!
Andrew
Great job Tammy! It's good to hear about your success. It keeps everyone motivated to keep pushing forward. Good luck and much success!
Rick
Rick Merritt
Trident Realty, LLC
Weak is he who permits his thoughts to control his actions; Strong is he who forces his actions to control his thoughts. --Og Mandino
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The contract will need to be completed by June 22nd. I'm working on securing a private lender for the fix up. This first deal is going to benefit our retirement accounts, but it is a first deal! Once I get very comfortable with this private money program and become really good at my presentation to investors, I will be in a much better financial situation to make the next deals easier.
Thank you everyone for the encouragement and kudos! This is an out of state deal and I'm still very nervous about the whole thing, but nothing beats getting out there and doing it! Press on! It is CERTAIN I will succeed and I will have my first million by the end of this year! I can see it plain as day!
No Longer a newbie!! :=) your truly an inspiration keep it up and you will be a millionaire at the end of this year!! and the house looks Gorgeous by the way hehe
Keep trucking!!!
Gorgeous Frazier
rental prospects lined up for the place already, a few rent to owns, all from Craigslist; I haven't even put up an ad for the property yet I'm looking into my lending options for this one and want to make sure I get the right terms. My loan has to be non recourse and I'm hoping I can convince a friend to help me with financing.
My website for attracting private lenders is almost done, and I'm still working on 2 other websites! (They're driving me nuts!!!)
My husband had made some calls to try to cancel the deal, but he didn't cancel it. My contractor is going through next week (my cousin) to give me a good estimate on getting it really nice and appealing. My husband says we may have to go to WI
, maybe there's a hidden agenda there for me, I haven't been back home in a long time! (2001!!)
We should be closed on this one by the 22nd of June. That is fast approaching, its amazing!
That is great news Tammy! Keep on plugging away!
... Verses: 35 "but those who hope in the Lord will renew their strength. They will soar on wings like eagles; They will run and not grow weary, They will walk and not be faint." Isaiah 40:31 ...
Remember how Dean said that sometimes its better to cut your losses? Well, I am at a point I need to make a decision with this deal. I finally got a trusted contractor in and an accurate evaluation of the property. The roof has been leaking and the mold is much worse than was explained to me. I was told there was mold in the crawl space.
I know better than to not physically LOOK at the property, but its in WI, and I'm in CA. Turns out the mold damage is far worse than thought. I bought the property at an auction and the agreement has no escape clauses; the only way out is if the title isn't clear. The mold most seems to have rotted through the frame, and the land is lower and the foundation wasn't build correctly, so its a disaster.
I do have an out that stating if there is an environmental hazard ,(but must be determined by the seller) either party can terminate the agreement. (Excessive mold growth could count? ANyone know?). I can also get out if the seller receives official notice that the property is in violation of building codes or similar laws or regulations.
You bet I'm calling the city or county tomorrow to find out if they can find any violations of building codes to send to Fannie Mae. My contractor says its a self build and there are electrical wires on the outside of the building and it is definitely not to code.
I was not allowed any contingencies because it is an auction property.
Now, my other options are of course to hold on to it and do seller financing of it for another buyer to take on the project, OR I could go through with it and build a new home on it. I did pay less than the value of the land for it. I can get a nice 2 story (so it has a lake view) built on it for under 100K and still come out with almost 40K net. This home is in a million dollar neighborhood and its an incredible area. My comps weren't taken near the lake (as there aren't many for sale by the lake), but I like to be EXTREMELY conservative with my numbers, and I subtracted 50K for the restaurant across the street. (for a case just as this!)
I have an AWESOME contractor and he is willing and ready to take on the project if I want to go forth with it. He says there's a possibility to fix it, but because the land is low that the problems would most likely resurface in 10 years. So, to be ethical, I'd knock the whole thing down and rebuild correctly.
My other options, the home next store appears to be in good condition and abandoned, and the restaurant across the street is for sale to either remain a business or be rezoned to residential. I already have been talking to the agent for the business to convert it to a SFR and I can get it for around 750K with a 350K seller financed loan. It would cost about 80K to convert the place to a residence plus rezoning costs of about 15K. That property would be worth at a MINIMUM 1.5M if it was a residence. And if I combined or split lots and got really creative I could potentially made a lot of money, but risk a lot.
Am I nuts for considering all this? I want to cover all angles, and if I could lock up a block of 3 properties and make them all beautiful, I'd be doing really good. Should I take such a great risk?
Private money is how I finance my deals.
Any well thought out advice would be appreciated. I'm going to be calling the academy with all this info too.
Sorry for the HUGE post!
Wow,
I remember a similar post like this from another dger they bought a property through auction without getting it inspected first. Although I have good suggestions it seems like you have all your avenues covered a plan A B and C lined up. I would call the building inspectors maybe you can get out the contract by them deeming it unliveable? Hope it all works out Hun
Hugz and kisses,
Gorgeous
Yes Tammy. If the numbers serves you right, go on. You have your private money, contractor in place, feasibility study etc. You sound like an organized detailed person and I can see future in you being a good rehaber/investor. Developing that area will increase your portfolio and you know whats next. Banks, angel investors, lenders will be willing to work with you and finance all your future projects. Good luck and wishing you continued success. Blessings to all. LA
Everytime you repeat the words "I CAN DO IT" with conviction, you cancel or override your fear and increase your confidence. By repeating this affirmation over and over, you can eventually build your courage and confidence to the point where you are unafraid. -Brian Tracy-
The whole story made me cringe.
The upside is monumental and what you can come into with equity is sweet, but the flip side is just as if not as painful.
What's your plan B with this if it stalls in terms of selling or renting??? Can you handle the carrying costs???
I'm all for saying "Go For It", but this one makes me think otherwise
I hope i'm wrong
I have a call in to the inspector. We'll see; he says offhand he doesn't know of any code violations, but my contractor saw many! I will keep updated. LEARN from my mistakes! That's the point!
I would go with your gut. I have seen a few properties that I wonder if I should even put an offer on. Then I see a video that Dean did that says he never backs away from a deal. I would say that all the problems are correctable. If you haven't done so already, I would get an estimate for all the repair work, if the numbers still work, go for it!
As a plan B, I would have an attorney look at the documents and give an opinion on an escape if you need to.
Bottom line, go with your gut. I know your are nervous, but let's say all you make is $1,000 on this deal, just think about the lessons you will learn. Say a prayer, then listen to your heart.
... Verses: 35 "but those who hope in the Lord will renew their strength. They will soar on wings like eagles; They will run and not grow weary, They will walk and not be faint." Isaiah 40:31 ...
Well, I talked to the auction company and told them how the foundation is not to code, it isn't safe or ethical for me to try to restore it as it is. I kept it strictly about me buying a HOME that was a major rehab which is now LAND with a house on it with 0 value. I told them I wanted to exercise my section 6 clause and either cancel the contract or renegotiate the price. I asked to have the price reduced to 5K; max 7500K. I will know shortly what the outcome is. They said they'll give me the choice; which would I like to do! I will get all earnest money back if they don't take my offer.
The building inspector is going out there Monday morning as well to write up all the violations.
Praying!
Keep working it! I'll say a prayer for you also.
... Verses: 35 "but those who hope in the Lord will renew their strength. They will soar on wings like eagles; They will run and not grow weary, They will walk and not be faint." Isaiah 40:31 ...
Well, when I singed this very intimidating contract with no outs to it, I read it THOROUGHLY and put in big red letters the word OUT where there was an out in the contract. The only 2 areas were an environmental hazard or a building code violation.
I had called the county building inspector to go out and look at the property. He went and found so many ridiculous building code violations and dangers that he is condemning the property!
Fannie Mae, in spite of this, did not want to entertain a lower offer. I've terminated the contract and I am getting my $2500 earnest money back. So, it was a good learning experience. My first failure and a temporary defeat! Time to get another deal going! I will never give up!
NEVER buy a property without looking at it no matter how good the numbers are. And always read the contract thoroughly when you aren't using a contract you're familiar with. It could save you a bunch!
I would chalk this one up as knowledge gained and move on to the next deal.
To me there is no downside to this. You gained a ton of knowledge that you have added to your arsenal.
goos luck on the next one.
Richie.
Your so smart!!
Most people would have been scared to offer them a either this or its a done deal. Thats how i deal with everything the bottom line is A and if you dont agree than i walk away. like richie said chalk it up as a learning experience and get started on the next couple of hundred i know you will complete!!
God Bless,
Gorgeous
the immortal real estate philosopher Elixdamus, good things happen and bad things are prevented
T, don't sweat the small stuff; it definitely wasn't meant to be and it showed
I got some great deals in Indianapolis and Missouri if you're interested
My husband sure is happy about this! I couldn't believe they wouldn't renegotiate the price at all, but I am happy with he outcome and pretty darn proud of being able to get out of a contract that was virtually impossible to get out of! It really gives me some confidence to go forward.
I have a couple of leads already for my next deals. There's so many of them I'm not sure which one to start with! My car signs are generating leads!
I'm calling the academy on them right now.
BTW, I'm looking for someone in the Southern GA area to work with me on a property I could lock down tomorrow if I wanted to! So, any Southern GA (Lakeland) investors who want to work together, PM me!
"If you haven't failed at anything lately, maybe you are simply not pushing yourself far enough. When you realize that failure is part of being on the highway to success, failure is not scary anymore." ~Dean Graziosi
I am so proud of you ! I am glad we have this here for each other.. The quest continues!! Keep us posted ! Best wishes, Kevin