All Forum Posts by: Shane M

Come back Shawn! I want to network with people in my area lol.

This discussions is far too rational to be about money and politics, :D

Quick update, I've been pre-approved and am scoping out multiple properties.

One already has an offer on it after about a week on the market, probably not worth hanging around for to see if it falls through

Another has been sitting for almost 2 months with 0 offers but needs A LOT of work.

Those have been the only real prospects I've come across, the rest have had multiple offers and didn't need much work.

I'm going to visit a couple tomorrow, one has been listed for months and months but was pulled. I believe the owner refuses to budge on the price so it may be a dead end. The other has been sitting for at least a month but looks overpriced.

It doesn't hurt to make an offer though, even if it 50% of the asking price.

My thoughts are that it is a lower risk situation that will provide a great learning opportunity for me. So long as I operate by the same standards as a normal flip and the numbers make sense.

Too bad I won't be able to keep that FHA credit if I sell within a couple years :P

Just curious if you ever heard of anyone successfully utilizing FHA financing for an owner-occupied flip. The 203K program is specifically for rehabs, but it is kind of a drawn out process. The intent is that you are going to live in the home as well (at least during the rehab phase)

Since I am still starting out I figure this would be a good way to get some experience without as much risk as trying to flip a regular property, plus I can actually qualify for financing. I plan on being in the area for at least a couple years anyway.

I've been evaluating properties using the same strategy for typical flipping (at least 60% ARV). But I'm concerned that the 203K program puts me at a negotiating disadvantage because it draws the process out and banks want to move these homes quickly and with as little conditions as possible (let alone financial ones).

But they may be desperate enough to want to go through the process, especially if they haven't had any offers at all for more than a few weeks or even months, which is the case with several properties.

I've been unsuccessful finding hard money lenders in the area, plus with my inexperience I doubt they would want to get involved anyway.

Thanks everyone!

Great information and references everyone, it has all been really helpful.

My only question would be: Are you guys factoring in the cost for new appliances in your $ per square foot?

I agree, it would depend on your margin. But If the house is completely trashed and not worth repair, you would essentially be purchasing the land and foundation (assuming that is good). Plus the cost of demolition and trash removal.

How much per square foot are you talking about to build? You save the cost of the foundation, but is that "worth" very much? I've seen some homes for 20K and under that would probably need a total gut or possibly a new build. What are the hidden costs with tearing down a property, even if you keep the foundation?

You can move into a home and live in it, fix it up and sell it too. You could also just live in it permanently and go through the experience of some renovations to get a little experience under your belt. I believe Richard did this himself!

There are limits as to how many FHAs you can get in a given time frame, and you have to live in the house for a set period of time before you can use another FHA loan, right?

So I have been advised by a 50+ home flipper who has been in the business for 25 years in this area to go for an FHA mortgage on a property I wouldn't mind moving into and then to eventually sell it. Does it violate any FHA guidelines to move into a property with the ultimate intent to sell it? Does anyone really care anyway? Do they lock you out of selling it for a certain period of time? How can they stop you?

I guess you wouldn't be able to transfer ownership to a company, so that rules out renting it out under an LLC. And I guess you couldn't "expense" your rehab if you were an LLC as well. Would you need to be a sole-proprietor (seems like a bad idea to me).

I kind of mentioned hard-money lending but he is a very conservative flipper and prefers dealing with his own funds. So he seemed opposed to them. The main risk for hard money lending is not getting a low enough ARV (and the hard money lender I'm working with is asking 50-60%) and having your repair costs coming in at the right place. Plus actually being able to sell. But even if you can't sell for the term of the hard money loan, couldn't you refi that loan into traditional financing without many problems? (Assuming the home post-repairs appreciates for the full ARV).

When looking at the advantages and disadvantages of each, which would you chose or recommend? Am I missing any vital info. here? Thanks!