All Forum Posts by: Jim Gordon

I own a four family that was a REO someone rehabed it as I can do normal repairs but I know when something is over my head. If you are going to buy and hold you have to ask yourself a hard question. If someone is behind on the rent can you do a setout on December 20? If you can't find it in your heart to do an eviction at that time of the year don't rent out your properties just fix them and sell them.

Something that you forgot to mention is that if you bring an offer to "do-it -yourselfer" on a house for sale and you answer one question for them you are now a dual agent in the transaction.

With REO properties its not luck its looking at a lot of properties to find the one that will suit your needs. As for buy and hold, or buy and sell it depends upon your stratagy for your investments. I am a buy and hold kind of guy. Let my tenents buy the property for me. If you buy and sell you are looking for a property that you can rehab and make a profit on. Properties that are rough can be a very good value to repair and sell for a quick return it all depends on your goals.

If you are going to invest in buy and repair properties remember to include in your cost of repair in your holding time costs--interest, insurance, utilities. Also remember in your analisys to include the cost to sell the property.

Never assume anything on a foreclosure property, do your DD on the property and make a trip to the recorders office if you need to. Also don't count on the value that you get from zillow to be very accurate. Find a local realtor that you can work with and have them run a CMA on the property. It is easy to get a range price without seeing the property. When you find a Realtor that you can work with as part of your team keep them in them loop.

Unless there has been something recently has happen to the property with most lenders a 90% offer will be rejected. With some lenders they have an algorithim that they use in pricinng the property. I am not sure of all the variables that they use but one of them is the number of offers that that have recently received on the property. They do count stupid offers as offers, ie a 10,000 on a 100,000 listed price is still counted. There was a REO locally that just sold for about 10% of listed price. The property had a fire while vacant and with that new information the lender sold it for less.

Reo properties will never have a steady cashflow because the property will be vacant. It is up to you to do any repairs and either sell the property, live in it, or rent it out.

As for the condition of the properties I like to tell people that it's just like christmas. You never know what it is until you see it. Sometimes they will be move in ready, other times you need a Hazmat suit to clean out all the crap(literally) in the house.

The ownership seasoning is relativly new and is designed to stop fraud. Also if you are going to sell on a FHA loan it is a good thing to have progress pictures on repairs that you have done.

Normally it means that you have not owned the property for the required length of time. FHA now requires that you have owned the property for 6 months, Ohio FTB program requires that you have owned the property for 1 year. Down payment is not a problem as a gift letter can take of that as long as there is a paper trail for the money.

i.e. It is ok for dad and mom to give the kids down payment money but the have to provide a letter that it is a gift and the may need to show where they got the money from.

You can not pay a referral fee or commission to someone who is not liscenced. That is against the law and can get both of you in a lot of trouble with the law. Another solution thinking out of the box would be to ask the agent if you found a buyer would he reduce his commission and have your parents pay you. It's real shaky and not something I can do. Check with the agent and see if you can do that in your state.