OfflineFINALLY, my deal is closed. There were many things that went haywire in this transaction. Being my first HML, I switched from one lender to another because terms were better and it backfired. Good thing I bought it with enough equity to be able to absorb the cost.
Its a 1751 square foot SFR, 3/2 on a 7200 square foot lot in a nice neighborhood with good schools. Needs $11K in repairs. Appraised for $315K. Bought for $199.5K. Total holding costs will be $47K for 3 months. Its a Fannie Mae, so it records on the deed it can't be sold for more than 20% until after 90 days.
So, profit potential of $57K minus any buyer's closing costs and seller's closing costs we'll pay.
This property was bought on Auction.com. Never thought it would get approved because it was well below the reserve. But, end of year means they want to unload properties! This home was listed at $295K. We talked to the realtor and he couldn't believe it was accepted. We even asked him had we put in an offer at this price, would you have submitted to the seller and he admitted he wouldn't (that's how it is out here in CA 
) He couldn't believe it either.
To do this with none of our own money we used other people's money at the cost of interest. I first secured a relational private money loan directly with another real estate investor. Created my first set of documents for a real private money loan so gained some experience there. Set it up to be an unsecured note. This was for the downpayment and rehab.
Secondly, we got a HML to fund the rest of it. We paid a lot of fees on our HML that were not expected, but still covered by the PML. It turned out to be a very stressful closing with a lot of animosity created because the lender was referred to us and it caused a big stink when the terms were changed. My husband was able to work things out very well with the parties involved, if it were up to me, I would have just paid the $2K in referrals so as not to rock the boat, but my husband would not have and did not.
Called RESA, they agreed with my husband, so that puts my mind at ease a lot! Kinda goes hand in hand with my Bill Cosby quote below now that I read it again!
****Lessons learned, GET A GOOD FAITH ESTIMATE from your HML! No exceptions, even if the terms were witnessed and heard by another person.**** Don't refer people unless you've actually done deals with them and know their business tactics well. ****
BTW, I used a Coastal Funding letter for POF for a cash offer!!! (I had several other's on hand JUST IN CASE that one wasn't accepted) It was accepted! And, we had to put up a $10K EMD as well (Which WAS our own money as I hadn't secured the PML yet, but my company paid us back the funds after closing). Also, when you register for auction.com, I told them I was using a HML, and asked if I should put cash or credit buyer, and they advised cash, otherwise I'd have to prequalify with their people, which are traditional lenders. You can't negotiate terms and clauses in Auction.com properties, so it is a very risky way to buy properties, just as a note to those who haven't used them before.
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I have to hold it for 3 months. HOlding costs include
Points
Rehab Costs
Monthly Mortgage
Monthly utilities
Monthly insurance
Property taxes
RE Agent commissions (buyer's side only)
If I have a RE Agent list it, my holding costs would go over $54K.
...Congratulations on your second deal. Thanks for sharing the details of the deal. If the numbers make sense, hard money is a great option for funding. It is so great to hear no money deals are alive and well. Keep up the good work. Happy Holidays! Believe and Achieve!
- Joe
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Congratulations Tammy,
Sounds like you and your husband makes quite a tag team. The house looks great; I guess you'll get the grass growing again.
Merry Christmas and a Prosperous New Year
Ty
Yesterday is history, Tomorrow is a mystery, and Today is a gift...
Ethel Griffin
...So don't throw away a gift, do it today as tomorrow is not promised.
falling out of escrow on at least 10 other properties first, putting in countless offers, going through 7 real estate agents who didn't want to stick with me, keeping on getting up after each failure, keeping a positive mind and attitude, not letting the naysayers design my destiny, not letting the negative criticisms determine my outcome, constantly learning new things (speaking of, I need to do another lesson at RESA! I haven't done one in over a MONTH!(but I have done several other courses by listening to CDs in the car), keeping a daily journal to keep you accountable, going outside of comfort zones, overcoming bad situations, positive affirmations daily, setting up marketing, web sites, phone numbers, staying up until 1am every day and getting not more than 7 hours sleep to complete all that needs to be done (I could get less, but I tend to get really crabby trying to deal with 4 kids on less sleep than that) and most importantly, prayer and leaving it in GOD'S hands and control. Sometimes crying. Sometimes overcoming the little voice inside that tries to convince you 'WHAT are you doing, you won't be able to do this' by quashing it.
Believing you will succeed. TELLING yourself you will succeed. Never feeling sorry for your situation or yourself, sticking up for yourself when needed (something I need to work on, I'm such a pushover!). Your outcome will follow your attitude and what you tell yourself.
Never stop learning and NEVER give up. Take 'give up' and 'can't' out of the vocabulary completely! Many times the thing standing in one's way of success is ... themselves.
That's just some of what I learned and knowledge I can share. I am FAR from knowing enough!
Details of my journey are in my journal here: http://www.deangraziosi.com/real-estate-forums/investing-journals/43252/...?
It is CERTAIN we WILL SUCCEED!!! Say it to yourself at least first thing in the morning, before you goto bed and several times throughout the day.
Thank you for all your support as my journey continues. I hope you all enjoyed your Christmas and got to spend lots of quality family time! We celebrated Jesus' birth and enjoyed our family time together today.
I am so thankful for all the positive reinforcement I've gotten here. I appreciate all the support since I started my journey on this site in March of 2010! All the best to you all!
May 2011 bring much success to all of you!
Tammy I'm very inspired by your story and your accomplishments over the years. I had a question about your purchase from auction.com because i'm thinking of purchasing a property thru them myself. Do you have any advice, guidance or learning lessons from your experience dealing with them in the past?
My Journal- http://www.deangraziosi.com/real-estate-forums/investing-journals/86100/...
is now a completely different site from when I closed this deal. With any auction, know your numbers upfront. Create a bottomline number and stick to it. If it goes over your set number, don't get wrapped up in the heat of the auction. The deal just wasn't meant to be. Move onto another property you can get for the right price. Remember, you determine your profit by the way you BUY. Don't compromise on your price!
Have a great day!
~Tammy
Hi Tammy,
Before you bid on a property on Auctiion.com do you run COMPS.
What bases do you use to arrive at an ARV to make an intelligent bid.
Thanks for you time in advance.
Regards,
Bimal
Wish Everybody a great success in their Real Estate Business
Way to go girl! See you at the Edge & I just assigned a deal for $4,750 in kc mo! whoot whoot! gonna post it here!
Tony
Go faster do more! GFDM!
Way to go! On with the next one.
Ahmed
Great example for all of us here in Southern California. I also was under the impression that Coastal Funding letter don't work anymore. I used before to buy REO's and worked perfectly; I tried about two months ago but was rejected. This is a good example about being persitent. Congratulatios Tammy I hope we can talk and help each other since we are in the same area.
In what part of Southern California are you working? Also, are your doing most of the time REO's or private sellers?
I am on the LA/Orange county border. I do REIC club meetings with one of my buyers. We'd been doing them every other week, but we have put them on hold for a while. Right now, the market here is shifting. Only about 15% of the market is short sales and REOs. Therefore, I'm shifting towards other types of deals; still working some short sales and REOs, but the market has DEFINITELY shifted here.
Mind, this deal was done in 2010. I don't believe Coastal Funding is around any longer. But the www.besttransactionalfunding.com funding letters work.
ARV is calculated the same way you always calculate deals Bimal. Stay in the same neighborhood and stick within 15% of the size of the house, and no further than 1/2 mile in a metropolitan area (if you are in a more rural area, you may need to go out much further. Best to talk to an appraiser in your area to see how far out they go for comps). Determine rehab. Then determine your holding costs and figure out your profit. Don't forget to account for 15% costs of money. Subtract all that from ARV and you have your maximum bid. If you will be trying to sell to an end buyer, also subtract your fee.
Way to go Tammy, I am kind of in some what similar situation but its not through and auction it through another investor, numbers look good so far and its a nice property may end up assigning it, wanted to wholesale it, seller wanted 2K earnest money before we wrote up the contract, we are going to send a POFs letter to him , have interested buyers but cant give them and address till we get it under contract,Fell yesterday on some ice and can hardly move today but working the best I can, much success, Jim
jbischoff
Tammy,
It is great to see all the support you've received on your deal. Thank you for posting it. I haven't seen many people post they did deals on auction.com, so it is great to see you close this.
It is always expensive when your working with hard money, never very easy.
great job
I always say Keep Moving Forward! Never Give Up On Your Dreams!
As Matt Larsen says "Feed the Need" - Edge 2013
Follow my daily investing journal and read about the deals I've done and am working on at:
http://www.deangraziosi.com/real-estate-forums/investing-journals/117493...