All Forum Posts by: John Bell

I currently have a verbal offer on a half acre lot in the heart of the downtown area (one street over from the current courthouse) of a small town in the path of progress. The local government has announced they will be building a county courthouse, district attorneys office and jail next to the current court house. They have acquired the land for the courthouse and jail already but they have yet to get the land for the new district attorneys office. They have expressed they want the new buildings all near the current courthouse. My concern is as soon as I buy this lot the government will seize it thru eminent domain. I'm hoping to build a small strip center and lease to local business that will benefit the new government employees. (coffee, lunch, bail bonds, etc.)  

Does anyone know how fair market value is calculated for eminent domain? If they take the land will I get at least what I put into it or take a loss? If I build will it deter them from taking the land? Another vacant lot is closer to the current courthouse.

@Jaron Walling

You're probably right but at least I'm in the game now. 

@Nik Corbaxhi

The terms are once it refinances I'll pay him back with interest and he's pretty chill about it. The property will cash flow well and pay it back if needed but I"m hoping to get all I can out of the refi. 

@Jaron Walling

I haven't remodeled anything yet. The comps were $67k. So I was surprised the appraisal was so low. I hope I can add value by rehabing. I have to wait six months to refi. 

I just closed on my first rei yesterday. Originally I was gonna have a mortgage up front but decided to barrow money from a family member to purchase the property with the plans to fix it up some and cash out refi in six months. I bought the home for $46k and had comps from a realtor that said it's worth $67K. This morning I finally got the appraisal that the lender ordered and it came back $50k. To cover my loan at 80% LTV I need the appraisal to be $59K. The appraiser had trouble finding comps so he used comps further away and up to two years old. Is it a good idea to contact the appraiser and see if he will discuss how I can improve the appraisal for the cash out refi in six months? My plan so far is to fence the back yard, redo the kitchen cabinets and counter tops (quartz), add washer/dryer, add dishwasher and microwave, and maybe redo the floors (currently vinyl sheet) but I doubt this will get me $9K on the appraisal. I noticed at the last minute the appraiser lowered the quality to Q4. " 01/08/2020 After additional consideration, based on minimal fenestration and basic finishes; subject and comparable are revised to Q4" So if I upgrade the finishes I can hope for Q3? Any advice to improve my appraisal?

On a positive note I have a tenant waiting already at $775/mo. She's one of my employees and is okay with me working on the place while she lives there. 

@John Chapman

Thanks, your comment makes me happier with my decision. The area is a fairly small town in the path of progress so I'm sure word will spread. 

@James Williams

I'm glad my experience can help someone else add to their rei knowledge. Best of luck to you

@Joe Splitrock

I will be very specific in the future to avoid this issue. I still have so much to learn but I'm excited to take action. 

Thanks!

@Peter Shafik 

Thanks! 

@Gail W.

Thanks for sharing your experience 

@Jay Hinrichs

Wow, so after reading your experience I feel dumb for even bring up my small issue. Thanks for sharing

So the seller agreed she misinterpreted the conversation but was willing to move forward since the contract was clear. She seemed upset at herself for not catching it. I decided to lower the $2k to $1k and she was thankful. So we should be good to move forward. Thank you everyone for offering your opinions and experiences to help me decide how to proceed.  

Thanks for the input everyone. Since it's my first deal I just didn't know what to do. I'm gonna offer to split the difference with the seller. Even if I end up paying the extra $2k I still have a deal. comps are $68k in its current condition and I have a tenant waiting and ready to pay $775 per month. In six months I will cashout refi, get all or most of my money back, and have a cash flowing property. 

Lessons learned - 1. be very specific when negotiating. 2. If it's still a good deal don't sweat it 

@John Edwards

A more experienced investor negotiated the deal and let me take it over as my first deal. Originally it wasn't a cash deal. 

@Brian Pulaski

No, this is an off market cash deal. 

They haven't decided to back out yet. The sellers thought I was paying $2k towards closing but the contract clearly says seller. If it's $2k more it's still a deal but why give up $2k for nothing? I'm just not sure how hard to stand my ground and if it's worth it. Sounds like it's not worth the effort. Maybe split the difference with them.