All Forum Posts by: Eddy Dumire

I totally agree.  It's worth mentioning though that they only bid against you up to the reserve price.

When they're relisted, they most likely didn't meet the reserve price.  Sometimes the bank sets the reserve too high and needs to have it not sell for many auctions before they come to reality and lower the price.  Sometimes these auction sites are really an exercise in patience and you must keep bidding on the same property over many auctions before it actually sells. 

Also make sure you understand that the auction sites themselves can and do bid against you to get you to raise your bid.  This is spelled out in the terms and you may walk away from an auction thinking you lost out to someone only to get a call later saying that the winning bidder is out and now you're the high bid.

@Mike Oconnell I think we've met at the Rappahannock REI meetings. Good to see you here too!

It may very well be that there are people waiting to bid until the last few minutes.  It's a strategy that I've used some myself, and yes, the auction does automatically extend if you bid in the last few minutes so the strategy is limited in effectiveness.

Not being able to see the insides is a big risk and you need to factor that into your numbers.  You're looking at a property that is in foreclosure and someone is about to lose their home.   They may become resentful and trash the place.

You also need to consider the cost of getting them out.  When I purchased an occupied property, I paid $1,800 in cash for keys to avoid the potential for an even more expensive legal cost to evict.  Depending on local laws, they may be considered a tenant at sufferance (I'm not a lawyer) that you would have to have eviction proceedings to get rid of.

You can definitely make money here, but you have to be smart about it.  Automatically budget for paint, carpet replacement, and replacement of all appliances in addition to anything else you notice from the outside (roof/siding/windows/landscaping).  Pull up the property on bing maps and get the birds eye view from all four sides.  Then add on another substantial amount for unknowns.  In my area, I usually add $20k for unexpected expenses but I generally only buy houses about 25 years old or younger.  You may need to add much more to be safe.  They may pour concrete in toilets on the way out and pull every bit of copper pipe out of the walls!

I invest in the Stafford/Fredericksburg area. The numbers definitely don't meet a lot of the "rules" out there unless you go to C/D properties. I stay with A/B properties and still make positive cash flow, but don't come anywhere close to the 2% rule, or the 50/50 rule. I've stuck exclusively to REO properties so I'm not sure how the market is for other strategies. The area is definitely still growing quite a bit, but prices on older houses have been a little stagnant lately. I think this is because there are a ton of brand new homes on the market that are competing with the other inventory in the North Stafford area.

I've been lurking for a while, reading blog posts, scanning the forums, and I've made it to podcast 88.  I figured it's time to introduce myself and start leveraging the forums to both help myself and others a little more rather than just feeding off the questions others have asked.  I'm a web applications programmer by trade and invest in real estate as a way to transition to a less stressful life.  My short term goal is to be making about $80k/year in passive income within 3 years.

My wife and I are buy and hold investors and currently own two properties in Stafford/Fredericksburg VA. My first was a SFD that I bought on homesearch.com. The house was a 3 level brick front with 4 beds and 3.5 baths. The property had lots of deferred maintenance. Our purchase price (including buyers premium) was 234k. The ARV at the time was estimated at $280,000. We put about 28k in repair costs and another 5k in holding costs. Yes, I overpaid for this one. Mortgage and HOA fees cost about $1200/month and we have a 3 year lease in place for $1900/month. I pretty much violate every rule there is from the 2% rule to the 50/50 rule to the 70% rule on this one.

I found labor for the first rehab on craigslist and this was a classic example of trying so hard to get the lowest cost labor that I spent twice as much money in the long run.  That story could fill an entire blog post so if I work my way into blogging I'll have some material to start with.

Our second purchase was also on homesearch.com and was for an occupied 3 level townhouse in Fredericksburg, VA. I assumed additional risk in my calculations based on the fact I would have to remove the prior owner. I purchased this for 134k with an estimated ARV of $200k. We were very lucky that it only needed about $15k in rehab and holding costs. We also paid $1800 for a cash for keys agreement. We don't currently have a mortgage on this one but I'm trying to get a HELOC to pull equity back out for down payments on more properties. If it weren't for the HELOC taking so long, I probably would have bought my 3rd property a couple weeks ago. This one has been rented on a 2 year lease for $1500/month. I used smartmove to help with the tenant screening on this one and it saved me from renting to a guy with 5 evictions.  This one almost met the 70% rule but not the 2% rule.  The 50/50 rule isn't really valid since we didn't finance, but we wouldn't make it if we had.

I really don't think that these rules are valid in my market.  I know that means I should probably invest elsewhere, but I'm just not comfortable with that.  I do a good bit of the rehab work myself and we manage the properties ourselves also.

I'm currently reviewing financial options for more acquisitions and also keeping my eye out for opportunities in the Stafford/Fredericksburg area.

TD Bank does HELOCs on investment property to 75% LTV. I'm in the middle of the process and honestly I'm really disappointed with the fact that it's already taken over 2 months and has been quite a runaround, but they're the only bank I've found so far that does them (though I haven't looked very hard either). The HELOC is at a 5% variable interest rate.

Your other option is a straight up cash-out refi. The closings costs will be higher than a HELOC, but you'll get a very low fixed rate for the life of the loan. You'll find more banks willing to do this. Most will only be willing to go as high as 75%. For conventional financing, Amerisave is hard to beat, but their closing really sucks and they push you to use their own settlement company, which is questionably legal with respect to RESPA.