All Forum Posts by: Christopher Foote

@Peter Sun. The property has to be an owner occupied property to buy using FHA.

@J Scott My input here. First and foremost if the partners agreed to the contract and signed the contract it should be binding. If you made the decision to hire you as the contractor as the managing partner of the llc I think you have a problem. Unlike others I don’t have a problem with you doing the renovation as long as it was agreed upon by the other parties. Someone has to do the work and the general contractor will price a profit margin into the job. Some will thInk this Is a ConflIct of Interest. If they did not agree to the contract, I think you will be at their mercy to document the cost of the job with a reasonable profit margin. Anything more you could be looking at problems.

@Brian Ellis This is definitely a barrier in my opinion. The consumer thinks. “I’m paying a $50 (hypothetical) app fee and he is taking 20 applicants so my chances of losing my money for no reason are 95%?” why would i do that I think that can scare people away. Good luck

@Alex Alaniz FHA has two forms of mortgage insurance. Monthly MIP and UFMIP. Typically the UFMIP is financed into the note in a lump sum but will also show up on your Closing disclosure as a cost. I think the big thing in this deal are the debts you had to pay off to qualify. That seems to have killed you proceeds. There are currently conventional mortgages available with a 3% down payment that will likely be less expensive than FHA overall if you have a solid credit score. however qualifying ratios are tighter than FHA. Good luck in the future.

@Alex Alaniz It is very common in hot markets for there to be verbiage in a sales contract that states that “if the property does not appraise at or above the agreed upon sales price, then the buyer will be responsible to pay the difference in cash and does not have the ability to withdraw from the contract due to the appraised value”. The key here is that you would need to make sure the borrower has the additional funds to make up the difference in cash. 56 days seems like a long contract time in this market. Maybe you can negotiate out an accelerated performance date.

@Joe Splitrock I agree with this assessment. Take the 125 and run. If you want to make additional money on the deal, sue the realtor on the initial transaction for damages related to you holding the property and you having to carry it because the didn’t take the deposit. It was a non contingent deal. They should have had the money in escrow. You could have at least recovered your costs.

@Mike M. You take 25k from a lease option client and use it to buy another property? You are not holding that in an escrow account? Do they forfeIt the deposIt if they dont buy the property? Wow!!

Hello Chris:

Welcome to the group.  I'm sure you will learn a ton here.  There are amazing resources here and some truly seasoned investors that always seem to be willing to help.

Best of luck in getting started with your first deal.

Eric,

Give us some details so we know what you are working with regarding the transaction. For example: The sales price is $120,000 the rehab is $30K and the after improved value is $210,000. I have $30K that I can put into the deal and have another 30K in my IRA that I don't want to touch. I have good credit 750 fico score and I am a novice or experienced flipper. I'm assuming you are new to this.

Jeremy:

Are you totally strapped for cash? I don't know if you have an owner occupied property or not or if you could qualify for one but if you do I would suggest you look at a 2-4 unit with 3.5% down FHA and build a seller credit into the deal to pay your closing costs and pre-paid expenses (Escrows, taxes). This would be an inexpensive way to get going. If this doesn't work for you then you may want to look for 1 of the fix and flip products that exist in the market place. You may be able to get in with a 10%. down payment and finance 90% of our rehabilitation costs. If the 10% down payment and closing costs would be a problem then you may be in the boat of finding a partner. These fix and flip products typically look at your FICO score, Experience, Liquidity and the ARV of the property. They will be looking for an ARV of 70 to 75% for a rookie investor if you have the rest of the criteria met. You should note if you go this route you will have to deal with your down payment, your closing costs and your first 10% of repairs out of your pocket before they will start reimbursing you.

If this doesn't work then you may have to continue to wholesale deals or find a participation deal with someone with private money where they are providing the funds and become your partner in the transaction.

Best of Luck to you.