All Forum Posts by: Andrew D.

@Account Closed  a lot of times I'll just call mid america before I get to serious about a repo.  They will tell you if it will need the inspection.  Its a good idea to get in good with a mechanical contractor as to pass this inspection the gas line has to hold 15 pounds of pressure for 24 hours.  In most older houses all the gas valves won't hold that pressure and most of the joints won't either.  That means you either go through with soapy water on each pressurized joint and pipe dope/ tighten any leaking ones or run all brand new lines.  It can cost $1000 pretty easy if you can't find someone to pull permit for you.

Also with HUD owned properties you can access the inspection they have done via there website. They pressure test the plumbing and most of the time they don't pass.

Also look at the water service coming in to the house.  If it is galvanized its only a matter of time until that needs to be replaced.  Just the other day the city turned the water off at one of my houses for some road construction.  When they turned it back on it started leaking right after the citys shutoff valve at the street.  Now the sidewalk is flooding and the city says I have to have it fixed or they can deny water to the house which would probably not sit well with the tenants. Cost me $1500 to get Earls backhoe out there to fix it.  That is one big un anticipated bill.

Also you may know houses built between 1950 and late 70s? here in CR may have Orangeburg sewer line.  Its prone to collapse and I always figure it at about $4500 to $5500 to replace.  Once again its only a question of when this fails and if you intend to flip rest assured most potential buyers will want to know if its been replaced and may insist you have it done.

I'm sure I'm missing some things but thats kind of a crash course. You can find some great deals on foreclosures but there are some pitfalls due to not knowing the condition of a lot of the major mechanicals. I'm kinda burned out on them and have been trying to skip between them and what I call lipstick houses like estates or something. I've had to HUD properties that my offer was accepted but never closed. They both ended up with title issues uncovered a week before closing. The banks order these last just in case any get liens get added during the approx 45 day closing. HUD gives a 30 day extension and then terminates the offer and refunds earnest money. At this point it goes into government limbo only to resurface if and when title issues are resolved. So I end up eating the cost of Appraisal, bank costs and title examination of about $650. HUD refuses to pay these costs and the worst part is even if I really want the place at the price agreed on, when HUD re issues the property its just back on the market no first dibs for the guy that first had the purchase agreement. This stinks especially if I have the excepted offer in January (getting it really reasonable) and re markets in say June where it sells for well over my original accepted offer.

@Account Closedcongrats on the upcoming purchases! I made offers on several SFH 2 weeks ago and looks like we'll be closing on 2 the end of November. I generally spend very little time looking for property in CR during the spring/ summer. Over the years I've found there is just to much competition then and I'd rather not waste the effort and enjoy the weather. If this winter is anything like the last there will be plenty of deals as people just wanna stay inside. I always like the winter projects as it keeps me busy and able to avoid cabin fever.

As to listing your rehabs, have you ever considered selling on contract?  I have never done this but know several people that do.  It might take time to qualify a buyer that can put down a down payment but you avoid any realtor commissions and can usually sell for top dollar.  I am kicking around doing this with one of the houses I close on in late November.

Not sure how much experience you have with foreclosures.  One thing to keep in mind here in CR is how long its been empty.  If its been over 2 years without gas on MidAmerican will require the city to inspect the gas lines.  A mechanical permit has to be pulled by a licensed contractor so therefore can add to your overall expense.  In my own experience the houses that have been winterized were not done until after the first winter the house sits vacant.  EVERY 2 story repo I've bought has had plumbing leaks.  Generally once water gets turned on to the meter I have a helper stand in the kitchen while I turn on the valve and watch for rain.  Most of the time the bath is above the kitchen and something in the supply to the second floor has burst.  Makes since as the basement would be better insulated.  Have to pinpoint the leak and then grab a jab saw and cut access, repair, etc.  Its become second nature at this point!

Back in 2012 I sold my Harley to finance a property.  It was one of my first houses and I didn't have a lot of equity in the others to pull money out of.  The house had been on the market a long time with several price reductions went SP then fell through.  I'd been keeping an eye on it for about 6 months just never made an offer due to being busy with other houses.

Realtor called and said it was back on the market.  I went over to take a look and realized it had solid potential.  I had been working on all my other rehabs nearly every night after work and every weekend for over a year and my wife was 5 months pregnant with our second child.  When I came home and told her about this possible next property she wasn't exactly thrilled.  "You better low ball that offer" she said.

They had started by asking $75,000 and were now down to $45,000.  It was a repo that had set vacant over three years.  Someone had broken in and stolen all the copper plumbing.  The house was a 2200 sq ft 4 bd 2 ba with lots of old school charm.  It assessed at $112,000.  I offered $30,000 and they took it!

At that point I needed to come up with financing quick.  I was able to sell my bike worth well over $13k to the local Harley shop for $9250.  They low balled me but I didn't want to wait around dealing with tire kickers to try and get a little more.  I was able to use that as a down payment and we were able to close without any problems.

I hired some help and we were able to knock out a quick intensive remodel and were able to get the house rented in 6 weeks.  3 yrs later I still have the same great tenants and it rents for $900 a month.  It cash flows wonderfully and I was able to secure a $50k line of credit on my equity in the home based on current condition.

So every now and then I look at the empty space in the garage and miss my bike.  I do also believe I made the exact right choice.  I have to young children and work a lot of hours rehabbing.  When would I have time to ride anyways?  I can always get another one later when I have more time.

@Account Closed  that's a great idea I will add that to my list of people and organizations to contact.  

@Austin Davis  actually I don't have any houses in the flood zone, I just worked for a company that rehabbed those properties for the owners.  I do however have 2 houses outside the 500 year flood zone that had storm sewer backup flood the basement.

These houses have there good and bad points.  Usually the mechanical systems in these houses were replaced within the last 6 yrs which puts off any major costs in those areas any time soon.  However, the last few years have had flood warnings every spring.  I wouldn't feel comfortable with houses any closer to the river then what I have (one near Czech Village and one a block from Harrison) without a proper flood wall.

Its funny when I was in my 20s I felt like I was missing the bus not already having bought all sorts of real estate like the authors of the RE books I was reading.  Looking back at it now I probably would have been investing in the Time Check neighborhood at the height of the RE bubble.  Now I'm buying a lot of my properties bank owned for about half the price the previous owner paid during the bubble.

I guess I've got a 10 year plan that I'm 3 yrs into.  If I keep up with my average 4 houses a year I'll be at about 40 houses.  I'll be 40 by then and think that if I stick to my current formula and by smart there will be enough income there to support my family of 4.

Hello my name is Andy Dunham.  I've worked in the construction industry for years.  After the floods we had here in 2008 I became involved in rehabbing these flooded houses.  I enjoyed taking the process of taking basically a gutted shell and transforming back to something beautiful.  The past 3+ years I have been buying distressed properties (foreclosures, estates, previous rentals that got trashed, etc) and fix them up and rent them out. 

I have been doing this as a side job while working a day job so I have been quite busy.  My goal is to build a foundation of income producing properties to replace the income of my day job.  Then I would like to focus on other aspects of real estate such as flipping, rent to own and selling on contract.

I am interested in information on selling rent to own and on contract terms.  I am also interested in renting to special needs and non profits.  I have been renting to one local group with good results however they are small and I have more inventory then they need.

That is the standard adapter for most Delta faucets.  In Cedar Rapids you may have luck finding a replacement at Plumb Supply or Ferguson.  Also check out Habitat for Humanity Restore.  It seems like every time I'm in there I run into a fellow landlord!

For the 3 government entities HUD is hudhomestore.com. Fannie Mae is homepath.com and Freddie Mac is homesteps.com. There are more out there from local banks and your county may have info on upcoming sheriffs sales. Hopefully that helps.

Congrats on your purchase Rebecca! I have been investing in SFH in the Cedar Rapids area for a few years now. I have looked into multi family but I just cant justify the absurd taxes on anything larger then a duplex. Plus the landlord usually doing the lawncare/ snow removal and usually water just haven't appealed to me. I recently heard about what Tyler mentioned about taxes slowly being lowered on multi families a little every year until 10 yrs from now they should be to the same level as residential.