Need help with a couple of deals. (LONG) - Posted by Tim (Cleveland, OH)
Posted by Tim (Cleveland, OH) on November 30, 1999 at 04:45:31:
I am having some problems with a couple of deals. I put a couple of REO’s under contract about a week ago that I was hoping to get help with. Both are in good shape with ARV’s of around $55K. Both are partially rehabbed with some new major systems (new furnace, updated electrical, new roofs, one has a new security system etc.) They each need about $2,500 to spruce them up to get them to the $55K. About $5,000 each would make them very nice. Both need new water tanks. Would be good rentals for those who are a mind to do that. Part of the problem is that no matter how much work you put into them, they are not going to be worth much more than the $55K I mentioned, based on comps.
Looking to wholesale. One under contract for $38K and one for $40K. The one for $38K needs a little more clean up, paint, carpet etc. than the $40K. The one I have for $40K is very livable with lots of updates rigth now, but could use new wall paper and carpet cleaning and the water tank.
Over the last several months I have been attending REIA meetings and building a network of rehabbers to flip to. I put these properties under contract and called my rehabbers to go and take a look. In discussing with them, I am being up front with them about what I am trying to do. If I could get $3K on each I would be thrilled. $2K would be fine before costs and woudl cover my costs. These are my first deals, so I am really trying to get my feet wet. My $1K earnest money plus an additional $1K TOTAL would be fine.
I ran a couple of ads stating “Handyman special. Area. Partially rehabbed. Asking $50K but will accept first reasonable offer. Must be able to close quickly. XXX-XXXX.” I have only gotten a couple of calls from these ads that ran last weekend. Mostly investors looking to do L/O or land contract etc. I know this is fairly short period of time, but I am getting pretty anxious.
In talking with my rehabbers, I am either not getting called back or when they ask me what I am looking for, they are telling me that I pretty much have them under contract for too much. Now, these are houses with a potential $10K in equity with very little put into them. Also in improving areas with good rent rates. Lots of big updates. All the hard stuff is done. Is beating me up over price just the thing that rehabbers do, or should I really be shaking at this point?
I am thinking at this point that if I don’t get a serious inquiry in the next week. I am going to call the seller and tell them I am going to break the contract. I have 45 days to close (close first week of January) but I am already getting very anxious.
The bank selling offers good financing 10% down 8.25% fixed for 30 years even on nonowner occ proeprties bought from their REO list. Which I coudl try to get, but I don’t have teh $7800 needed to close. I have thought about trying to get $10K each from a buyer to get closing money, have a little extra and sell to the buyer on L/O but this has not garnered any interest either.
I would lose my $1K earnest money if I break the contract, which I really can’t afford and I guess they could try to force me to honor the contract. There are no weasel clauses as the bank insisted I use their contract. I was fine with this as I thought for sure I would get more interest. If they tried, I am pretty certain they wouldn’t get far as I am pretty much judgement proof.
Any advice or just plain old encouragement would be greatly appreicated.