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Re: Does this RE deal sound good?
Old 03-22-2006, 12:09 PM   #21
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Re: Does this RE deal sound good?

My wifes $10k remodel turned into 40+. A lot of that was my own fault for increasing the scope, but just staying with the original plan probably would have put us into the high 20's.
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Re: Does this RE deal sound good?
Old 03-23-2006, 10:25 AM   #22
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Re: Does this RE deal sound good?

thanks for all the input. I've checked for rot and found none, just warped subfloor, and slightly uneven concrete slab. Why?

Walls are still square, peeled back some siding in a few areas and found nothing scary



On another property I've been looking at, there's ahealth code violation for lead paint. That befuddles me as 75% of homes painted before 1978 (ie 99% of homes in my area) have lead based paint. Since this one was vacant, and vandalized, the health dept tested and slapped a violation and order on it. The catch is, you cant simply paint over the lead paint (like 99% of homes in the city), it needs to be removed! WTF is up with that? Someone began a restoration by hanging ALL new drywall thru the home. All that's left are the ceilings, and the outside of the home. I wonder if vinyl siding would count as elimination?

Anyone experience anythign like this with the health dept?


Thanks
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Re: Does this RE deal sound good?
Old 03-24-2006, 08:48 AM   #23
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Re: Does this RE deal sound good?

UPDATE: House #1 is out of the question. Too many variables that I wont be able to accurately estimate until taking possession (found new water leak...may be main water line coming up from a hole in the ground underneath crawlspace)

House #2 in the previous posts, and explained abovE(health department issue) is being bid on today. I am submitting a low-ball offer of 10,500 for the home, they are asking 14,900. Its been on the market for 55 days, and is bank owned.

I found a way around the health dept. requirement that a lead abatement specialist does ALL work involving any lead in the house(ie EVERYTHING that is painted!!!). I'm getting my lead abatement license in the state of OHIO by the end of april. It's about 800 in class and test fees, but can turn in to a nice side business!

Hope they say yes to my lowball offer!!!!!!!!!
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Re: Does this RE deal sound good?
Old 03-24-2006, 11:04 AM   #24
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Re: Does this RE deal sound good?

Quote:
Anyone experience anythign like this with the health dept?
I was not aware Ohio had lws against lead paint. MA is pretty strict (all chewable surfaces below 5 ft must be abated/replaced if a child <6 resides in the house). The expense is in replacing the doors and windows. Stairways can be wrapped with carpet.

Of the half dozen bank owned properties I've purchased I've found some banks favor carrying the note (figure this is where the $$ can be made for them) and will throw in special financing packages. Others just want OUT and are much more negotiable on the price - and will not carry the paper. Point being, if they do not negotiate on price, try to negotiate the terms of a loan (low rate/closing costs).

At those prices, you can't go wrong. Good luck!
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Re: Does this RE deal sound good?
Old 03-24-2006, 12:06 PM   #25
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Re: Does this RE deal sound good?

Well, it's only a 'law' that 6 feet and under is abated or covered IF the health dept. tests the home. this home was tested because a little kid ate paint chips on the porch. Duh :

Stairs can be wrapped in carpet, and likely will be...you are correct. New siding going up will be fine. Rest of the home just needs painted. I offered 10k. They're asking 15k and def. paying 2500 in commissions to RE agents.

Here's the funn y thing: March 3rd, according to the county tax assessor, was the day that this property was recently sold to another financial institution. they paid, according to public record, 4100 dollars!!!! I looked this company up, and found out that they specialize in helping big lenders 'clean their portfolio's up for the end of the month or quarter". They take them off of the banks hands to make thier portfolios look better (they probably have negative equity @ this point). They keep it on the market with the same realtor to avoid pissing them off. Their realtor says "Just make an offer, they really want to move it..."

I offered 10k, 12k would be satisfactory, and about 13k is what I am counting on.

I've pulled 6 comps, and am coming up with about a 53k average selling price for this home when finished. I expect to have NO more than 30k in it with 12 months vacancy. Should turn a decent profit! I think if I sit on it (which I'm willing to do), I could get 60k for the thing. I'll post pics so you all dont think I'm a raving lunatic! 10k for a home, sell it for 60k with 15k rehab costs...hmmmmm....



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Re: Does this RE deal sound good?
Old 03-27-2006, 12:55 PM   #26
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Re: Does this RE deal sound good?

I put an offer in on Door #2 Friday morning. They were asking 14.9k, i offered 10k to get the ball rolling.

I'm SOOOO anxious, i can not stand it any more! It's only been 3 days, most of which was weekend, but dayyam! I'm getting ready to explode. I wish they would just counter me an offer of about 12k and I'd close tomorrow!

I have a lot of detailed estimating done, labor lined up, all my proverbial 'ducks in a row'.

Now, with all this prep work, watch them say they have a higher offer! LOL

It's been on the market about 60 dys, so I doubt that....but with my luck.... :
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Re: Does this RE deal sound good?
Old 03-27-2006, 03:34 PM   #27
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Re: Does this RE deal sound good?

Quote:
I put an offer in on Door #2 Friday morning. They were asking 14.9k, i offered 10k to get the ball rolling.

I'm SOOOO anxious, i can not stand it any more! It's only been 3 days, most of which was weekend, but dayyam! I'm getting ready to explode. I wish they would just counter me an offer of about 12k and I'd close tomorrow!
Yep that's the way I feel everytime I submit an offer on a house I just "have to" rehab. I've got one now that I'm waiting on a response from the bank...multiple offers and about 17k in profits make for an anxios wait.
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Re: Does this RE deal sound good?
Old 03-27-2006, 04:26 PM   #28
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Re: Does this RE deal sound good?

I hear ya. after more research, I'm seeing about 25-35k on the table for this one! I'm dying to hear something....
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Re: Does this RE deal sound good?
Old 03-27-2006, 07:12 PM   #29
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Re: Does this RE deal sound good?

as long as you 1031 it, otherwise taxes will make it not worth the profit.
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Re: Does this RE deal sound good?
Old 03-29-2006, 06:50 AM   #30
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Re: Does this RE deal sound good?

Quote:
as long as you 1031 it, otherwise taxes will make it not worth the profit.
That's why I like having rentals AND doing flips. The depreciation (and other expenses) from the rentals can offset some of that "profit" from the flips. Also if you do enough work as a RE professional then you can write off more than the 25k loss limit per year. My pm doesn't do 1031s when he sells he just writes off all his business expenses against the profits.
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Re: Does this RE deal sound good?
Old 03-30-2006, 08:12 AM   #31
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Re: Does this RE deal sound good?

TheFed-
So have you heard anything? I'm feeling the drama on this one as if I were doing the deal myself. When do you expect to hear? Good luck on it. Man Ohio real estate numbers are a far cry from where I live. btw, how 'bad' is the neighborhood -- is it high crime or just a bit run down?
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Re: Does this RE deal sound good?
Old 03-31-2006, 02:01 PM   #32
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Re: Does this RE deal sound good?

Quote:
Originally Posted by CybrMike
as long as you 1031 it, otherwise taxes will make it not worth the profit.
I don't get this. It's a short term cap gains tax, so it's taxed at his normal tax rate anyway. So getting 25k in profit and paying the tax is comparable to just working a 9-5 and earning 25k.

Am I missing something?
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Re: Does this RE deal sound good?
Old 04-03-2006, 04:52 PM   #33
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Re: Does this RE deal sound good?

sorry its been a while!

Well, the deal is 99% done. just need to sign the papers. I took house "B".

The neighborhood is not great, not terrible. No burglar bars on windows, BUT the bassement window in the house was kicked in the other night (no biggie, im putting in glass block windows soon). It doesnt look like anyone went inside, although thru the home is writing on the walls from high school kids. I think, in many neighborhood,s that if a home sits obviously vacant for 6 months, kids or vandals will find it.

Overall, you would always want to lock your doors and windows and car....no exceptions. But liek anywhere, if you treat people with respect, they'll often reciprocate.


I'm in the home for 13.5k including closing, and anticipate about 7500 in expenses right now. i will be renting it to a friend for 500/month, resulting in about a 250/month cash flow. One year lease. I will try to get as much out of the home (HELOC) as I can to help finance the next one.

wish me luck!!!!!!!!!!
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Re: Does this RE deal sound good?
Old 04-03-2006, 09:20 PM   #34
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Re: Does this RE deal sound good?

TheFed'
You took the one with the lead paint problem or the other one-bedroom one?
If the lead paint issue, you won't have any issues with your friend staying there, right? Hate to have him, no matter how good a friend, coming to you later, especially once you've made some dough, for damages from having been rented a toxic apt!
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Re: Does this RE deal sound good?
Old 04-04-2006, 10:15 AM   #35
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Re: Does this RE deal sound good?

Quote:
Originally Posted by ESRBob
TheFed'
You took the one with the lead paint problem or the other one-bedroom one?
If the lead paint issue, you won't have any issues with your friend staying there, right? Hate to have him, no matter how good a friend, coming to you later, especially once you've made some dough, for damages from having been rented a toxic apt!
yes, the lead paint one. as long as he doesnt start eating the walls, he shouild be okay. I'm going toa 5-day training class to become a lead abatement specialist. it costs 850, plus a few exams to get the license. Once I have that, I can proceed to repair the home. To eliminate the lead, you either scrape and re-paint, or replace. Outside, you can put up vinyl siding and that's acceptable. Overall, it's no big deak.

The home has 4/5 bedrooms, its a ranch, fenced big back yard, not the greatest neighborhood....but acceptable for the price range. All new windows and electric. Needs roof, flooring, all walls taped/mudded/sanded/painted (its all fresh sheetrock), siding, and a gravel driveway.

I cant wait!
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Re: Does this RE deal sound good?
Old 04-04-2006, 04:43 PM   #36
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Re: Does this RE deal sound good?

Sounds like you've created the perfect set of challenges for yourself, with a nice profit waiting at the end, to boot. Good luck with it and let us know how you are progressing over the months ahead.
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Re: Does this RE deal sound good?
Old 04-04-2006, 06:33 PM   #37
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Re: Does this RE deal sound good?

thanks! I will certainly keep you all updated, as I think this will help facilitate my ER in 23 years (im 22)
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Re: Does this RE deal sound good?
Old 04-05-2006, 08:30 AM   #38
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Re: Does this RE deal sound good?

14% cash on cash return ((250x12)/21k) without figuring appreciation/sweat-equity. That's a good deal in todays market.

Good luck!
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Re: Does this RE deal sound good?
Old 04-05-2006, 09:30 AM   #39
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Re: Does this RE deal sound good?

Quote:
Originally Posted by tryan
14% cash on cash return ((250x12)/21k) without figuring appreciation/sweat-equity. That's a good deal in todays market.

Good luck!
especially when you figure out that I'm only pulling 4k or so CASH from my pocket, and the rest is leverage.
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