All Forum Posts by: David Miller

I'm now to the end of April, almost. 

The contractors are stressing me out. 

HUD requires that I fix a few things, so i have a general contractor that I found through a reputable friend. I've asked him to address new windows, repairing my porch as well as my HVAC and fixing any electrical issues. We'd also be hooking up natural gas which means some extra plumbing. Which leaves me to do the repairs inside - refinishing 2200 sq ft hardwood and concrete floors, repairs to 2 bathrooms and gutting a 3rd, as well as lighting, entirely redoing the kitchen, painting walls and sundry others.

I think my budget has run away from me hard. I'm not sure because most of my numbers are guesses. The contractor has to send the budget to the financiers, and his sub contractors are not playing friendly with my schedule. It's infuriating. 

Being a complete rookie, I'm open to suggestions... Or a cheerleader... Or maybe just some self depreciating humor. 

 This is my nightmare now too. Did you ever resolve your situation?

Update! Bid accepted! I have my house under contract!

The rules as I understand them now from the financer state that my offer is final. The thing we are still negotiating is the final price of the mortgage based on the repair estimate. It seems like I'm about to put my life in the hands of my contractor. 203k is cool for allowing me to roll the renovation costs into the mortgage, but with that allowance come stipulations. It will pay for appliances, but I'm not sure it will replace the antique furnace, etc. Once the offer is formally signed by all parties, I'll have 15 days to get with inspectors and contractors and come up with a final number. 

My finance man specializes in these loans, so I'm counting on him to get through closing as quickly as possible. If everyone plays nice, we should be in there in 45 days (jeff says he can do it in 30, but ....). I'd be happy with 45. 

Math time! I've run comps and I think houses here have been selling at $93/sq ft on average. If I can keep my repairs under $20,000, I'll have bought my house for $66/sq ft. At $93/sq foot, my 2300 sq ft house would be worth 212,000.  the last time anyone tried to sell it, they listed it at 175,000 in 2007. Zillow says it's worth182,000. I'm paying 125,000 for it, plus renovations, which all get rolled into escrow.

My goal is to keep the house, but harvest the equity in a few years to spring into rental properties. I'm afraid to hazard a guess at the renovation budget. She does need some tender love and care, but I'm waiting for a contractor to get out there and tell me exactly what I can do. 

So now we wait...

Thanks guys !  I haven't seen anything saying as is, so that gives me some hope. 

I'm taking the plunge. Other offers can still come in for the next 48 hours, and so that makes me nervous. I had literally just spoken to my realtor and finance guys yesterday. Today, the realtor lit up my inbox, and by the afternoon they both had me back on conference call telling me to jump on this house. As I was leaving with the realtor this evening another family pulled in to see it. I live in a hot market. I've known this, but it was a visceral reminder that other people also want to buy this house.

The house is a foreclosure. I'm trying to get it on a 203k. We made an offer high enough that the closing costs should be all but covered by the seller, and that it should be competitive even in a hot market.

It's happening fast. My head is spinning. My offer is probably closer to 78% of ARV, but I also plan to hold this house for a long time. I eventually want it to become a rental, but I will need to live there for probably a year or two until I'm able to buy another home. How can I understand the profitability of a deal like this, or is this just something that I'm not going to know until it all shakes out? I can't have a proper inspection or renovation appraisal until they accept my offer. My best guess walking around was that it needed some fairly moderate repairs. The kitchen is a total renovation. The bathrooms might need it too. All of the floors need redoing. The porch needs to be braced. Paint for everything... etc. The HVAC looks old but it apparently works. HUD did an inspection, but not really.

The highs are that this home is in a neighborhood where the median value is closer to 200,000. It has a decent lot. It also has a fireplace and a nice porch. Conservatively, the realtor and I guess ARV to be 160,000, but I honestly believe it's probably more.

Newbie question time, I guess..

With my offer on the table, will I still be able to negotiate it pending inspections and construction estimates? I don't know if 203k allows it.

For more experienced investors, how do you manage in hotly contested markets? Do your offers go up compared against the 70% rule? 

Going in with practically no down payment, what is the best way for me to gauge how profitable my investment will be?

Regarding the timeline I can expect, the realtor said I should know if my offer has been accepted in 48 hours. I think she is referring to the end of the exclusive period, when my little HUD house would go out to non owner occupants. My lender is very experienced with 203k, so I tend to trust when he says 45 days for closing. This basically means that I cannot start renovations until after closing, so am I looking at late May? I've seen others' horror stories regarding this time frame and it gives me cause for concern.

I'm certain these questions have been answered already somewhere, so I apologize if I'm kicking a dead horse.

Well, that's all I've got. I appreciate any insight, and I'll post back with the results. Fingers crossed!

Thanks Jenna. I have other engagements that day but please keep them coming ! I'll be back

Way to go Jenna ! I'll see you there =)

Thanks Jenna. I do like hearing alternative points of view. I would have already edited my initial response but it's not an option. My gut reaction was run away, but I do see some value in the REIA. I'm all about networking. If you start doing a real estate coffee hour please let me know. I work downtown and I would love to meet other investors and people in the industry.

Richard, thank you for the heads up. Networking is nice, but I'm not trying to play the guru game

To piggyback on this, Chattanooga is so close to Alabama and Georgia, that much of what one thinks of as 'Chattanooga' is taxed completely differently ie Rossville.