Posted by Soraya on May 15, 2000 at 10:35:53:
Wow!! What a surprise. I posted my message under Bill(OH) should have been posted under Bill Steger>
Sorry
Soraya
repo needs fixing up - Posted by Bill Steger
Posted by Bill Steger on May 13, 2000 at 13:39:38:
I have come across a repo home that I am interested in purchasing as a investment to rent or resell. I have no money down, but I have the knowledge to make the needed repairs to make the house appealing. My question is how to I make a offer and fixup the house with very little out of pocket. It will take me about 60 to 90 days to rehab the place. Here’s some more details. The house hase been empty for 4 months, It has just been listed with a realtor for $78,900. The outstanding mortgage balance is $57,000. Comps in the area support about low $80,s if in good shape. Any suggestions would be greatly appreciated.
Re: repo needs fixing up - Posted by Bill (OH)
Posted by Bill (OH) on May 14, 2000 at 08:09:08:
Hi Bill, let’s see if I can give you some suggestions. Bank repo’s can be a great way to get some dirt cheap deals. They can also be an exercise in frustration and headaches–because they can take a long time to close and often times it takes months for a bank to see reason and unload the property for what it’s really worth.
As for what you should bid, well the usual formula is this:
After Repaired Value x .7 so that you get the property for 70% of market value.
Then deduct the cost of repairs–don’t forget holding costs for two to three months. Water, sewer and trash pickup–gas, electric etc.
Deduct another 10% for your profit.
This is the offer you should make. Why 70% you ask? Two reasons–one is that you will always find a surprise or two when doing rehabs. These surprises cost you money! Second, when you are ready to l/o the property or sell it, you can sell it fast because you can price it just a little below the market.
As for financing, there are banks out there that will lend up to 70 or 80% of the After Repaired Value (another reason for the 70% figure) with an interest only payment due (usually) 90 days after closing. That way you can do the fix up without money out of your pocket.
The other financing option is to ask the bank that owns the property if they will give you 100% financing. The first property I purchased for investment I got this way. Then use credit cards for the materials.
Keep in mind that the bank may reject your first offer. Don’t budge from what you have figured as the most you can offer!!! Keep giving them the same offer every couple of weeks until the place sells or they accept your offer. Persistence pays with REO’s. Also keep in mind that it can take up to four months to close a REO because there are so many banks/title companies/ and paperwork involved.
The name of the game with REO’s is ‘PERSISTENCE’–and boy can you ever get some good deals by sticking with it!
Thank You Ron Legrand! - Posted by Ellis
Posted by Ellis on May 14, 2000 at 12:44:44:
Sounds like it came right from the Wholesale/ Retail course!
Ellis
Maybe Bill has not been to a Legrand course!! - Posted by Soraya
Posted by Soraya on May 14, 2000 at 16:08:00:
I have to admit it sure does sound like Ron LeGrand.
However, maybe Bill Steger has not read or gone to any of Ron LeGrand’s courses so I think it is all right to provide him with the information no matter from where the source is.
What do you think is the appropriate thing for us to do? Should we try to acknowledge the guru from which we get the information that we share with others?
I have read and taken so many courses I don’t remember where I get my information. 90% of the messages I post are from someone’s seminar, only 10%, if that much, is from the “School of hard Knocks”.
Soraya
Re: Maybe Bill has not been to a Legrand course!! - Posted by Bill (OH)
Posted by Bill (OH) on May 15, 2000 at 09:45:10:
Surprise guys! First, the last name is ‘Scott’ not ‘Steger’, and no I haven’t been to a Legrand course. I’m a realtor with one heck of a broker who has been building and rehabbing for about forty years who has taught me a lot in the last five years. Then, there is the practical experience from purchasing properties for myself and for clients. There is also an excellent REIA club that I also belong to in Cincinnati…so, that’s the story of where the info comes from.