All Forum Posts by: Anne Williams

@stevek It was all of the above..  listed too high, should have listed at 565 instead of 575 to generate more offers (it did appraise at 575 for my refi), when reposted, should have left it alone, my real estate offered it to the first group that offered during the first round way too low, I should have listened to my gut,  a perfect storm of bad marketing..  I listened to the wrong people, didn’t have a strong team or a great mentor..  but..  I learned a lot from the experience..  and I am a quick study..

It’s a really nice house in Broomfield in Brandywine, if you know the area..  really turned out very nice.. 

pm me and I’ll send you the address so you can see the history on it.  Would appreciate any feedback you can give..  because you are right, it should have sold …. Fast..  self assessment is good..  

@Michelle S. YES!!  Thank you for your post..  How much does time away from your family cost..  ??  It seems like doing anything for NO money, isn't a good investment either.  Patience is a good thing.. and Kudos to you for going it alone!!  That is a huge accomplishment..  The good thing is that the market isn't getting softer, it is a decent bet that by spring/ summer the market will heat up again.  I feel like the winter months are full of people trying to get real estate on sale..  

I don't have to sell it.. and I don't want to be a house flipper.. I already have a full time job.. My goal was to add to my pot so that I could achieve my goal of adding 3 more doors to my portfolio this year. This is door number 2 of 3.. and while I didn't make my goal, I am a little closer, and a bit wiser.. I figure that in this market (Denver), there is no 2% rule in the renting paradigm.. Holding on to the property for a bit seems like the less risky way to move forward.. and while I am a little queasy about renting it out for the wear and tear, the COC is around 6%, equity will increase over the coming year (there is a severe housing shortage here) so I am guessing around another 6-10%, as will rents (+3% / year) if the market tanks, and I have the patience.. I have a gut feeling that things are going to work out ok.. even if I have to wait.. Cheers to a new year!

The numbers looked pretty good in the beginning..

purchase price 429,500

Arv 565-575k

Hard money loan: this killed me

16k (2 pts, 10%, 3 mo in advance)

Construction insurance 1600/6 mo

W closing costs all in at 451k

Renovations were estimated at 50k (actually 59k-roof and sewer replacement and radon, and the drywallers killed my furnace)

6k additional hard money payments

Staging2k

57k left (assuming 575k sales price)

Sale side closing costs 

6k (open title)

20k realtor commission 

31k

And after Uncle Sam takes his cut

21.7k is left..

I put in 162k of my own money to save on interest.

And there you have it.. w an offer at 565, and a VA appraiser that undervalued it by 20k, we fell out of escrow. 1 week before thanksgiving.. and that is my very sob story.. w my life savings in jeopardy, you can see why I am losing sleep over it..

I think I could get what I want for it and more if I could list it in late February, but I am out of time..  just trying to make the best out of a situation that could be, I know, a heck of a lot worse..  but here I am..  😀

I can get 2750 a month for it and I am thinking that I can cash flow fairly well on it if I add it to my portfolio..  the conversion is a bit shaky and I am sure taxes are going to be a flaming dumpster fire to sort out..  but short of pulling a 2nd bridge loan or a conventional, I don’t know what else to do w it.  I can’t have it listed if I am attempting a loan on it..  I feel like I am stuck w it..  at least for a while.

John, would you risk not being able to close in time for the balloon or would you do another bridge on it?  I don’t think my hard money lender will extend based on the contract I signed on it..

Thanks for the advice.. I don't think there is an option to extend. I will call them though, just so they know what is happening. I am pretty sure they would make me do a whole new loan on it, and it wasn't cheap.. Hindsight 20/20, I should have had it rented the second I took it off the market.. and started the refi process then. So many people giving advice w motivations of their own.. after looking at it closer, even though I won't get the money out of it right away, at least I can cash in on the 750/mo cash flow it will generate.. until I can complete the BRRRR. I like the get rich slow approach. I get to keep more of my investment since there is a cost associated with the selling side.. there was over 125k between the purchase price and the ARV and it seems like a lot of work for the tiny slice that is left after you sell..

Like you, I definitely prefer the smaller rehabs..  The most I have ever put in was about 10k previous to this..  I have a lot more skin in the game on this one for sure..    fingers crossed, I can get this refi to work and put this thing behind me..

We should have gotten more offers, in this market, where homes are being sold 10-50k over list..  I got one offer, 10k below asking.  Ten people walked through it the 1st weekend.  It’s really nice.  I had it appraised by a bank and it appraised for my list price.  I feel like we should have listed at the offer price, so we had competing offers, waived concessions etc. 

I didn’t relist.  I had concerns that because it was listed for > 10 days that it would be tagged by buyers.  So at the advice of another investor/RE agent, I decided to sit on it.  Rookie mistake?  Maybe..  

So I started my very first flip in August w a target finish in early October. Details below.. a few surprises but on track to pull down the ARV and make around 30 k.

So we put it on the market listed way too high the week before Halloween and after a quick contract acceptance we ended up getting beat up by a VA appraiser and we terminated contract. So now, my hard money loan is a 6 mo balloon, and I am getting killed on the interest payments.. all my money is tied up in it. Around 160k. I need to sit on it for at least another month in order to get what I want for it.

Here is my question.

What do I do if the balloon happens before I can sell it?

Looking at a 1 year rental situation.  Cash flow is around 700/ mo after expenses.

Looking at selling it to my spouse to pull some money out.

Cash out refi conventional requires 6 mo seasoning to get the appraised value.

I am not a full time flipper, I am patient and am considering the dollars and cents of it all.

Wondering if anyone has experience converting a flip to a rental?  Any advice on leveraging?

Thanks for your help!

I have been doing buy and hold for 19 years..  just not like this..  seems like if I can get this to work, it might be my new business model.. 😀

I am not a lawyer, however, if you follow your lease and your states laws, and they both signed it, they are both liable for full amount of the rents defined by your lease for the lease term.  Because they are breaking the lease, you are entitled to whatever penalty stated in the lease (keeping damage deposit -or other per your state guidelines).   If the female comes back, she is still subject to the terms of the lease.. and thus the damages.  it sounds like you might be able to call her actions abandonment(which should be defined by your state- here in CO it is 15 days without paying rent), and thus she would have no claim. It doesn’t mean she can’t take you to small claims, but she wouldn’t win anything.. If you decide to let him out of the lease, just be certain to document the terms of your agreement, and make him sign it so there is a paper trail.   I love the JOINTLY AND SEVERALLY LIABLE INDEMNITY clause, for all of my contracts..

At the end of the day, if he doesn’t want to stay, you can’t make him, but you are entitled to the remainder of the lease term rents..  Don’t lose sleep over this one..  

I had a similar situation in one of mine.  The tenant who stayed wanted to stay for the term, I did a roommate transfer on the damage deposit, and he found another roommate.  I have a clause in my lease that states that a forwarding address or contact be left for the refund of the deposit.  The tenant is still there, 2 years later…. he pays current market rent on time every month and he takes great care of my house and yard..  I would give the guy the benefit of doubt if he wants to stay..  could turn out to be a good deal for you.  You should look closely at the landlord-tenant laws in your area.