Re: VA properties - anyone with advice? - Posted by Gordon
Posted by Gordon on March 06, 1999 at 12:06:15:
Hey, hows it going?
In response to your request, don’t believe everything everyone is telling you. The VA may be different in your state or area.
As a matter of fact, I have been putting in bids on VA foreclosed properties since last May. I just closed on a 3 bdrm 2 ba home here in CA 2 weeks ago. In fact, I’m getting ready to go over there as I write this letter, to fix it up.
If you are an investor you must put down 10%. But, thats just the down payment, it cost me close to 18% because you must also pay brokers fees/commissions.
However, I have to say that in my area these properties are selling well below FMV after fixup.
The FMV on my property after fixup will be approximately $70,000, the asking price from the VA was $42,000, I bid 10% less and won the bid.
You can bid up to 10% less than the asking price. Will you win the bid? That depends on how many other people are putting in bids on that particular property. I believe that I happened to be the only one placing a bid on that house.
It’s a nice house, will probably cost me about $3500 to $4000 to fix up including carpet/linoleum, landscaping, interior painting, outside touch-up, and replacing oven and dishwasher, and other misc. repairs. I will rent it out for $650 a month, my PITI is $350 due to high tax estimates, next year it will go down app. $50 a month, this leaves me with $300 a month PCF at this time, and $350 next year. Not to mention appr. $25,000 equity in the property (this is after subtracting all of my investment money).
Not too bad for a VA foreclosure even with what I have invested.
Try finding other houses where you can net such a profit each month.
The only draw back for me is the high down for investors. You could ask the broker to accept his/her commission in the form of a note and you could make them payments over a period of time.
I think the best bet for purchasing properties with no or low down is directly from the seller. Easier to work out a deal. Especially if you can find a VA or FHA non-qualifying assumable loan. These are GREAT!!!
My second house purchase was one of these. I spoke with the seller, she wanted out, bought a new home, this one was sitting empty. She had appr. $20,000 of equity in the home, but, get this, she only wanted a cashiers check for $2,500 (thats right two thousand five hundred dollars) and for some one to take over payments.
Well, I looked at the house and it was great, a small 2 bdrm (argh!) with a very large backyard, one car garage, only took appr. $2,500 for fixup.
I jumped on the deal. Just signed the papers and handed her a check while she handed me the keys to my new home. Thats it, no credit check, no tedius paper work, no dealing with mortgage companies. WOW!!!
It was too easy, and my phone rang off of the hook with prospective tenants the very first day my ad ran in the local paper, appr. 35 calls a day!
Well, I’ve had that house rented now for about 9 months. No problem. Good tenants. Oh sure every now and then I fix something minor.
I am now searching for some multi-unit buildings, much faster way to build PCF (positive cash flow).
Sorry for all of the extraneous information, just wanted to share with you some of my experience, may help, or motivate. The point is, is that there are many ways to purchase properties, some of them might be right in front of your face as you read the Sunday paper!
Good-Luck. Happy hunting!!!