Posted by Dimpil on October 10, 2003 at 05:24:25:
I will!! That does seem cheaper then the current route.
Also I with this home, he allowed the owners to move back in as they were in the process of losing the home in forclosure and wanted to buy it back. There was 50,000 in equity and he bought their sob story. I thought it was a bad move, if you don’t pay when it’s yours why will you pay when it’s mine?
But I will tell him and I will use the advice in my own practice.
Thanks!
Selling rehabs / flip issues - Posted by jasonrei
Posted by jasonrei on October 07, 2003 at 23:56:26:
To you rehabbers out there. I’d like to know what you do to sell your houses. Here’s what I do:
I usually get a little interest in my houses while they’re being worked on. I send these prospectss to one of two mortgage brokers I like. Very few qualify for what they’d need to buy my house.
For the first couple of weeks after a house is ready, I put up a for sale sign. I follow up with people that call, steer them to my mtg bkr.
More often than not, someone’s agent calls me and wants to show the house. I let them. They submit an offer. I call their mtg bkr and, after checking with their underwriter, they tell me they can’t do flips. If the people really want the house, I tell the agent about my mtg bkr. Usually the agent will pass, but sometimes they go thru mine.
I list the house on MLS after a couple of weeks.
I run newspaper ads.
I have a website and, depending on the area the house is in, I call a couple of agents I know sell there and tell them I have a house ready. I give em the lockbox combo and tell them to show whenever they want.
Probably 85% of the houses I sell are sold using real estate agents. In the near future (as my volume increases) I expect to find at least 1/3 of my buyers on my own.
Any ideas or observations from y’all?
Re: Selling rehabs / flip issues - Posted by Terry(IN)
Posted by Terry(IN) on October 14, 2003 at 14:46:03:
Go to www.ushomevesters.com and click on “Seller’s Information” then click on the free report “How to Sell Your Home in 2 Weeks”.
Re: Selling rehabs / flip issues - Posted by Desiree
Posted by Desiree on October 09, 2003 at 04:46:06:
Well if you have title/deed it’s not really a flip. You own it. Most lenders in the current climate want you to have ownership of the property for 12 months before you can sell for FMV. Yes, they do not believe in a capitalist socieity! No really it’s due to fraud and the economy. Lenders were losing money and deals where going bad.
Other then your brokers who works with lenders who do not require seasoning on title before selling it I’ve yet to get around title issues as most want to see a 12 month chain or 24 month chain of title as part of the underwriting process.
Some lenders will say if they can see where you’ve put the money in, repairs, remodling etc., they will give you full price but it’s dollar for dollar. I had one lender stip me for the repair list because the house sold in the last 3 years for 80,000 and the new owner was now selling it for 125,000 a year later. He guy did but about 25,00 worth of work in the house so the lender felt comfortable. I’ve even had lenders request questions distrssed sales. It will get worse before they losen up again.
Re: Selling rehabs / flip issues–what about this? - Posted by Chris(Inidiana)
Posted by Chris(Inidiana) on October 09, 2003 at 21:56:25:
I’m kind of new at this but I am running into the same issues. Not sure if it would work but I thought of doing the L\O and at the end of the term creating a note for the buyer. This way I was thinking I can prove the payments have been made on the property to get around some seasoning issues on the note and maybe better package the note to possibly do a simultaneous close for 100% of the value of the note.
This way you open the door for more potential buyers…or problems!
Any Thoughts???
Re: Selling rehabs / flip issues - Posted by jasonrei
Posted by jasonrei on October 09, 2003 at 10:45:21:
I’ve sold 2 deals this year where the lender wanted cancelled checks to my remodeler.
I sold 2 others where the lender wanted a list of improvements I’d made. The most recent was an FHA I’d owned 3 months. I was asked to pay for a second appraisal on that one.
Finding decent deals, getting the money to buy, and remodeling are all getting much easier. Selling is the toughest part.
Re: Selling rehabs / flip issues–what about this? - Posted by jasonrei
Posted by jasonrei on October 10, 2003 at 09:42:08:
I’ve run the numbers on L/O my houses then selling after 12 months.
Thing is, I get hard-money loans on most. My lender only goes 6 mos. I’m not going to do a real nice remodel if I’m going to lease out the property. If I have to replace carpet and do touch-up that’ll cost me at least $2500. I think the majority of L/Optionees won’t be able to cash me out after 12 months, so I’ll have to evict. The new appliances I put in my houses won’t be new anymore, either. If I have to search high and low for grade-A L/Optionees, I’d be better off finding conventional buyers. I can definitely understand trying to be creative, and I think a lot of what I do is very creative.
I’ve been in this business a little while and I’ve learned to never count on anyone doing what they say they will.
Re: Selling rehabs / flip issues–what about this? - Posted by Dimpil
Posted by Dimpil on October 10, 2003 at 05:36:42:
IF the property was in your name. See that’s the big issues with lenders right now. There are a few who do not require seasoning but they are few and far between. The best way around it is to get the current legal owner to quit claim you (or your company) the home or add you (or your company) to the deed that way he’s not losing intrest in his property and still maintains he’s ‘rights’, keep the mortgage in his name and you make the payments.
Have the teneants give you copies of the FRONT and BACK of there check once it clears the bank, lenders don’t just take the front anymore, and most of the time they can go on line as the majority of banks have on line access and can print out cancled checks. Of copy the money order before putting it in your bank.
If you own the home then yes do the lease option as they will have more options to purchase the homes and would qualify for a refiance vs a first time purchase. Much better for them and you. Depending on the credit, you still may have to carry a second but you would get the majority of your cash. And with the lease option you have more flexiabilty if issues comes up like; 1/2 the money went towards the down payment if the lender requires some money down because can only get a 90/5 and need 5% themselves. Stuff like that.
Re: Selling rehabs / flip issues - Posted by Dimpil
Posted by Dimpil on October 09, 2003 at 17:17:50:
I know! I think it will go back. It’s a fad it comes in and goes out.
Re: Selling rehabs / flip issues - Posted by Jim
Posted by Jim on October 09, 2003 at 18:13:24:
L/Option then flip, its like flying 1st class
Re: Selling rehabs / flip issues - Posted by Dimpil
Posted by Dimpil on October 09, 2003 at 18:49:05:
Having issues with those also. You need to be on deed/title, so you have to either get the current owner to quit claim OR get on them to add you to deed.
The issue I’m having is the person having a recorded option, lenders are still coming back asking who legal owner is and when title search is done, leagal owner is not the person who as the option. Thus the person who has deed/title is the legal owner and the option is viewed as nothing. This is a recent loan I’m citing from my company, the lender an killed the deal the way it was submited, the sales contract had to be re written between the legal deed/title owner and the buyer. The person with the lease option was then the ‘middle man’ with a contractal fee.
It was a nightmare for 2 months! And yes I thought the recorded lease option would be the ticket.
I’m telling you in this current market, get it quit claimed and either hold or go with lenders who don’t require seasoning when you have ready buyers.
Re: Selling rehabs / flip issues - Posted by Jim
Posted by Jim on October 09, 2003 at 19:47:43:
Why in the world would you record a lease option? Just get it notarized to make them happy. Keep it between you and the buyer. Keep the lease separate from the option. On the lease agreement make it contingent on the option. Disclose to them their % for down payment from their L/O is for max seller assist & the rest will be given through a family member (blood relative) as a gift, the family member even gets to write it off. Tell the lender you’re giving them the seller assist so they can buy you’re house (FHA Deals). Conventional is even easier. Note information is in PA markets. P.S. This might be fraudelent to a lender…be careful
Re: Selling rehabs / flip issues - Posted by Dimpil
Posted by Dimpil on October 09, 2003 at 20:27:32:
I didn’t record it! The school of thought is the lease option recorded has more power. NOT. The only thing is not every buyer is FHA or conventional qualifed.
And I see you are talking about the owner and the potential buyer vs a ‘middle’ guy and owner and a buyer. The deal I was talking about was an option from the middle guy to the owner who leased the home to the buyer. I see now I got confused!
Now the only issue I have with a lease option is what my boss is going through right now and which tells me before I jump into that market I need a bundle of cash to ride out the strom. His lease/option people have not paid, he filed for eviciton, they got a lawyer and now they are back and fourth in court every 3-5 weeks fighting. They are not paying and he wants them out to put new lease/option tenatns in. I’m doing all the paper work so I can learn the ‘rules/law’ about that side of it. Not pretty.
BUT I will say out of 4 lease options and 10 rentals they are the only one’s giving him a hard time which tells me in general it works it’s just that one who thinks he’s got rights live for free.
Re: Selling rehabs / flip issues - Posted by Jim
Posted by Jim on October 10, 2003 at 24:51:20:
I don’t know to what extent you’re boss prequals his tenants/buyers, he may want to check their history a little better. not to say this situation doesn’t happen with even great looking tenants. Tell you’re boss to offer them money for the keys-Its worked for me plenty of times and Its alot cheaper than an eviction.
GOOD LUCK!