All Forum Posts by: Julie Kern

Good morning, BP. I have a question on a foreclosure that is scheduled for auction on the courthouse steps in November. We are in a bit of unique position (I think) because the property in question is the house next door to us. There are only 42 homes in our neighborhood, all built around the same time. We have lived in the neighborhood since the year all the homes were built, so we have been able to keep a close watch on sales (we actually have had several this year), rents, etc. We are very comfortable with our estimate of the FMV of this home, and with the rent amount that it would command.

Additionally, before the homeowner was served a notice of foreclosure, we actually got to see the house with our agent.  It had been on the market since March, with the price gradually dropping to a point where we became interested in making an offer.  After we saw the house, we asked our agent to write up an offer, only to find out the seller had already accepted an offer (well below what she owes on the house - I'm assuming she was starting the process of short sale).  Within a few days of finding this out, I discovered that a notice of foreclosure had been served.

We are aware of external repairs needed on the house (some of the same things we have had to do in the last few years - woodwork needing to be replaced, etc).  The interior definitely needs revamping (carpet, paint) but there were no major visible defects when we saw it, other than the fact that it was filthy and hadn't been maintained well.  Of course, the big unknown is what an inspection would reveal.

Anyway, the starting bid on the house is $110K. We believe on the low end, the FMV of the home is $180K and that is a very conservative estimate (3 sales have been above $200K this year, although these homes were a few hundred square feet larger). We would budget around $30K for repairs, knowing that this is high for the visible work needed but allowing for unknowns.

I have done a preliminary search for liens and did discover a FIFA lien from 2011. We would do a title search before going to auction to make sure we understand the full scope of any liens against the property. We know there are no HOA liens, as our HOA is defunct as of about 8 years ago and only solicits voluntary donations.

Our neighborhood is well-maintained (this one is the eyesore on our street) so I feel confident about investing here.

One negative - as far as we know, the neighbor is still living in the house with her daughter.  As of a month ago (when we saw the house) there were boxes packed, giving the impression that she was making plans to move.  But obviously, evicting a neighbor would be extremely unpleasant and not something we would ideally want to do.

So, given this information (sorry for the length of it), does it seem like we have enough information to move forward (obviously, the title search would be key)? Oh, and our max bid would $120K.  If we were able to get it for this amount, does this seem like a good deal?  

Thanks for the detailed answer, @Andrew Davis ! I will check out the books you recommended and certainly try to be as cautious and discerning as possible when evaluating wholesalers and their deals. 

@Troy Sheets , I had to look up pocket listing. The listing was on the MLS, so could it still have been a pocket listing? And could you define OOC for me? I will certainly take your and @Jesse Waters advice and ask our agent to contact the selling agent.  Thanks so much!

@Jesse Waters , thanks for your reply.  Our agent did tell us that 48 hours is customary but said that there are investors who will leave the response period open-ended so we used 7 days as a middle-ground option.  That being said, the property went under contract within a day or two of the day that they began accepting offers.  I think in the future we'll stick with 48 hours.   

@Bill Sargeson , that's the part I'm a little unsure of. Based on our estimates of the ARV and repairs, going any higher wouldn't make sense. But if we were high on the repair estimate or low on our valuation, then that means we were off on our offer amount and removed ourselves from consideration. Which leads to another question... should we have offered higher initially (say $110K) and then, if repairs came in around what we estimated, used that information to negotiate back down to the original offer (or whatever price made sense at that point)?

I'm going to keep an eye on this property and watch what happened with the other properties that were under contract, what this one ended up selling for, etc. as a sort of case study to help us in the future. 

Thanks for your reply!

My husband and I are just getting started in REI (Buy and Hold), and made an offer on a property Oct. 6, the first day the seller would accept offers (property was listed 10/2, we saw it 10/3 and our agent put the offer in first thing the morning of 10/6) . Here are the details (if I have left anything important out, please let me know):

- List price of $125K

- ARV of $140K (possibly higher as there were two almost identical homes - lot size, floor plan, sq. ft - under contract on the same street for $150K - $160K that could have positively impacted comps depending on what they ended up selling for.)

- Rent of $1,150 - $1,200 (based on other rentals on the same street)

- Great school district and location

- Cost of Repairs - $8K-$10K (based on our limited experience - we would have had it inspected and looked at by a GC in due diligence had our offer been accepted).  

- Our offer - $105K cash, 7 days for seller to respond, 7 day due diligence and close date of Oct. 27.

I received notification via Zillow (where I had added the property to my favorites) on Oct. 8 that the property was under contract (our agent was never notified).

I would love some feedback on whether our offer made sense.  Did we miss out on a deal because we underestimated comps and could have offered more?  Or because we overestimated repairs (there was definitely a roofing issue - possible replacement, and a big hole in the ceiling on the first floor with water leaking into a bucket below it)?  Other thoughts?

Thanks in advance!

My husband and I are just getting started in RE investing. We have been working with a buyer's agent (seen about 10-12 houses, made one offer), familiarizing ourselves with our market, reading as many books as possible, and spending lots of time on BP and listening to BP podcasts constantly. We have also made connections with some folks we know that have done work around our house in the past (and with whom we have been extremely pleased), letting them know that we are looking for investment properties and also prepping them that we might be looking to them to do some work for us in the future. These include a siding company, carpet cleaning company, a flooring guy and a painting crew. All people we know and trust and with whom we have a good rapport already. We are also plan to start attending two REIA meetings in our area in November.

The next thing we are looking at is the possibility of using a wholesaler.  I have registered on one wholesaler's site that I found from a posting on CraigsList, and also registered on MyHouseDeals with a 3-month paid subscription.  I'm currently reading a book on wholesaling to gain more insight on how things work from the wholesaler's perspective.  

My question (finally) is this: Can some BP members detail for me the steps from start to finish of a wholesale transaction from the eyes of someone who is brand new to investing? Since we are so new, going this alone - without an agent, which I'm assuming we wouldn't use if we are working with a wholesaler, correct?- makes me a little nervous. I know we would have to be able to determine comps and cost of repairs independently of what the wholesaler advertises, because I've already seen by looking at listings in my area on MyHouseDeals that the ARV listed is WAY high.

Any advice and guidance would be most welcome.

Thanks!

@Stan Butler , thanks for the tip on the REIA meetings. I'm hoping we can attend both in November!

@David Cohen , @Elizabeth Colegrove , thanks for you suggestion and insight on our area!  We are in the process of trying to find a good contractor.  We're hoping to find someone by referral/word of mouth and looking at a couple of those options right now.  

Hi, I'm a newbie from Kennesaw, GA.  My husband and I are in the process of looking for our first investment property in the Kennesaw/Woodstock/Acworth area (and parts of Marietta).  Our strategy is buy and hold, our goal being to help fund our retirement and hopefully be able to retire early (I am 43, he is 53).  

Our focus is on SFH's, at least initially. I have been lurking on BP, listening to BP podcasts when I run, cook, drive, etc. reading a lot (Millionaire Real Estate Investory and HOLD so far, looking for my next book, so recommendations are welcome), and spending way too much time on Zillow, CraigsList, and the county tax assessor's website :) We are working with an agent and have looked at 10-12 properties so far , put an offer on one but it wasn't accepted.

I would love to hear from other new investors on what you are doing to educate yourself and any deals you have done.  I would also love to hear from more experienced investors on how you got started, what helped you most in the beginning, mistakes you made, etc.

I'm very excited to have found BP - it's an amazing resource and I'm sure it will be instrumental in our success!