All Forum Posts by: Andrew Griffin

@Nick Giulioni I really appreciate your comment. I looked up IRR and I think I understand the basic concept now. Also, checked out your website. Looks like you are doing some amazing work! I've got a potential deal or two that might suit your criteria. Plz check out my post HERE and let me know how I could make them work for you. Thanks

@Shawn York That helps give me some perspective on price points for negotiation with sellers. I'm sure there are other investors with the same criteria and approach you have. Maybe investors who place a higher value on Class B neighborhoods, will be more open to properties that are a little less than or barely hits the 1% rule.

@Nick Giulioni Very true. How much of a discount and/or cash flow do you require?

@Shawn York @Anthony Sgro I appreciate the responses. The particular properties I had in mind are in the both really close to one another in Decatur township zip code 46221. Crossfield-Southport and Pheasant Run-Canterbury House neighborhoods. Right by the High School.

@Shawn York So what you’re saying is that $1300-1500 rent range would be worth an investment of at most around $120-140k?

How much would you pay for a Class B SFH in suburban Indianapolis?

I'm a new investor/wholesaler/broker from Indianapolis. I have a couple of sellers that are either already moving out of their homes (or interested in moving), therefore, no tenant in place. They are weighing out their options between listing as-is, getting a rehab first or selling off-market as-is.

Still need to verify the information below once I view the properties but here is what I have so far:

• 3 Bed and 2 or 1.5 Baths
• 1425 sqft
• Rents would be approx. $1,250 - $1,500 (depending on level of finishes)
• Cosmetic Light/Average Rehab of $15,000 - $25,000
• No major repairs needed
• ARV right around $150,00- 155,000
• HOA $30/month
• Property Taxes approximately $2,500 - $3,000 annually

I'm looking to find out what all-in price including rehab/closing costs an investor would be willing to pay for these. Thanks for any information or guidance!

@Nick Giulioni Are you currently buying properties that match what I described?

@Mike D'Arrigo What Cap Rates are rental investors currently willing to take on suburban Indianapolis Class B SFH that need Light to Average cosmetic rehabs?

Thanks for the feedback everyone!

Just to give everyone an update, evidently the lender does have some success with 203k. My situation might have gone arry when my original loan officer left the company shortly after I was approved. The lender stuck me with a loan officer who seems inexperienced and not able to tell me much about the process.

What I found out is that the lender will require a lead-based paint inspection BEFORE closing and Might even require me to stabilize any lead-based paint findings BEFORE closing. It has taken days to only get partial answers to my question. I asked them to assume that the property likely has lead throughout the interior and exterior and let me know what I need to do from there. The underwriter is not comfortable with doing that. They want to confirm the findings first. They have not been able to give me a complete gameplan for what happens if lead is found even though they knew my scope of work prior to the appraisal. I did confirm from a lead-based paint inspector that they will detect the presence of lead under any amount of new paint so @Derreck Wells you're right about that. @Noreen Eddy I considered just trying to buy the property with a conventional but I won't get to do the repairs needed so I'm going to pass on this one rather than trying to figure out a new way to get it done.

My team was proactive enough to include scraping/repainting the exterior trim on the windows that we noticed were chipping. We also know that we will be disturbing paint. patching and repainting plaster on many of the interior walls so that we can update knob and tube electrical to current standards. We have contractors on the team that are certified to handle lbp renovations.

Later, I found out that someone I actually know recently got an FHA 203k from the same lender but they were allowed to do a lead-based paint inspection after closing. From this ordeal, I've learned that lenders/underwriters do not necessarily follow set standards for each project and their word is final.

@Paul Welden was kind enough to share his knowledge and connect me with other lenders. For now, that deal is dead. There are too many what-ifs to justify pursuing it further. Paul also confirmed that once an appraisal report is generated, it becomes The only valid FHA appraisal for that property for 120 days. Any FHA borrower will be required to use that appraisal report for 120 days (not applicable to any other loan such as conventional, VA, USDA, etc.)

I'm going to take a look at another lender and a different property. If I have success I'll definitely share the lender information!

@Paul Welden That's unfortunate. The loan officer talked up the lender as if they had experience with the 203(k). I didn't do my due diligence on the company.

Lead-Based Paint Inspections are pricey in my area and I'm looking at an additional 3-4 weeks to account for the appointment and results, at least. My seller is not going to give me that kind of time so I'm in-between a rock and a hard place. Not to mention additional costs that may be added to my budget. The appraisal already came back very low and I had to cut my rehab budget so much that it can't take another hit.

No, the 203k consultant said that he wouldn't mention lead specifically but we discussed scraping and re-painting certain areas and added it to the budget. He actually has been silent since I've asked him is this really normal for an FHA backed loan.

I feel that I'm forced to challenge it.

@Paul Welden Thanks for that explanation! The way I am going to fight this is that the lender already admitted that they are just going by what the appraiser is requesting. The lender did not tell me about this requirement upfront or give me a reasonable time to accomplish it before closing. That further verifies that this is not a typical lender overlay because the lender already was aware I'm applying for an FHA backed loan and that the house was old.

The appraiser did not note any defective paint areas that would need to be addressed. He based the inspection required solely under the pretense that "All properties built prior to 1978 will require a lead base paint inspection and possible stabilization if FHA financing is used."

Although I'm new to this, most inspectors have told me that they never see that requirement. The HUD guidance I found online specifically states that 203(k) is a mortgage insurance program only because FHA is not providing the rehab dollars and should be treated just like any other FHA backed mortgage and refers to 24 CFR 200.810(c) which does not require a lead-based paint inspection.

If FHA, the lender, Indiana, EPA, ect. do not require it, what legs does the appraiser have to stand on? I think what he may have done is try to justify singling out the 203(k) but he should not be able to do that. Therefore, I'm challenging his reasoning and will let everyone know the outcome.