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All Forum Posts by: Bill S.

Bill S. has started 6 posts and replied 38 times.

Post: Another Deal Bites The Dust

Bill S.Posted
  • Investor
  • Chicago, IL
  • Posts 39
  • Votes 5

@Elizabeth ColegroveThere was a recent comparable that would support a higher sale price but at this time of year it is difficult to sell real estate here. It is really hard to say if I can sell it for more given these off setting factors and I'd prefer to sell it faster than then for more money anyway. The opportunity cost is my biggest concern as I need the proceeds to be reinvested. I don't want to waste another 2-3 weeks on a loan I don't believe will close. 

There is no debt service for this property but still have to pay insurance, taxes, etc.. I am not sure what you mean by current costs are sunk costs? My gut tells me that the loan will not close. There are a few red flags that give me this feeling and if it doesn't close I lost 2-3 weeks of being able to market the property.

Do you think I am being unreasonable for proceeding only with non-refundable earnest money when they request to change the loan 55 days after contract?

Post: Another Deal Bites The Dust

Bill S.Posted
  • Investor
  • Chicago, IL
  • Posts 39
  • Votes 5

@Brent CoombsThe original earnest money deposit is non refundable in Illinois only when all contingencies have been cleared including financing. You could write the initial contract to state earnest money is not refundable but it would be difficult to find a buyer willing to accept these terms as they are not standard for the market here.

I offered to extend the contract only if the buyer makes an additional non-refundable earnest money deposit and converts their original earnest money deposit to be non-refundable as well. The buyer was not willing to accept these terms so if the loan doesn't go through I would not get any earnest money. They are saying they are sure the deal will go through but not willing to risk their money that it will.

Post: Another Deal Bites The Dust

Bill S.Posted
  • Investor
  • Chicago, IL
  • Posts 39
  • Votes 5

Today I had to walk away from a flip deal I am selling after 55 days under contract. I was in deep and it was a tough call to make. I wanted to put up the story on BP to other investors and see what they think.

The story is that the prospective buyer presented a 30 day close. On day 53 I followed up on the loan with the lender who told me the file was submitted on 11-20-15 . Then followed up with the buyer's broker who told me the lender said the file was resubmitted on 11-25-15. I emailed the lender asking for clarification and never heard back from him.

At day 54 I contacted the lender's manager to check out the file and told the buyer's broker that I can't continue giving extensions. In the afternoon on day 54 I am told the loan was denied but that they can switch the loan from conventional to FHA. I get the details from the lender and relay everything to my lender for feedback. My lender tells me something isn't adding up and it appears they are scrambling to save a dead deal.

I talk to the lender and lending manager on day 55 and they tell me something different this time that actually makes sense. The mortgage broker and buyer's broker are telling me how confident they are that the deal will close (100% they say). I agree to extend only if the buyer provides additional earnest money and agrees that all earnest money is non-refundable. The buyers are willing to do it initially and change their minds after speaking with their attorney.

The buyer's broker tells me the attorney advised the buyer that my request is unreasonable. She tells me repeatedly how wrong I am to assume it's reasonable for the buyer's to risk their earnest money. She tells me that I am just cancelling the deal so I can sell it for more money now. I tell her that if its a 100% chance of closing like she says then they aren't risking anything and that if they won't put up the earnest money they don't believe it is a 100% chance of closing.

What do you think?

Post: Should I hire a project manager or trust the general contractor?

Bill S.Posted
  • Investor
  • Chicago, IL
  • Posts 39
  • Votes 5

@Azita S.@Robert Taylor 

Bob see Azita's post above. Sounds like you found your contact. Good luck.

Post: Should I hire a project manager or trust the general contractor?

Bill S.Posted
  • Investor
  • Chicago, IL
  • Posts 39
  • Votes 5

@Azita S. 

George is giving you good advice. Contractor due diligence and a strong contract should be your primary focus here. 

A visit to Milwaukee BEFORE this gets started will be your best investment. Put together your contractors list and have them meet you at your project to do a walk though. Pick a few you like and do a tour of the other projects they have going on to verify the quality of work. IMO, I don't believe a project manager will add value if you don't align their interests with yours. That means giving them a cut of the final profit on your deal, so its a business decision you'll have to weigh out.

The more detail you include in the SOW of your contract the more protection you have from things getting off track. I'd include the exact materials to be used and specific quantities of each into your SOW. Materials can be a black hole so putting control measures on them in your contract is imperative. Change orders will happen along the course of the rehab so you'll need clearly outline how they should be handled. Timelines are another big risk of the project getting of track so you'll need to enforce strict control measures here as well. Hope this helps.

Post: negotiating with lien holders after sale - purchase @ sheriff auction

Bill S.Posted
  • Investor
  • Chicago, IL
  • Posts 39
  • Votes 5

@Account Closed 

Post: negotiating with lien holders after sale - purchase @ sheriff auction

Bill S.Posted
  • Investor
  • Chicago, IL
  • Posts 39
  • Votes 5

It sounds like you attended a tax lien sale....as you say "the auction was being held for the $6,000 if back taxes". The link posted above is someone that attended a foreclosure auction sale. These are two different types of auctions as you are buying different types of liens at each. Each lien has a unique set of rights that are spelled out in the your state's statutes. You need to reference your states statues regarding tax lien sales and IRS liens to find the specific answer you are looking for. Good luck.

Post: High Rise Condo Investing and Special Assessment Risk

Bill S.Posted
  • Investor
  • Chicago, IL
  • Posts 39
  • Votes 5

@Patrick Balk

I've had a few friends who have held condo investments in high rises in the west loop. A well managed HOA with solid reserves has kept all of them from having to pay any special assessments. Learning from the experiences of friends I wouldn't put special assessments at the top of the list for risk exposure in high rise condo investments. The biggest obstacle is complying with the restrictions of the rental bylaws of the HOA. For example, some buildings limit the number of rental units allowed in the building. If there are more owners wanting to rent than the building allows a priority list is created and you can't put the unit up for rent until your unit is approved for rental by the HOA. Make sure you know the bylaws regarding rentals in the building and understand that they can be changed at any time. Hope this helps. Good luck.

Post: Illinois Real Estate Exam

Bill S.Posted
  • Investor
  • Chicago, IL
  • Posts 39
  • Votes 5

@Mark Doyle Buy "Modern Real Estate Practice in Illinois 7th edition" published by Dearborn. This is the book I was given for the 90 hour course. Some of the material (contract law) you are probably already familiar with and the amount of material to cover is massive.

The most effective time management strategy I found was to take the practice exams at the end of each chapter (23 total chapters, 20 questions each chapter) and record your scores on a spreadsheet. This will give you an idea of where to focus your study time. If you can dedicate 2 hours of your time each day you can finish the practice exams in 5-6 days.

Review your test scores and set a benchmark to determine what material to review further (e.g. any score less than 80%). Any score below your benchmark focus on reading the chapter to get a better understanding of the material. Take the comprehensive review tests in the back of the book during your last study week to get an idea of where you are at.

Check out page 596 that gives you a percentage breakdown of the material covered on the test to help develop your study plan. No sense in spending all your time reviewing material that only represents a small portion of the test.

This is what I did and it work for me. Good luck.

Post: Refinishing of bathtub

Bill S.Posted
  • Investor
  • Chicago, IL
  • Posts 39
  • Votes 5

@Tom Bujnowski

Hey Tom,

I am finishing up a flip myself and spoke with a few different tub refinishing companies. All of them told me that it's best to do it last. With the exception of a bathroom layout with the vanity next to the tub that will make it difficult to complete the project. If the vanity isn't blocking an area to be worked on around the tub then definitely do it last. If you are tiling the tub surround it is very likely that the installer will drop a tile that will chip the tub. They can match the finish to the other plumbing fixtures for no additional costs, assuming its a standard color (most offer 6 standard color options). Make sure your contract covers this detail and others like caulking to avoid any unexpected expense after the work is complete.

Good Luck!