Posted by Tiffany (MA) on March 27, 2001 at 08:21:40:
Thanks Nate,
Contacting local banks and finding out about the 203k is one of my projects for the day. I’ll let you know how it goes.
-Tiff
Need help w/ city proposal for rehab job…help! - Posted by Tiffany (MA)
Posted by Tiffany (MA) on March 26, 2001 at 07:32:12:
Hi everyone,
Really wish I could go the convention this year, but my budget is at a negative cash flow and I can’t even rob Peter to pay Paul because Peter’s broke too! Sorry, I’m not broke, I’m temporarily out of cash ;0) Making it next year is at the top of my priority list though.
I looked at a single family house the city is taking bids on. it a tax foreclosure. The after repair value is 200-210k. The city is asking 80k, and repairs I have estimated to be 45k. Numbers are working great, but the problem I’m having are these bid proposal forms. Cant figure out what they’re looking for. I actually would like to occupy this house, so I know I have leverage over the contractors bidding (owner occupants are ‘rated’ higher).
Some of the things they are asking for are that I’m confused about are:
-letter of interest introducing the develoopment team, including the developer, architect & other consultants
-developers statement of public disclosure & statement and qualifications and financial responsibility
–development proformas, operating proformas, & a sources and uses statement. Include an acquisition price & detailed cost estimates of construction and other costs
I would be the principal so how do these things apply since I’m not a developer.
Also the city sells these houses at ot below fair market value. The determined their asking price of 80k to be FMV. Should I offer 80k which would work for my financing or try to offer less. Will they hold be to the 80k if selected or is the price then negotiatable.
Any feedback from anyone with experience with this sort of thing is appreciated.
Thanks
–Tiff
Re: Need …help! - Posted by Anne-ND
Posted by Anne-ND on March 26, 2001 at 11:10:16:
Tiffany,
We have looked at city-owned houses that went up for bid. The only people who can answer your questions are the people who will review the bids. I just called up Urban Development (may be called something else where you are) and told them what I wanted to do, and they told me how to fill out the forms.
There may well be different expectations for home-owners rather than developers, but they want to see that whoever gets the house has a PLAN. You may have the lowest bid, but if you don’t have a plan, you won’t get it. At least that’s how it works here. For instance, are you planning to do the work yourself? If so, then you’ll have to prove you’re competent to do the work and have the financing for the materials and holding costs. If you plan to hire out the work, they want to see written estimates from your contractors, and proof of funds that you can pay the contractors.
If you bid $80K, that’s your bid. It’s not negotiable if they accept your bid.
I would urge you to reconsider and try to make it to Atlanta. Borrow the money from someone else if Peter and Paul are out of cash. Just get there. You won’t regret it.
Good luck,
Anne
PS- we never ended up bidding for the city-owned properties, they were not good enough deals at FMV. For a house that needs $45K in repairs you should be paying a lot less than FMV- there’s too much uncertainty and risk to buy it at FMV.
Re: Need …help! - Posted by Tiffany (MA)
Posted by Tiffany (MA) on March 26, 2001 at 13:19:27:
Thanks for the advice. I called the project coordinator and I found out that the developer info they are asking for would not be applicable to a owner occupant. The 80k that the city says the house is worth presently, does not line up with sales comps of similar houses that have sold between 176k-225k. The house is habitable currently (someone is living there now). I plan on hiring contractors to do the work and I am currently looking for hard money. Theyy do want to see that the estimates are by licensed contractors and not “handymen”. Once I find hard money I can get a commitment of funds letter to be included with the proposal. After rehabbing I would have a house that cost me @ 130K and is worth 200k.
I’ll talk with my hubby about this year’s convention. Its worth a shot even though he’ll likely think I’m out of my mind, but since I’ve started getting into CRE investing he does think that anyway. Nothing like a good pessimist(sp) to keep you motivated.
Thanks again.
–Tiff
Re: Need …help! - Posted by Nate
Posted by Nate on March 26, 2001 at 22:49:39:
Tiffany,
At that kind of LTV (65% when completed) I can’t imagine you couldn’t get a local bank interested in the construction loan. Particularly on a city owned property where they would get Community Reinvestment Act points for doing so. Call a couple of the local banks and ask for the Community Investment or Community Development Department. Also check with mortgage brokers about a HUD 203K loan. Because you will be an owner occupant there are LOTS of financing options out there that are a LOT cheaper than hard money.
Nate