Investment Info:
Single-family residence fix & flip investment.
Purchase price: $194,025
The Sellers foreclosed mid-transaction and even had to lawyer up to get their lender to look at the Short Sale package. We were to close mid-August but when I went to sign that day Title called and said we did not have short sale approval. The Short Sale was kicked off to the FHA Short Sale department and we had to start again. These new processors even tried to get the listing agent and myself to give up our commissions. I dropped a huge inspection report on them, made them rethink relisting.
What made you interested in investing in this type of deal?
I am in Alaska, the dark winters just aren't manageable for me anymore so I decide for mental health reasons its best to relocate. After considering a number of places I decided Wisconsin was best for my lifestyle. In AK, I have my real estate license, I also got my WI license in advance to self-represent and secure a property before I relocate. My logic is, I would be paying for a lease so I might has well build up equity in a mortgage instead and if I found a fixer-upper then have equity also.
How did you find this deal and how did you negotiate it?
I flew down to the Madison area and stayed with friends while I house shopped. I saw this little single family in Stoughton and knew the price would drop soon, which I needed to have enough equity to make sure it was worth the effort. I had an offer written up but knew if I submitted it too soon it would look like a low-ball offer and probably not get accepted, last day I was in town the price dropped and I threw in a full offer and asked for full closing costs.
How did you finance this deal?
That was another part of this "sweet spot" since I am moving away from Alaska for mental health reason and therefore to optimize my remote work environment and I will be 100 miles away from my first FHA, I was able to find a lender that would give me a second FHA. Obviously, less monies towards the down-payment is more monies towards renovations.
How did you add value to the deal?
I am experienced in the real estate processes and could navigate everything fine. The appraisal passed fine but then the inspection report was huge! A lot of little items, a big one being plumbing but I got someone to check the lines and all was good. Really, I am going to renovate the whole thing so a lot of the items would get resolved along the way anyways. Seemingly, I would close on this deal that was right in the sweet spot, which was planned for end of June.
What was the outcome?
Still haggling this deal but thought I would make sure to record the experience and share. Now it sounds like its getting approved (again). We wont close until end of September so keeping my fingers crossed but wanted to share my experience.
Lessons learned? Challenges?
It just seems like the housing / banking system right now is driving toward fore-closures and you really have to fight for it these days. I have practiced real estate and this is my third personal investment so I am more savvy than most, some people really would get screwed out of a good deal in a process like this for no good reason. I also dropped my huge inspection report on them, if this deal is terminated it wont be on my behalf and they will legally need to share on any new listing.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
I am self-representing so work with me! UWCU has been great to work with, I am glad I chose them.
