Single Family Foreclosure Flip #3 Reynoldsburg Ohio

[Jessica Hood]

Looks like I am on my next adventure!  I would like to share a little background first for those who are having trouble getting started in investing due to credit or capital issues.  Then I will get into the flip I just started.

I am currently living in my recent 203k renovation property that was purchased July 2015. I have had to be creative in my methods for investment growth, due to little capital and minor credit issues. FHA 203k deals have been my way to get my foot in the door of investing in real estate. Little down payment and lenient on the credit issues/debt to income ratios compared to conventional loans.

This is why I have used the FHA 203k program to get me started. It has its limitations, but it worked. It took me two years to finally pull it all together. Two years of credit hurdles, losing bids to better offers, and being outbid on good deals. Let me just say that being an FHA buyer in a cash investor foreclosure market is not easy! Then I finally scored a good deal which resulted in instant equity/profit!

The downside is the length of time FHA requires you to own the property. I believe it used to be two years, then one year (that was when I bought my property), and now it is reduced to 6 months. I am happy they reduced it to 6 months because that means I can now sell. It makes it much more useful for me.

I have about $50k+ in equity in my current property, but cannot access it via HELOC due to debt to income ratios. Talk about frustrating!

Hard money lenders and Crowdfunding platforms have turned out to be unobtainable because of the 15% to 20% down payment requirements. I project that I will have access to those options after this next flip.

It seems my only option at this time is another 203k renovation with a 6 month time frame.  

I would like to mention the importance of having a good mortgage guy on your team.  I have followed my mortgage guy from Union Savings Bank to Wells Fargo to Prime Lending.  While the bank policies are important, having a trusted mortgage guy that is always there when you need him (weekends, late nights, last minute) is SO useful!

So, I set out to find another property and found one on Hubzu (where I got my last property).

During my hunt for lending sources, I had an interesting conversation with a contractor/investor about this property. He told me that I probably did not stand a chance at the auction because he had insider information that I would be going up against a big time cash investor. He was certain I would lose out to the cash investor because of my FHA financing. Let's just say I am far too determined to give up that easily.

I was up until well after midnight last night in a bidding war with 4 other bidders.  In the last two hours, it came down to me and one other bidder.  We were certainly pushing each other's limits!  I nearly gave up.  I was right at the cap limit of $155k that I had set for myself before the auction started.  The other bidder finally dropped out an I won the auction at $152k!  Victory at last!

Purchase price with Hubzu fees:  $159,139

Expected renovation costs:  Less than $15k

After repair value (ARV): $230k to $240k

Holding costs:  I don't consider holding costs since it will be my primary residence for the duration. Monthly mortgage is just a normal cost of living in my opinion.

Projected profit: $45k give or take after end sale expenses

This home is in a good neighborhood and the houses are all well kept.  It is structurally sound and the mechanicals appear to be in really good condition.  It just looks like most of the work is minor and cosmetic.

Now it is time to wade through all of the FHA financing documentation and close this deal!