All Forum Posts by: Bruce Clark

@Account Closed the house has been on the market for over 18 months. Clearly it is not in high demand. It is empty. it has active leaks in the roof. Bats and birds have found their way in. Despite all of this, the owners have decided to limit their potential buyers to someone who has 45k cash. To each their own, but to me it does not seem like the type of property to be limiting the potential buyers you would consider. 

@Brent Coombs Thanks for the tips. I have heard a lot of people say that conventional lenders have minimums on mortgages. However, it must not be universal, because i work with a local bank, and I've had several loans/mortgages of less than 30k. 

@Jeff B. thanks for the tips. I think I am going to try that route. 

I put in an offer for a potential flip. My offer was for 45k subject to inspection and financing.

My agent says the seller has responded by saying 45k is fine but they only want cash offers and they are "not going to deal with inspections." The selling agent has had the house on the market for 18 months and needless to say, he is not happy.

My agent tells me that they have had the house under contract twice but it has fallen through based a bank requiring repairs prior to closing or a low appraisal. My guess is that prior buyers did not intend on flipping the property and they were likely attempting to use an FHA or similar type loan. I am not sure though.

I think the house is a good candidate for a flip, but I certainly am not going to buy it without an inspection and I do not have 45k cash. 

My thought is to go through it with an inspector and try to line up financing and if/when I get everything worked out then resubmit my offer.

Anyone ever run into this or a similar situation? Thoughts? Suggestions?

@Eugene Kemp Thanks for the comments. I really appreciate the input.

@Eugene Kemp I should have been more clear when I mentioned Zillow. I used it to look at actual sales of similar properties in the area. I definitely do not rely on its "estimated values." Also, my offer is contingent upon inspection and financing. I am an attorney, so I made sure the contingency clauses were solid. I was under the impression that it would be difficult to secure 100k financing before I even had a deal under contract. Am I mistaken on that?

@Bill Hinshaw thanks for the tips. I have checked the days on the market for several recent sales and I haven't found any over 100 days. Most are within 30 days. I have run the numbers (with guesses at financing costs) and even if we hold it for a full year, I am still calculating 40k profit. Overall all it seems like a solid deal to me. With it being my first flip, I am just nervous that I am missing something.

I have some buy and holds and am relatively comfortable in that space. However, I am attempting my first flip. I am partnering with a friend who is a general contractor (with an accounting degree). I found the deal and I am going to work on the financing. He is going to manage the construction, monitor the budget, and work with a realtor to sell the house upon completion. We are being very conservative with the numbers.

ARV $175,000 (I have done research on realtor.com and zillow. Based on my research, this number is very conservative. Actually a similar house only two blocks away sold for $200k just two days ago. I have also asked my realtor to pull comps and give me his opinion, and I am waiting on that.)

Purchase price - Asking is $52,000. I offered $45,000 this morning so we will see.

Rehab costs - $59,000 (This is very conservative as well. We have both run the numbers about 20 times.)

I think this is going to be a good deal for us. What does everyone think?

Also, it is not under contract, but if/when it is, I will need to start securing financing. I have never had trouble financing buy and holds though my local bank, but I am nervous about approaching them with a flip. Also, I have no experience with hard money or privatelenders. Any comments, suggestions, pointers are greatly appreciated. 

@Joshua Fulenwider I agree on the 15 year term. That is what is hanging me up too, because although my current rate is 5.75, it is also fixed for 30 years, which gives me some piece of mind. I would much rather get a LOC on the property, so that I could just pay the money back when I wanted and the term wouldn't matter. I havent found a bank yet that will give me a LOC secured by an investment property. I am still looking though.

Thanks for the input.

Thank you everyone for the comments and suggestions! Great info and perspective!

@JD Martin thanks for the insight. I appreciate it.

@Russell Brazil Wow, I did not know that about the elevation certificate. The property is definitely high enough. It was built in the mid 90's and from the design it is clear that the builder did his research. It has like a 12 foot basement. When I looked at it, I could clearly tell that flood water would never realistically get to the finished living area, but I just assumed that a bank would require the insurance regardless.

I am going to look into getting a certificate today. Thank you for this tip. I guess this is why it pays to ask questions.