FINAL SUMMARY: Yes, it ended. The seller actually cancelled the sale but I am relieved and a bit frustrated. Here is the quick run down along with lessons learned.
1. Our first bid for this house was 100K. We ended up going to 135K with the seller paying 5K in closing costs. This was with the FHA203K loan. We figured we might be able to get the math right on the back end with repair costs.
Mistake: not having any experience we assumed the cost was going to be 50K-60K to repair. After 9 contractors and 5 weeks the estimates averaged 150K without lead paint removal costs. Total loan would have pushed 300K!!!!
Lessons learned: Know your numbers and stick to them. Now we know what to look for in rehabs and specifically what the VA, 203K, and other loans will require. We also have good numbers on some repair items to compare on future properties.
2. We ended up going through 9 contractors. 4 never showed up to the property. 5 gave us quotes. 3 quotes were not itemized as we asked and 2 were verbal. It took over 5 weeks from the first offer accepted to get the first bid which was NOT itemized.
The work needed is full electrical replacement, full plumbing replacement, 20K in foundation repair, lead paint removal, exterior siding and carpentry repair, roof repair, both bathrooms replaced, sheetrock work, second floor needs more bracing, asbestos siding was disturbed, workshop 25'x50' needs to be demoed, hvac install, stair repair, all carpet upstairs removed due to human and animal waste, and back porch repair. All this is necessary and not cosmetic needs. A real makeover number would be 210K which includes appliances, kitchen repair, paint, first flooring replacement, windows, doors, exterior siding.
Mistake: We should have contacted the HUD consultant FIRST for a job this big.
Lessons Learned: Thanks to Mr. Paul, we know now to do this for a standard 203K loan. But the HUD consultant can also be a good project manager on any loan (if you find the right one.)
3. Sellers are people too. Sellers and buyers have their beliefs, positions, and desires. This particular seller in this house was very difficult to work with. They left a home full of poop, destroyed, and basically condemned. They are hard on their stance of wanting 130K minimum. 6 contractors and the HUD consultant told me this house should not be listed for over 100K at most. But we were willing to settle in due to this being our first rehab and 'forever home'. The seller even called me an idiot (via Facebook. Yes they messaged me and said as much) to say I should not be expecting a price so low and that this property doesn't need to be rebuilt. They eventually cancelled the sale since it was taking too long and we asked for a price drop. This is a blessing in disguise. Saved me a massive headache in the end. We asked the price to drop to 80K. That is the only way this loan or property would actually work mathematically.
Mistake: Trying to work with a seller who has unrealistic expectations.
Lessons learned: Just be yourself and don't get emotionally involved with sellers or properties.
Overall what I learned:
Find your team. We had the wrong realtor, lender, and contractors. I even have unanswered emails from my lender. Mr. Paul Weldon actually answered more questions that the lender I tried to use on this property. The HUD consultant was the one who really knew what was going on. We should have contacted him the day after we had the accepted offer. That could have saved 3-4 weeks of headaches and stress. I now know so much more about real estate that I would not go back and redo any of this. I will definitely change up what I do in the future but the amount of experience I learned in the last 5 weeks is priceless. Thanks to you Mr. Paul for helping. Thanks to the Bigger pockets folks who responded. This is not over. We are still looking for a home and we are also keeping our eyes open for investment properties. We are studying the market and areas to determine the best ROI.