All Forum Posts by: Account Closed

@Joe Impagliazzo I should have clarified; investment property. 

Thanks. 

Can anyone in NJ recommend a lender they have used to finance a renovation mortgage?

Looking to try to get a loan for a home purchase + renovation costs. Hopefully 75%+ LTV on the home purchase and renovation (up to a certain cap for reno).

All recommendations are appreciated.

My first flip, I put down 13% on the purchase price but paid completely out of pocket for the renovation, which was tough to do. Moving forward, I want to get at least a portion of the renovation financed so less cash out of my pocket.

Thanks! 

Thanks for the response. 

The value at $240,000 was in August of 2006 - the peak of the real estate market. So the reason this home is in foreclosure is due to that. Clearly its not worth that in 2014 and being vacant for 1.5-2 years. 

Its been on the market for 10 months starting at $189,900 and now down to $119,900. I have another fannie mae homepath home under contract right now and got it for $10,000 less than the listing price, which had also been reduced 3-4 times. So I don't think $95,000 is really unrealistic at all. 

Additionally, the point of my post was for feedback on how the numbers look relative to other rental deals people are seeing. The houses surrounding the property are all in the $150,000 - $250,000 price range.  

@Curt Davis 

Hello Bigger Pockets,

I always enjoy getting over people's feedback regarding evaluating a deal. Please see my notes below regarding a potential buy and hold property I am evaluating. 

House:

4 bedroom/1.5 bath, split level, 1720 SF, built in 1968 on .25 acres in good neighborhood, listed for $119,900 in New Jersey. 

Previously sold in August 2006 for $240,000. Going onto auction.com next month actually. I haven't gone through the details of auction.com, if there is a reserve price, how you can finance it, etc.

Anyway, the numbers are more important. Even if I don't get the house, I would appreciate feedback for analytical purposes.

Target price: $95,000

Renovation Budget: $5000

Closing Costs: ~2%

Equity Investment at 10% down (because this was a fannie mae homepath home)

10% = $9592, closing costs at 2%, $1918, renovation $5000, total equity in deal $16,810. I would put in ~$2500, outside investors ~$14,300. 

Have interested investors and want to scale rental portfolio so going to do 15%-20% equity of my own and then 80%-85% investor equity at 8%-10% APR.

The projected rent is $1650/month based on comps, with tenant paying utilities. 

The real question is why is this house on the market for $119,900 when you could pretty much move directly into it. I could put $5000 through a backyard fence, paint, carpet, and clean up the kitchen. The reason its been on the market for about a year (in my opinion) and the broker I spoke with, is that the house while on a corner lot, is positioned in a weird spot on the lot with a very tight backyard. I think the yard is ok, but most of it on the side. 

Revenue:

$1650/month (assuming 1 month vacancy/collection loss) for year 1

Expenses:

Mortgage: $518/month assuming 30 year fixed rate mortgage at 4.25% 

Taxes: $4300/annually (could probably appeal lower)

Utilities: $75/owner pays water and sewer 

Insurance: $75/month

Repairs: $1000/annually 

Outside Investor Equity payback: $115/month (estimate)

Net Operating Income: $426/month, $3460/annually 

Cash on cash return: 20.58%

2.0% rule: 1.60% (very high for deals I've assessed in NJ that aren't $40,000 run down and need $15,000+ of work)

Unlevered yield on cost: NOI/Total capital cost $3460/$103,138 = 3.35%

Levered yield on cost: NOI/Total equity $3460/$16810 = 20.58%

Could probably refi it after it appraises for more than $150,000+ and get 75%+ LTV, all my cash out of the deal, but then have a higher mortgage payment so less cash. I don't want to over lever.

I know I'm trying a ton into this but just want to hear others thoughts. Thanks. 

@J Scott thank you, i am familiar with a short sale but appreciate the thorough explanation. 

So I guess the only way this could work is if I pay the current owner an amount higher than the debt she owes Well Fargo.

When my broker ran a title report, it shows no liens against the property. 

I could pay her $110,000, repay Wells $105,000 (not taking into account any late fees/etc) and then she gets $5000..

However, the house is definitely not worth $110k...It would only make sense financially to acquire at less than ~$95,000....I am saying this without walking though it. 

@Account Closed ARV at $210,000 is after I spend $50,000+...I haven't walked through the inside and its in very beat up shape.

This isn't a situation where I'm going to get the house from the old lady and then immediately sell it for a massive profit. Its on the potential of being a tear down. 

@J Scott thanks for the advice. I totally agree I just need to strategize how to go about the process if the woman responds. 

Am I able to buy the house from her for less than what she owes the bank? 

Im working on getting a contact from Wells Fargo from a broker I am working with. Why would WF have any involvement in if I buy the house from the current owner if they haven't legally foreclosed? 

Bigger Pockets Community  - need some guidance! 

There is a a vacant property next to the property I am closing on this week.

I had a broker run a title report and it shows the house has a mortgage with Wells Fargo with $105,000 in debt remaining and no liens. 

The property tax records give me the previous owners info. She no longer lives there but I spoke with the neighbors and they claim she is still paying the property taxes on it. I am going to call the township on Monday. 

A broker I know gave me his opinion that the lot itself was worth ~$70,000. The house is a 2 bedroom, 1 bath bunglow at 1000 sf. It is in pretty bad shape. I need to walk through it but would estimate ARV would be $200,000 - $210,000.

My question is how you would move forward? I actually found the previous owner through Facebook. I know its not a business like way to contact but its the only way her name came up and its definitely the same women. 

Because the bank has not legally foreclosed, can I buy the property from the previous owner? If I bought it for $106,000, the previous owner would pay the $106,000 to Wells Fargo and then pocket $1000. 

Could I also work with the seller and Wells Fargo to try to buy the loan at a discount? Could I offer like $65,000 - $70,000 for the remaining debt on the mortgage? Would I then have to foreclose on the property?

Thank you very much for your help. I want to aggressively pursue this opportunity. 

@Joel Owens @Benjamin Timmins Thank you for the advice. Ill stay clear of this unless I hear otherwise or the purchase price drops so dramatically that I can tolerate the assessed risk.

Happy Monday BP Community,

I wanted to see if anyone had an experience rehabbing a property with an in ground oil tank. I am looking at a house that most investors are scared to touch because it has an in ground oil tank in the backyard.

I've done some preliminary research and seems like people are scared for good reason. No idea if the tank has leaked and then it seems like the EPA would get involved. The entire removal could be a nightmare.

I was considering asking a couple companies to try to go on site and give me a hard max quote of removing it. Not sure if they will do that because I guess you don't know until you dig and see whats going on underground.

Any recommendations or feedback would be great.

The comps are extremely good for this property but need to make sure I don't rush into something like this and then spend $50,000 to remove it and treat the soil, etc.

Thanks.

Hello BiggerPockets Community,

Quick question for the loan experts.

I found a great house to flip in NJ that is a Fannie Mae Homepath home. I called Fannie Mae, as an investor you can put down 10% with no mortgage insurance. I am 100% positive and there is no mortgage insurance.

That said, I called PNC and Wells Fargo and they said I could only receive the loan with 10% down under my personal name not my LLC (have a partner).

There are other lenders in NJ they participate in Fannie Mae loans so I can call them all individually but I wanted to ask anyone in the community if they received a fannie mae investor loan 10% down under an LLC?

Thanks in advance for your time.