First House Dilemma

[Matthew R Crawford]

Greeting everyone, 

We finally got a house under contract after many weeks of searching, marketing, and driving for dollars. However, we have a few questions since we are beginners in real estate. Now that we acquire a home we know we will need to find funds. If we can't cover the closing cost, do we go for a hard money lender? Or private lender?

This house was under contract once; however, after the inspection, the deal failed. Should we get two or three contractors to evaluate the property and hope they find the problem? Or have a home inspector look at the home before doing any work to the house?

This house is in a great area right in the centre of the city. It is a 1400sq ft home with three bedrooms and one bath. The ARV is $125,000 to $130,000 if fix up nicely. Should we go ahead to add another bathroom since the master bedroom is big enough to add one?

This is our first house to flip and would love everyone's opinions and experiences. Thank you so much for your time. 

Matthew & Mandy Crawford 

[Greg Scott]

Matthew:

Congrats on getting going.   

I'm a little concerned you have put the cart before the horse, so let me ask a few questions.

Do you have a financing contingency on your Purchase & Sale Agreement?  It is a bit surprising to me that you aren't sure you can cover the cost for closing and don't already have a plan for additional funds.   If you cannot close, you may lose your earnest money, but even worse, hurt your reputation.

How were you going to pay for rehab and holding costs if you aren't sure you can afford to close?  

Do you have an inspection contingency in the PSA?   The fact that this house fell out of contract before on inspection is a warning sign.  It could be that the prior buyers just got cold feet.  Or, it could be sign that there is some major issue with the property that you need to try to discover.    Don't worry about getting it inspected before you do work on it, get in inspected before you BUY it.  Even better, get in inspected before your inspection contingency expires.

Assuming you get to the rehab stage, yes master bath is great, but each area is different.   Understand the comps in your area and learn what is driving demand.  The market and the math will tell you the right answer.