Second 4-plex and a foreclosure!

[Account Closed]

Good morning everyone! We purchased our first 4-plex in late August and are now set to close on the second 3 week from now! I love 4-plexes, they're my little go-to money-makers. My husband, however, is more into the fixer-uppers... so we're also set to close on a foreclosure on the same day! 

It's a little scary to have 2 deals happening at exactly the same time. 

"What if one falls through? What if they both fall through? Oh God, what if neither of them fall through?"

But I suppose that's why we do what we do; the reward usually greatly outweighs the risk others see as too large.

Anyway, both properties are in the Cedar Rapids area here in Iowa. The 4-plex was listed for 145, picked it up for 135. We actually got that deal because we walked away when they countered. The foreclosure is in a nice little area with similar properties that typically sell for 135-140. We snagged the foreclosure for 90 (thinking upgrades/rehab will total around 10).

On a side note, has anyone had any experience with the Flat Fee MLS by FSBO? I noticed you can set your own buyer's agent commission percentage. Just wondering if anyone has chosen to go this route. How do those of you that typically flip list/sell your houses? I refuse to use a realtor and pay the 7% that's standard here in Iowa.

We plan to list the foreclosure in early spring along with our current personal residence. At that point, we plan to find a duplex/4-plex that we can move into.

Happy investing!!

[Andrew D.]

@Account Closed  a lot of times I'll just call mid america before I get to serious about a repo.  They will tell you if it will need the inspection.  Its a good idea to get in good with a mechanical contractor as to pass this inspection the gas line has to hold 15 pounds of pressure for 24 hours.  In most older houses all the gas valves won't hold that pressure and most of the joints won't either.  That means you either go through with soapy water on each pressurized joint and pipe dope/ tighten any leaking ones or run all brand new lines.  It can cost $1000 pretty easy if you can't find someone to pull permit for you.

Also with HUD owned properties you can access the inspection they have done via there website. They pressure test the plumbing and most of the time they don't pass.

Also look at the water service coming in to the house.  If it is galvanized its only a matter of time until that needs to be replaced.  Just the other day the city turned the water off at one of my houses for some road construction.  When they turned it back on it started leaking right after the citys shutoff valve at the street.  Now the sidewalk is flooding and the city says I have to have it fixed or they can deny water to the house which would probably not sit well with the tenants. Cost me $1500 to get Earls backhoe out there to fix it.  That is one big un anticipated bill.

Also you may know houses built between 1950 and late 70s? here in CR may have Orangeburg sewer line.  Its prone to collapse and I always figure it at about $4500 to $5500 to replace.  Once again its only a question of when this fails and if you intend to flip rest assured most potential buyers will want to know if its been replaced and may insist you have it done.

I'm sure I'm missing some things but thats kind of a crash course. You can find some great deals on foreclosures but there are some pitfalls due to not knowing the condition of a lot of the major mechanicals. I'm kinda burned out on them and have been trying to skip between them and what I call lipstick houses like estates or something. I've had to HUD properties that my offer was accepted but never closed. They both ended up with title issues uncovered a week before closing. The banks order these last just in case any get liens get added during the approx 45 day closing. HUD gives a 30 day extension and then terminates the offer and refunds earnest money. At this point it goes into government limbo only to resurface if and when title issues are resolved. So I end up eating the cost of Appraisal, bank costs and title examination of about $650. HUD refuses to pay these costs and the worst part is even if I really want the place at the price agreed on, when HUD re issues the property its just back on the market no first dibs for the guy that first had the purchase agreement. This stinks especially if I have the excepted offer in January (getting it really reasonable) and re markets in say June where it sells for well over my original accepted offer.