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All Forum Posts by: Sam Alpha

Sam Alpha has started 8 posts and replied 120 times.

Post: How would YOU tackle this foreclosure deal?

Sam AlphaPosted
  • Rental Property Investor
  • Orlando, FL
  • Posts 132
  • Votes 24

@Jay Hinrichs @Bill Gulley 

I managed to speak to the owner and got more information on the financing and property condition.  

In regards to the financing, he is behind on his mortgage by $80k. With all associated fees included, that total comes to $100K. If that amount is satisfied, he takes full possession of the property. In addition to this, the HOA has a lien on the property in the amount of $4800 ($800 for non-payment of HOA fees and $4000 for legal fees). He says that he has been to court and the HOA did not have the appropriate documents. The judge has asked for this and if not furnished, he will throw the case out. There is also a new HOA in place, so he is not sure where he stands there. I have made it clear that he will have to get that part cleared and the lien lifted before we proceed or we can pay the lien off from the amount that I was going to give him, in which case he gets a smaller cut, but he is accepting of that, if all else fails. Please note, that I have spoken to an attorney here and will be letting him deal with all this IF the property passes inspection and all looks well and doable.

In regards to the condition of the property, I have a new post under a more appropriate forum topic.  If you have any experience in rehabbing, your input would be appreciated. The link is: http://www.biggerpockets.com/forums/67/topics/1642...

Happy Holidays to you all!!!

Post: How would YOU tackle this foreclosure deal?

Sam AlphaPosted
  • Rental Property Investor
  • Orlando, FL
  • Posts 132
  • Votes 24

@Dirk Smithson you are right.  I am going to be using the service of an inspector and will also have a CG give me quotes for the work required.

Thank you for the advice on the plumbing.  i will be making sure to get that part covered in full.  You will understand by going onto the link in the post below.

Post: How would YOU tackle this rehab?

Sam AlphaPosted
  • Rental Property Investor
  • Orlando, FL
  • Posts 132
  • Votes 24

Hello all,

This is a part of another post I have which can be followed at: http://www.biggerpockets.com/forums/41/topics/1635...

I have started a new post as I have a more specific question in regards to the property (3/2.5; 1650ish sq.ft.) that I am interested in.  In posting here, I am hoping to get a response from more seasoned rehabbers.

I have spoken to the owner of the home and the following is what he is aware of that will require attention.  Please take note, that I will be getting a full inspection and will also have a GC in there for the sake of having two different sets of eyes looking at it.

The items that were disclosed are:

i) All carpets will need replacement (either with new carpet or wood flooring).

ii) The was a failed valve in the master bathroom which has soaked the drywall and damaged other areas.  In short, the whole bathroom will have to be redone.

iii) The common bathroom has slight water damage from leaking end caps, but is not extensive and only the dry wall will have to be replaced.  Besides that, the whole bathroom has been updated recently.

iv) Some of the baseboard will require changing.  Since this is an 18 year old home, I would prefer to get all the baseboards done.

v) Laminate from the kitchen counter tops is peeling and can either be changed for new laminate or completely replaced with granite, tile or other material.

vi) The home has not been updated (besides the common bathroom) and I can update it to the extent that my budget allows or to my liking.

Also note, the A/C unit and the roofing (not only shingles, but the whole roof) was installed new in 2004.

The owner thinks that I can get this completed within a budget of $30k.  What are your thoughts.

I also have a concern with the water damage and am wondering if I should be taking on such a project as my first one.  If all works out well, the deal would be a very nice one and I am struggling to make a decision of whether to let this go or embarrass it and move forward with a lot of due diligence and inspections.

Thank you in advance for all the input.

Wishing you all a very Happy Holidays!!!

Post: How would YOU tackle this foreclosure deal?

Sam AlphaPosted
  • Rental Property Investor
  • Orlando, FL
  • Posts 132
  • Votes 24

I have a meeting with the seller this afternoon.  I have made a list (below) of things I need to ask him regarding the property.  Is there anything one should add to this list?

List:

Exterior:

i) Structure/foundation:

ii) Siding:

iii) Roof:

iv) Leaks/cracks:

Interior:

i) Walls:

ii) Flooring:

iii) Electrical:

iv) Plumbing:

v) Air conditioning:

vi) Doors/windows:

vii) Appliances:

Post: How would YOU tackle this foreclosure deal?

Sam AlphaPosted
  • Rental Property Investor
  • Orlando, FL
  • Posts 132
  • Votes 24
Originally posted by @Dirk Smithson:

Just cause he says 30k in repairs doesnt mean that. 

I agree with you.  I will have an inspector and a GC in there before committing to anything.

I would just buy it with an FHA 203k loan

That would be a very good option.  However, in this case, it may not work out as I am under a tight time restriction and these loans can take 60+ days to get sorted out.  The interest rates on these also tend to be a little higher than on conventional loans.  Also, if I am not mistaken, I think the buyer must take residence in the property, whilst the repairs are undertaken. 

Post: How would YOU tackle this foreclosure deal?

Sam AlphaPosted
  • Rental Property Investor
  • Orlando, FL
  • Posts 132
  • Votes 24
Originally posted by @Wendell De Guzman:

Sam,

Conventional lenders or banks can do a cash out refi only after 6 months. They have to "season" your ownership first. It was not like that in the good ole days but those days are basically gone. You can search for portfolio lenders in your area - they may be able to do a cash out refi even before 6 months is up.

Thank you for the explanation.

On lending you $ - I only lend in 3 cities right now (these are where I have partners who know the market and these are partners I trust)

- Chicago IL

- Cincinnati OH

- Ft Myers FL

Fair enough. It sounds reasonable to do it that way.

Post: How would YOU tackle this foreclosure deal?

Sam AlphaPosted
  • Rental Property Investor
  • Orlando, FL
  • Posts 132
  • Votes 24

@Bill Gulley I have gone ahead and taken your advice as it seems like a sound one.  The same name (attorney)  was recommended by 4 people and so I am assuming he is good.  He will charge me $750-1000 for working with the other party, setting up contracts, doing due diligence and handling paperwork.  The time constraint, coupled with my lack of experience, makes that fee a reasonable expenditure.

Post: How would YOU tackle this foreclosure deal?

Sam AlphaPosted
  • Rental Property Investor
  • Orlando, FL
  • Posts 132
  • Votes 24
Originally posted by @Charmaine M.:

What happens if he cannot get conventional financing after 6mths?

I think I am set up in a manner where that shouldn't be an issue.  However, you do have a valid question and I too am curious as to what would happen should a situation such as this arise.

Post: How would YOU tackle this foreclosure deal?

Sam AlphaPosted
  • Rental Property Investor
  • Orlando, FL
  • Posts 132
  • Votes 24
Originally posted by @Wendell De Guzman:

Hi Wendell, I looked at your profile and website and I must say that it is an impressive one.  I also liked the way you have everything laid out in such an organized manner (on your website) including the numbers.

You should buy this using hard money first. HMLs don't care the house needs a ton of work. If you're paying 50% of the acquisition and rehab, the HML will have a loan at 30-35 LTV - a safe loan even if you're a newbie. 

Using a HML is an option. However, I am also exploring other options to see which may result in the best fit. Your profile states that you are a HML too. If I decided to take that route, is it something you would be interested in?

Then you fix the house, rent it out and then refi out in 6 months using conventional financing.

I am looking at rehabbing the property as soon as it is aquired and getting it all completed within 8 weeks (12 at the most).  You have mentioned 6 months above.  Am I missing something or are you being conservative with time?

There ya go - just send me $10K consulting fee for this advice (LOL)

Now that is some consulting fee! I'm giving up the hard work in RE and switching over to consulting exclusively with the aim of retiring in 3 years (WINK).

Post: How would YOU tackle this foreclosure deal?

Sam AlphaPosted
  • Rental Property Investor
  • Orlando, FL
  • Posts 132
  • Votes 24
Originally posted by @Bill Gulley:

So, you made an offer and are you buying or do you have a cash buyer?

I have not made an offer as I just spoke to him yesterday. Also, I do not have a cash buyer as I want to hold on to the property. I am in the process of researching my options on the financing part of this deal and will have a post under the finance section of the forum tomorrow with all the details and questions.

What investors use to do is irrelevant, this is today, proceed with caution. :)

CAUTION? Is there anything here that may be defined as illegal practice? If so, please do share, as I want to run this as clean as possible.