All Forum Posts by: Michael Dunn

I've been running numbers on houses on various houses that are REO/foreclosures and was wondering if there is a certain percent ( Below ) a houses ARV that REO's are usually listed at. For instance...... The houses on HomePath, if a house is listed on there for say $80,000 , is it safe to assume that that house is listed at a price that is 20% below it's ARV ? So when the house is appraised at it's current state, the likely apprasial should come in at around $100,000 for ARV ? And if using $100,000 as the ARV , the 70% rule would put you at an offer price of around $$70,000 minus Repair/Rehab costs ? Thanks so much everyone, really appreciate the help and Breakdown of the way to calculate/Breakdown an REO's listing - Michael

Evening BP community, need help clearing something up please.... I'm torn between which financing to use..... FHA or home path. I'll be purchasing as an o.o. , do my question is, since I qualify for both typed of financing , which would I be better of getting? I'm looking at purchasing an REO , so there will be some rehab costs added to the purchase price. What ( % wise ) would be my absolute maximum % of the purchase price would I have to come up with, for both FHA and homeopath ? Thanks so much everyone, really appreciate it - Micha

" After Repair Vale " ARV ? I'm pretty sure it's not, but Market Value still confuses me to a degree. I know that ARV is what the house will ( should ) appraise for after it's fixed up / renovated, and the ARV is based on recent sales / similar comps to the houses in a 3 - mile radius. But " Market Value " I'm still not 100% on. Say I find a property on HUD or HomePath and it's listed for... $90,000 , So is the $90,000 listed price, the Market Value of that property, based on the condition that it's in ? And if so, using the 70% rule as a guideline , what would be your max offer price on that property if say... the ARV comes in on it at $110,000 and the estimated costs of rehap/repairs is $10,000 ? ARV $110,000 x 70% = $77,000 - $10,000 ( rehab/repairs ) = $67,000 ( your maximum offer price ) ? Thanks so much everyone in the BP community for your time and help , appreciate it as always - Michael

Hi BP community. This past week I talked to a few local Lenders, and am now in the process of getting my Approval Letter, via the amount of Financing that I qualify for. What initially started out, was that I would buy an REO, do the rehab work to it, live in it for a year as an O.O. and then Rent it for Cash Flow. Well, now I'm leaning towards buying my First Property as an Investor and then Flipping it in a 3-4 month timeframed window. My question comes down to, what, if any of my Fianancing options ( Conv. , HML, FannieMae, FHA 203K ), would allow me to purchase a property and then turn around and sell " Flip " it , in such a short amount of time. I have read of the FHA 90-day Anti-Flip rule being waived till Dec. 31 of 2014, but thats for buyers who wish to use that type of financing to purchase a home. I'm trying to figure out what the new Rules are, on the side of Buyers ( such as myself ), who want to purchase ( plus add most , if not all of the Reab costs ) into that same loan, and then have no restrictions , as to how long you have to hold on to a property, before I could sell it for a profit. I have looked at FannieMae's First Look period of 15 days for O.O. and then, they offer Investors to come in a bid. As well as HUDs first 30 day on Insured properties for O.O. and first 5 days on Uninsured for O.O. , before Investors bids can be accepted. I have about $8,000 in cash, and should be approved for a low to mid $200,000 price range loan, even though I'm not going to purchase one cose to that range, as this will be my first " Flip ". Thanks everyone in the B.P. community, really appreciate it - Michael

Afternoon BP , I was just looking at some new listing updates on the HomePath website, and I was wondering if someone could tell me please, what the main difference is on a house that is listed as " Back on the Market " vs " Price Reduced " . I'm guessing the Back on the market listings, are properties that fell out of Escrow and the Price reduced properties, are due to the house not getting any offers in at the price it was listed for, before the price reduction ( or is it due to the house being listed for X number of days and no offers were submitted on it )? As a potentional buyer, does the listing status ( Back on the Market vs Price Reduced ), benefit us as a buyer, more so than the other ? Meaning, can you get a better deal on the property, based on it's listing status. Thanks everyone - Michael

Hi BP - I understand how and why HML are used buy those who want to Flip houses and I understand the math/LTV/etc.. associated with the process of buying a property using a HML for this purpose. My question though, is in using a HML if I wanted to purchase a property and keep it as a Rental to produce and generate monthly Cash Flow. Can you use a HML for Rental properties, and if so, what if any main differences are there vs using a HML for the purpose of Flipping ? I really appreciate it BP community, Thanks - Michael

Hi BP community. I have been reading through the two Renovation loans that the FHA offers, as well as the Rehab program that Fannie Mae offers. From my understanding, no matter which of these loans you go with, they all require you to hire a Contractor and draw money as the rehab work is completed by that Contractor / as it is Inspected at it's various completed stages. I'm trying to find out if there is a Rehab loan out there, that I can use in conjunstion with getting the actual property financed , but that will allow me to do the Work myself, without having to have a Contractor / someone come and inspected the Rehab work as it's completed. I'm leaning towards a HML and then funding the Rehab work out of my own pocket on the front end ( Material costs only ), but still having the cost of the materials financed into the HML on the front end of the deal and getting reimbursed the costs for materials when I refinance into a 30 year fix. Thanks everyone - Michael

Hello BP community. I have been researching and racking my brain on which type of Financing to go for. I qualify for VA,FHA,HomePath,Conv. My dilemma is in the amount I have set aside for Downpayment ( $7,500 at current time ). So a conventional loan is basically out of the equation ( considering most require 20% down ). That leaves the other Big 3 options.... VA,FHA,HomePath . What I'm trying to figure out is, is there a way I can get financed through one of the 3 aforementioned loans, and still be able to do ( all ) the renovations myself. I know I'm going to need a renovation loan attached to whatever loan I get, as I don't have enough money to finance the renovations myself with my own cash. So a Rehab loan is going to be a must. From my reading, all 3 loans require that you get a licensed contractor. Is there a way around having to hire a licensed contractor, and doing the work myself. I have the skills to do the work, I'm just not licensed. Also, I read that the FHA and VA are strict on homes that loan on, have to be move-in ready, and therefor, their inspections of homes is quite strict. I'd love to get a Coinv. loan, and have less red tape attached to my loan, and allow for the freedom to do the work myself, but my Cash on hand at the moment is no where near enough for the 20% down. I'm leaning VA loan, if I can get into a house for virually nothing down ( Funding fee ) and no PMI and then paying for any upgrades/Rehab out of my own pocket. Be saving big time on Labor costs if doing work myself. Well thank you BP community for taking time to read and offer your insight and knowledge . Very much appreciate it - Michael;

Here's my current situation......I have close to $7,500 saved up for a downpayment / to fund some of the needed repairs on the property that I " hopefully " eventually purchase. I know that's not enough money for a 20% downpayment, especially on a decent house that would be sufficient as a Rental in the near future. I am former military, I qualify for a VA backed loan, which from all my reading and research, would be my cheapest route in terms of purchasing a house, while allowing for the least Downpayment required ( 2.25% Funding Fee ).

The thing is, I want to buy a property on the front end as an Investor " Investment Property ", instaed of an Owner Occupant, so that I can get in there and do a few upgrades, new flooring, new paint and get it on the market and rented as soon as possible. I live in the Memphis,TN area and right now, it is a pretty robust enviroment for Investors to Flip and to buy and Rent properties for Cash Flow. In the Midtown region of the city, This area is a highly sought out area to buy and rent in. Homes average at the low end, around $160,000.

The kicker is, alot of the houses in the area were built in the early 20's ( 1922 ) . And quite a few of them have Detatched living quarters ( they're listed as Multi-Family or Du/Tri-Plex ). My thinking is, If I go the VA loan route, It will qualify as a Multi-Family residence , and I could live in the Main house, and rent out the Detatched living quarters, for a price that will cover the note on the actual house itself. I technically don't want to live in the house that I purchase , but if I had to, I want to have my note being paid for me. Im planning on getting a REO or purchasing a house that has been on the market for a considerable amount of time / 90+ days so that I can get one at below market value, and have instant equity in it, then do a Cash-out refi , after I have lived/owned the property for the 1 year that is required. Then use that money to purchase the next rental property, repeat cycly.

Anyways, sorry for the long and drawn out message lol I've talked to a few lenders in my area, and have narrowed down what I qualify for, I just need some quidance as to what my next step should be. I have a credit score of 660 if that helps. Thanks again Everyone, Much appreciated - Michael Wanted to add: I mentioned that the houses were built in the 20's, in the area that I'm looking to buy in. I read that the VA and FHA have strict guidelines as far as not letting you Close on a property that needs HVAC, roof repairs, etc... And this is the kind of work/repairs that I want to do myself. So that's why I'm leary on going with one of these types of Loans. I looked at Fannie Mae's HomePath Renovation loan, that requires no Inspection, which is more what I'm looking for, but then I run into having to put more down on the front end ( 5% down for Owner Occupy or 10% down for Investor. Although, I think that has gone up to 15% for Investors )