Pending home problems

[BAMF]

Damn, now is the time to need to be a handyman to pour 10-20k into a house....Too bad I'm not.

[MiDiablo]

/\ Haha... Well... The good news is that the estimated cost of rehab is with our General Contractor that we have in-house here in our office! He's responsible for most of the Rehab's in the area!

Of course depending upon your choice of rehab, you can either spend less, or more. For instance - an investor in the "buy, fix, sell" market - is going to spend more on higher quality materials and fixtures, etc. Whereas an investor in the "buy, fix, rent" market - is going to be able to save money on using linoleum (sp?) versus travertine tile, etc. Because renters are looking for cleanliness more-often than quality of material used.

Additionally, many investors make the mistake of trying to be "the handyman" on their investments. We typically steer our investors away from that as hard as possible. The biggest mistake, we feel, that an investor can make is to become "one of the help" on the jobsite. He needs to be the orchestrator, the manager, the boss. Our investors should be able to accomplish more with their cell phone than with a hammer or a tile saw.

-Jo$h

[BAMF]

Hmm, interesting. So you have people buy these houses (to rent, sell, live in, whatever) dirt cheap and you have an in-house contractor that will do the rehab work needed...and since its so cheap I'm sure a mortgage can cover the expenses. Thats a really awesome deal.

[HerHotRod]

Originally Posted by Country Boy

The only thing I will say about the housing market is this... We have more than doubled our work in the last month. Feb we had 40 houses, Mar was 80 and now we are at over 120 or the month... I see much more work goin on than I used to and theyre actually haveing a bunch of new starts...

Think what you want....

I work for a builder and agree with the increase in starts. At least as far as our companies concerened.

[MiDiablo]

BAMF,

To answer you question simply - no.

More in depth: Conventional Mortgages on a home of this nature will not qualify. However, Cash &/or Hard Money Mortgages will. Conventional Mortgages must be able to pass at least a "4-point inspection" to qualify - meaning basically that all items that function must function as designed & that all surfaces must be in servicable conditions according to manufacturer's specifications.

Having said that, these foreclosures are usually stripped/gutted/wrecked up pretty good. No windows, no appliances, etc. When this is the case, conventional mortgages won't fly. HOWEVER, the solution to that (which we offer to non-cash buyers) is to do a short-term, high-interest rate, no prepayment penalty loan (hard money). On these loans, we actually escrow the funds for rehab, pay the monies accordingly to the general contractor's, etc. - and then upon completion of the rehab, we get the home re-appraised (read: After Rehab Value "ARV" appraisal), and then assist the Investor in getting the home refinanced into a conventional mortgage/loan through a "normal" loan.

These can be done for "owner occupied" investors, or also for investors who utilize exit strategies of Rent, Sell (flip), or Lease-Option even.

[BAMF]

Very, very interesting. Let me know if you guys have anything between Carrollwood and Hillsborough/Sheldon with a fair sized backyard, 1100 sq feet+, and at least a 1 car garage, excluding the obvious shithole areas that we all know and love. I'm pre-quald for 150k (want to stay as low as possible, though). and can toss 15k tops down.

[Strangeholliday]

Are you the hard money lender MIDIABLO? Because most hard money lenders are going to want a no less than 30- 35 % down BAMF

[BAMF]

Originally Posted by Strangeholliday

Are you the hard money lender MIDIABLO? Because most hard money lenders are going to want a no less than 30- 35 % down BAMF

Ah. Always a catch. Damn, cash talks right now.

[MiDiablo]

Strange, yes we are the Hard Money Lender as well. Our company is essentially an "all under one roof" or "one stop shop" if you will. What I mean by that is that for a successful investment in real estate, there are four necessities to cover:

1. Find,
2. Fund,
3. Fix,
4. Exit.

Finding the properties can be very stringent on the end investor. Many of our investors have a full-time job, and being able to scower (sp?) Craigs List, MLS, and Auctions is a full-time job in and of itself. Having said that, we've got a full-time staff of Acquisition Associates that bring us the deals at a pre-negotiated and contracted price with the owner.

Funding the investment can be tricky or difficult as well, because as I previously mentioned, these don't qualify for "Conventional Financing" per se. We offer the Hard Money (H$) Loans in order to overcome that obstacle. Many H$ lenders require (as strange mentioned) an enormous cash amount into the deal upfront. Our requirements are much less. We require $2-5k to contract the deal (consider it sold), and the total contribution is actually credit driven. For instance:

700+ FICO = 80% LTV (based on ARV), and a 3% Investment (based on Loan Amount); with at least 3 months of reserves in liquidity funds.

Whereas someone in the 600's would go.....

600+ FICO = 60% LTV (based on ARV), and a 15% Investment (based on Loan Amount); with at least 6 months of reserves in liquidity funds.

So again, it's credit driven. So I can't say what any ONE person would be required to put into their particular deal(s) without having pulled their credit through our H$ Lender.

Fixing the property can be a problem for many investors, as they're not personally a licensed General Contractor. That's why we've got our OnSite Residential General Contractor's here in our office. He personally inspects each property, giving us an estimate (very generic/general) on rehab costs. Then if the investor(s) want to find out more detailed pricing, he can provide a detailed estimate/quote to the investor prior to their decision to purchase even. This can either be used by the investor in order to base their costs in order to bargain with other G/C's; or flat-out can be utilized in the rehab by going through OnSite Residential.

Exit strategies obvioulsy vary with each investor. Some are okay with Section 8 Rents, while others aren't. Some are okay with Lease-Opting to tennants, while others just want to flip. We offer successful strategies for each of these. We've got an active website for our Investors to post their homes on (for sale, for rent, for lease), and we also refer our incoming leads/referrals that don't qualify for wholesale investing - directly to our wholesale investors. Furthermore, we offer property management for those investors that prefer to be "hands off" even. And of course, no exit strategy is complete without having the home have been rehab'd successfully, timely, and correctly. So the finding, funding, and rehab has been done; then we help the investor(s) refi into a conventional mortgage - and then assist them with use change!

Shew, fingers hurt.

[Joe]

So, where does your company profit in those figures?

Obviously this is not a "free" service...

[MiDiablo]

Originally Posted by BAMF

Very, very interesting. Let me know if you guys have anything between Carrollwood and Hillsborough/Sheldon with a fair sized backyard, 1100 sq feet+, and at least a 1 car garage, excluding the obvious shithole areas that we all know and love. I'm pre-quald for 150k (want to stay as low as possible, though). and can toss 15k tops down.

FWIW, we got a home in the Town & Country area just yesterday. It's just South of Waters on Sheldon. Timberlane Neighborhood. Here are the brief stats:

3 Bedrooms
2 Bathrooms
1 Car Garage
Block Construction
1,155 heated s/f
Sale Price: $92,500
Rehab: $16k
ARV: $160k

And for the investor side of the 411...

Total Investment: $108.5k (plus closing costs)
"Realistic Market Value" (80% of ARV): $128k
Estimated Net Profit: $19.5k (minus closing costs)

Additionally, the area rents are bringing between $950-$1,200 for those that seek cash-flowing properties.

[MiDiablo]

Originally Posted by Joe

So, where does your company profit in those figures?

Obviously this is not a "free" service...

Nothing in life is free. True $tory.

We profit by pre-negotiating our prices/fees with the home-owner prior to contracting the home(s) from them. For instance, there will be no hidden fees that "pop-up" at closing time. Our fee(s) include a $295 admin fee, listed in the sales contracts, to cover obvious office related fees, and then a commission based percentage from the seller. On average, a typical retail commission to a realtor is between 6-7%, and as high as 10% on commercial deals. Our commission is a 5-7% generally speaking, and again - this isn't something that is "tacked on" - however, it's INCLUDED in our listed Sales Prices.

We're governed by the National Association of Realtors code of ethics, so we're as upfront and honest about our fees/monies as possible. Additionally, our H$ lender is governed by the banking federalis (lol), so there again we maintain strict ethics and integrity!

[MiDiablo]

And, for complete and utter honesty - there's not much money in each deal that we do INDIVIDUALLY (a couple grand generally).

Our goal, as an Investor Network Firm, is to make long-term relationships with Investors. If I sell one home/deal to an Investor, I may be able to feed my family for a week or two. Whereas if we build a quality relationship with an investor, and help him/her create a solid investment portfolio with reoccuring profitable investments - each of us (myself and the investor) stand to feed our families indefinitely.

This is how we make the majority of our profits, is by repeat business. Less expenses incurred, less overhead = increased profits. If I've got an investor that I *know* will buy a 3/2/1 home in the 33615 zip code, then I am usually able to negotiate the price lower from the owner/seller because I'm able to guarantee a quicker cash sale.

[MiDiablo]

Originally Posted by MiDiablo

Sale Price: $92,500
Rehab: $16k
ARV: $160k

Total Investment: $108.5k (plus closing costs)
"Realistic Market Value" (80% of ARV): $128k
Estimated Net Profit: $19.5k (minus closing costs)

Oh, and just an FYI - This particular home scenario equates to a 17.9% rate of return on your money

[BAMF]

Originally Posted by MiDiablo

Oh, and just an FYI - This particular home scenario equates to a 17.9% rate of return on your money

Yeah, only problem is its in Timberlane. Man, that area went downhill. Too bad I don't have the cash down for a deal like you guys offer, though.

[MiDiablo]

Timberlane has its pitfalls, surely. As do many areas in Tampa. However, the property values given is based off of current home sales, not off of "before going downhill" values.

It's actually not a terrible neighborhood. It's being worked on getting cleaned up at least! It's a start,

[Greed is Good]

Originally Posted by BAMF

Yeah, only problem is its in Timberlane. Man, that area went downhill. Too bad I don't have the cash down for a deal like you guys offer, though.

hope you got some gunz for that hood

[BAMF]

Originally Posted by Greed is Good

hope you got some gunz for that hood

6 of 'em. And two cans of ammo. But that ain't enough for Timberlane, yo. Cuz I ain't got a Glock I shoot sidewayz. With a z, nigga.

[BAMF]

Originally Posted by MiDiablo

Timberlane has its pitfalls, surely. As do many areas in Tampa. However, the property values given is based off of current home sales, not off of "before going downhill" values.

It's actually not a terrible neighborhood. It's being worked on getting cleaned up at least! It's a start,

Yeah, now throw out half of the residents, incarcirate 3/4 of the remaining residents, and you'll have a respectable place.

[Strangeholliday]

beggars can't be choosers..