All Forum Posts by: Chris Martell

@Michael Noto It's a SFR. I'm not looking for cashflow on this one, just the equity. If I do this over 2 years it'll be the world's longest flip (I'm joking, of course, because we'll be living there).

It's in a nice town, but the reason I said I'm cynical about the comps is because this one is the largest house on a street full of small houses.  I think that will deflate the sales price just a little.  

I'll try to be as concise as possible, but there's a lot going into this one.  

I found an REO on the MLS monday morning. A quickie set of comps came in around $200k...the cynic in me says plan for $150. It's listed around $55k. I missed it before because it was listed much higher, but at the end of last week the price dropped significantly.

I don't normally consider owner-occupied, but this one's right around the corner from my fiancee's family here in central Connecticut, and she'd like to live closer to them.  It's mostly cosmetic work, but it needs a new roof before long.  I'm also not certain about the state of the mechanical systems.   I'm handy & don't mind doing the bulk of the work myself, but I know there will be a couple big ticket items. If we're going to live there, that gives me time to get to all the small things. 

The numbers are so good that even if the repair work, by the time we're done, is something crazy like 50k, we'd still stand to make 50-100k by the time we're finished.  That's a great margin.  But we don't have the cash to buy it up front (and the bank obviously wants cash only for REOs) so now we need a solution.  

Plan #1 was to have a private lender purchase it and then immediately do an FHA 203k rehab-refinance to cash him out and to give us the budget for the rehab. This was looking good until we realized that I'm no longer a W2 earner, so we can't use me on the FHA loan until I have my business operating for 2 tax years. And we're not certain that her income alone will qualify us.

Plan #2 - have the PL finance it for 2 years, then we refi.  I'm new and I only have one PL. And he balked at this plan. 

Most hard money lenders here won't lend to owner-occupied, so that's likely off the table.

Latest idea:  What if I team up with another investor?  He or she buys the property, then issues a 2-year lease to me set up so we buy it out at the end of the lease?  This carries us through the time we need to get the loan, and it makes some money for a friend.  Using 10% interest annually as a guide, the other investor would make $11k over the 2 years, ultimately earning back $77k for investing 55 (and honestly, if they negotiate a better price with the bank, then "more power to them!").  I'd even be willing to buy it a little higher, if they wanted to make an even better rate.  (I don't want to buy it *too* high, since I'm paying all the rehab costs.)

Is this a crazy idea?  And what else should I be considering?

There's a lot of traffic on this property now that the price is so low. I saw it with the listing agent on Monday and there were other folks viewing it at the same time. Nobody has an offer in yet, but time is of the essence.  

tl;dr - How do I buy & owner-occupy a 55k REO with no available cash and no ability to qualify for a loan for 24 months?

Welcome (back) to the neighborhood!

I'm investing in Middletown but living in New Britain, and as you probably already know, so much of New Britain is for sale right now!  There are multifamilies on the market in all neighborhoods, and some at very low prices.  

Something to keep an eye on -- earlier this year they made an effort to pass more restrictions about how many unrelated tenants you can have in a property.  It's something they discuss every few years, usually after some CCSU students have a major party. But it's in the air again right now.  

I'm not trying to give you a hard time, but is this true?  Because if you're giving up on saying "I have a partner" but substituting "I work with 1000s of cash buyers/investors", that's not a huge improvement.  Unless you really, really do.  

I like that you're getting your license.  From your story, it did sound like you're showing & selling the property, rather than the deal, and in some states that's going to land you in hot water.  Getting your license sounds like a good next step.

Thanks for sharing your story.

International Man of Mystery.

Well, sort of.  I am a published author in the field of Martial Arts & Self-Defense.  I had my own gym for 10 years, where I taught everyone from "folks who just want to be a little safer" to others who wanted to be the next Ultimate Fighting Champion.  It was wonderful and rewarding and I did a lot of work with my local community (including offering a free weekly class to the public every week for seven years!).  

I sold the business in 2012 because I got an offer to return to Professional Ballroom Dancing. I did, and I worked as a staff trainer, instructor, competitor, and performer until a torn ligament in my ankle sidelined me.  

I spent the first half of 2015 at a desk because of the injury, but it was doing marketing, communications, and systems development for a wonderful design-build firm that wins awards for their net zero homes.  I absolutely loved it there.  

I've left that to be a full-time investor.  But now that I've been cleared by my orthopedist, I'm also getting back into shape to do more Ballroom Dance competition and train more fighters ;)

@Jake Baxter welcome!

I recently went through something similar - there's a house down the street from my parents' home where I grew up that has been vacant for a while.  The assessor's website gave me the name and address of the owners, but they're since moved.  I found that a little creative googling of their names (using the address I had) brought me more up-to-date records. I mailed something to each of them (one no longer lives in CT), and while one bounced back, I'm certain the other went to the right person in the right place. Now it's just a question of getting a response.

You may get lucky on google. If all else fails, maybe hire a skip tracer?   Good luck!

I just read this entire thread, and the whole time I was thinking "it's gotta be resolved by now, we're almost 5 years and 27 pages deep!"  

@Will Barnard, it's gut-wrenching to read this saga. I hope that from here out it goes smoothly, and that ultimately it creates a great situation (a surprisingly good sale price, a lead on an incredible deal, etc).  Thanks for sharing this incredibly educational tale with all of us.  Keep fighting the good fight.

Welcome to BP! 

The CT REIA group works with investors statewide (and also has investors from RI, MA, and NY that come to the meetings), so that's a good bet. The monthly meeting was just this past Monday, but they have a pretty active event calendar.

Hi Dinesh,

Welcome!  

Hi Jacqueline, 

Welcome!  And also, congratulations!