All Forum Posts by: David Corvin

Lol shortsales.. another topic to research.. I'm so new..

Thanks for the reply!

David

I was in the process of going through CL (we buy houses ads), searching for prospective investors to add to my buyers list and I came across one, PeachHomeBuyers dot com, that boasts that it can purchase any home even if the house has no equity and/or is upside down in value. How is this? What's their angle? How do they come out on top in such a deal? I just don't see what they'd want with a property that more is owed on than is worth.

David

I notice that just about everyone signs their posts here with an LLC. I don't know much about being LLC'd. Should I do that prior to flipping my first house or doing my first wholesale deal? If so, why? Is it a liability thing or a tax thing? How does the process work and costs involved? Thanks!

David

Ok, still needing to cover things such as closing costs, holding costs etc, haven't found my answer for that yet, but what about a 203k for the rehab portion of my expenses? I understand that a 203k is a relatively complicated piece of work, but that it's a loan given and wrapped into the orginal loan when purchasing HUD homes for the specific purpose of rehabbing.

So, scenario:

HUD home located at a price range of 25-40k. (We've found a couple that look promising)

Closings costs at three to five points should be between 750 and 2k.

Appraisal and/or inspector: 400-1k?

Insurance: 200? ish?

Application Fee: ??

Utilities first month: 200?

And then 203k into the initial loan for the estimated 20k in rehab costs.

In my inexperienced mind, this makes for a loan of 45-60k with 1600-3500 in upfront costs and approximately 700 a month in holding costs (mortgage, insurance, taxes, utilities).

Am I still on the wrong track? Or can this be done (with hard work and luck) as I've laid it out above.. at least roughly? And can someone shed a little more light on my numbers for a scenario such as this if my numbers are off? (Where all my question marks are)

Thanks!

David

Thanks for the replies guys. Disheartening for sure, but I thank you for your honest directness. I'm not even about to give up though. There has to be a way to get my foot in the door and I'm gonna find it. Tomorrow we're gonna get together & talk about everything & we're also gonna hit up a free class or two at Home Depot to learn how to do some of our rehabs on our own.

Anyway, thanks again guys!

David

Thanks Doug! But what do you mean by ARV value changing lower? Meaning that comparable houses in the area have values that are currently lower than what they were say a year or two ago?

David

Can someone shed some light on the details involved in obtaining a loan, be it from a bank or private lender or some other source unfamiliar to me?

Our specific situation:

Myself and two partners (one of which is already pre-approved for a loan of up to 60k, with the stipulation that the purchase cannot be for less than 50k), are currently seeking a HUD home to flip as our first project. We have a good understanding of the formula involved in deciding which house to choose, ((ARV X 70%) minus rehab cost = maximum purchase price), and we understand the costs associated with purchasing, holding and selling and have a good handle on general rehab costs as they go.

Having said all that, what is the procedure for obtaining the funds for the rehab? What are all of our options? Who do we turn to? Private lender, bank or other? What is to be expected from each and what does each expect of us?

What should we expect to have to pay out of pocket during the purchase? Or can all of these fees (inspection, closing, lender fees, etc.) be included with the loan that my partner is pre-approved for? Is a deposit and/or earnest money always required? Can the fees be covered instead by whatever money is acquired, in whatever fashion, for the rehab costs?

Also, at what point in this process is the home appraised? Between which steps? Will a lender require an appraisal prior to lending? Obviously we'll have to have all of our ducks in a row in a concise and readable fashion to present to the lender.

I myself have approximately $1,000 to play with (my very small emergency fund that I'm reluctant to touch). Offhand, I don't yet know what my two partners have, but I know it can't be much, if any. We're willing to take a pretty big hit on interest rates and points just to get this first deal under our belt. After that we'll have gained a good bit of experience and confidence and have at least a bit of seed money on hand for the next undertaking.

Lots of questions, I know. Thanks to all who took the time to read over it and even more thanks and appreciation to those who provide some insight!

David

Thanks guys, this clears up a bit of the fog associated with the prospect of starting a first project. Excellent write up J! Thanks again!

Thanks for the encouragement and advice Charles! I hit J. Scott up, but no reply yet. Can't blame him though.. who wants to help create their own competitor? :P

Thanks again!

I've been running across a few terms that I get the gist of, but could use a little more clarification of if anyone is willing?

1) Holding costs - What ALL does or can this encompass?

2) Opportunity costs - I gather that this is the cost of tying up your own money into a venture thus preventing you from investing it into something else? But isn't rehab/flipping a house... when done properly, a good investment in itself? I would think it would be a cost if you had the money and simply did nothing with it. A little help here please :P

REO or REO property - Real Estate _____? I keep seeing this, and from what I can gather from the context it's continually used in, is that it refers to non-commercial property. That's all I've been able to discern thus far, and I'm likely wrong about that. :P

Thanks!