Posted by Sean on May 05, 1999 at 10:04:51:
At least you’re smart enough to have a liquidated damages clause and only put $100 earnest money in on these houses so that you CAN walk away.
Uphill Side of Learning Curve - Posted by Carmen
Posted by Carmen on May 05, 1999 at 08:12:47:
Boy, I must be on the uphill side of this learning curve!
We got one deal behind us, which we are going to sell (bought at $42, sell at about $65), so that is good. One other deal still looks good (contract for $44, FMV $75, $5K work).
2 of the other deals we had look like they won’t be going through after all.
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Contract for $28K, FMV $80K on what looked like a good little duplex, minimal fire damage, contractor said it would take about $10-$15K to put it back in rentable shape. Rentals in that area go for about $600, potential of $1,200/month. Financing source is flaking out, so we thought we’d see if we could flip, instead, just in case they don’t come through - got laughed out of the park. Seems this home was flipped to current owner by an “I Buy Houses” investor a year or so ago; another investor also had a go at it. They told us that this has become a drug home (although the neighborhood is not bad, and they are building new $80K homes 3 blocks away) and it is impossible to secure - every time a door is put in, it gets torn out; all the windows are broken every night. Since it’s been vacant for so long, the transients have taken it over. It’s in a secluded cul-de-sac, on a river, which makes it even more appealing. So, we’ll probably pass - and lose our $100 - this looks like a community redevelopment project, not just a rehab! The neighbors seemed concerned - came over to see what we were doing, and threatened to call the police - but even if we got the community to patrol the area nightly, we don’t feel like taking a bullet from some crack addict over this.
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Another home, which we comped at about $76-80K. Needs about $10K work including a roof, under contract for $48K. Was supposed to close on May 7. Bank changed their financing program on the fly - they now will only fund based on appraised value (they had said they could fund at 75% of FMV) - supposedly $45K by their appraiser. What gives??? Anyways, can’t fight the bank, and can’t get another source of funds in 1 day, so we’ll probably let this one go, too. We don’t have the funds to fix if we go hard money (they won’t lend on repairs). If we can extend the contract, maybe we’ll try to flip…
AH, the joys of REI! This is still very much exciting and a challenge - the more I learn, the less I’ll make the same mistakes!!! 