All Forum Posts by: Matt M.

Unfortunately, I did not get this property. However I want to thank everybody for their comments and insights. They've been extremely helpful and I'll certainly use them moving forward. All the best to you and happy holiday season to you and your family! 

Hello,

I'm working with a wholesaler to get a raised ranch to fix & flip.  The lower level is dry but shows indications of mold on the floor, walls, and ceiling throughout.  The lower section of the stairs leading up to the upper level will need to get replaced due to partial rot. However, there is no mold visible on the upper level. On the exterior, there's mold growing up the entire left side almost to the roof and up 3-4 ft in the front of the house. The source of the water is external and can be remedied with a sump pumb/perimeter drainage inside as well as a dry well outside. Lastly, the house has been vacant for 3 years.

Although I'm hesitant to take this on due to the extensive mold, it could be very profitable. So, my question to all you experienced flippers, would you cut and run?  Gut the entire house from top to bottom, inside and out?  Just gut the downstairs where the mold is visible?

Just as important, is there a reason to use a professional mold remediation company versus just doing it myself?  I know this will probably differ by state, but are there legal reasons for using a remediation company versus doing it myself?

I've new with flipping and have always shied away from properties with mold.  So, all input is welcome!

Thanks.

Matt

Hey All,

I'm new at the flipping game and need advice on estimating rehab costs with REOs.  I'm also no expert when it comes to the mechanicals so if they look older, I'll usually just include them in my rehab costs.  However, the problem I'm haven is that 

For you experienced flippers, will you usually plan on replacing all older mechanicals, as a general rule, or do you wait until the inspection and then negotiate with the bank?

I've been including all new mechanicals in most of my offers but I'm finding that I'm just having a hard time making the numbers work since it really drives up my rehab costs.  Do most of you automatically include older mechanicals in your numbers? If not, are there tips you can share on how to judge how much life is left in your furnace/boiler or central air system?

Thanks. 

Matt M.

@Ryan Gillette

Thanks, Ryan.  If the title insurance company accepts the risk, does that mean I'll have a marketable title?  If so, that certainly will let me breath easier regarding the first issue.  But what's your take on the right of redemption?  Are you familiar with how that works in CT?  By the way, are you an agent? If so, I'd be interested in touching base with you. 

I'm new at this and just got my first accepted offer on a REO off the MLS. The bank is Wells Fargo but all offers were required to be done through www.williamsauction.com.  I received their packet yesterday and only have until this coming Monday morning to return the completed package.  The bank's addendum is quite lengthy and has quite of few items of concern. Now I've heard banks will not negotiate on their addendum but there's two sections that concern me most.  The first, the bank does not guarantee the type of deed provided and only guarantees insurable title but not marketable title.  My other concern is having no recourse on right of redemption, so if the previous owner exercises his right after closing, I'm **** out of luck.

So, my question is "Has anyone experienced these issues with a bank addendum regarding an REO purchase and how did you handle it? Did you walk? And, if not, how did you mitigate your risk?"

@Josh Caldwell

In the example you just gave, can the buyer's release fee also count as a down payment (if and when the option is exercised)? If so, how will that be shown on the HUD-1?

I got a lender involved upfront b/c I wanted her to vet the prospective buyer and give me the thumbs up or down on whether the buyer can get financed in the next 12-36 months. Maybe I"m being naive but I feel if you do a good job screening your buyer candidates upfront, the buyer's likelihood of successfully exercising the option goes up dramatically.  And, if I'm going to do these, it's important to me that it's a win/win for everyone, including making sure I don't jeopardize the buyer's ability to count her release fee toward her downpayment.  (It's also a BIG selling point for the buyer, making the decision a no-brainer!)

@Josh Caldwell

As mentioned above, I am interested in assigning LOs. I recently got a property under a lease and option contract with the seller and lined up a buyer to directly assign to. The buyer had no problem with an assignment fee of 3.5%-5% as long as it also counted toward their downpayment (if and when they exercised their option). However, both my attorney and lender said the problem with that approach is that the HUD-1 MUST show the down payment released to the seller (instead of me) in order for it to count as a down payment.

So, to avoid that problem, I'm now leaning toward entering into a sandwich lease option and then simply assigning back to the seller for a release fee (and having seller release me from our original contract).  Your thoughts as to which approach is better?  (And, if you can recommend a guru that has good contracts, it would probably be easier and cheaper for me to go that route (and have revised for my state) versus creating from scratch with an attorney.)

Thanks again.

Matt

@Hattie Dizmond

Series LLCs sound great. Unfortunately they're not used in my state yet.  Thank you!

@Josh Caldwell

Josh, please see three posts above. 

@Raymond B.

Thanks, Raymond!