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Westernskies 06-30-2009 12:48 PM

Finally took the Real Estate Investment Plunge….(long post with photos)
 
3 Attachment(s)
We have been watching the RE market, trying to time the bottom, wanting to invest and move up at the same time.. We submitted five offers in two different states on bank-owned homes, explored a couple of short sales, but weren't having much luck finding what we wanted. We were getting burned out looking at homes (online and in person), and generally disgusted by how these properties were being marketed, offers handled and deals being done.

So, we decided to take a break, and decided that we would not look any longer, but if our (new) realtor found anything we would be open to looking… Turned off the computers, went out to dinner, and made plans to go pick out the new puppy we had been putting off getting until after the move. Told our realtor we were taking a break, but if he could find us an incredible deal on a home we could ordinarily never dream of buying in a neighborhood we could ordinarily never dream of living in…. Anyway, the next afternoon he called… in a panic… A new custom home had just come back on the market that morning in a very exclusive community; it had previously been on the market for over a year, the listing expired, it fell through the cracks and the bank wanted it off their books in June. They dumped the price to get it sold quickly; he believed it wouldn’t last a week at the new price.

We went over right away and looked; fell in love with the house and the setting, and made an offer on the spot-and only gave the bank one working day to respond. They grudgingly accepted with the caveat that we could close in 22 days… before their Second Quarter was over. And our 15K earnest money was non-refundable if we failed to close on time.

Getting appraisals, inspections, and a mortgage done in 21 days has been a marathon. It is no wonder why banks are taking such a bath on their RE assets- this was a million- dollar plus home and they refused to turn on the power, water, or gas for our inspections- we had to pay to put them in our name; even though we didn’t legally own the house. (good thing it didn't flood or burn down...)
All the appliances were stolen by the previous owner missing, along with some of the lights & plumbing fixtures, but overall the house was in great shape. Brand-new, was staged for showing at one time , but never lived in. Our lender wanted to see a working kitchen and bathrooms, so I installed the missing fixtures, brought in old appliances, and sweated through the appraisal. The HOA wouldn’t sign off until the yard was cleaned up, etc, etc, etc. It was touch and go, and a heck of a gamble but we did get the sale closed- a day early. ;D

Here are the details:
  • 4000ft2/ 4Bd/4.5 baths/ Den/Library/ Guest house/ oversize 3-car garage/ 24-7 guard- gated community with 2 Nicklaus Signature golf courses, clubhouse, 3/4 acre lot, bare-bones landscaping, no pool.
  • Lot sold for $300K in June 2005
  • Construction loan in late 2006 at market peak was $800K
  • Home was completed in late 2007, just as market started to turn; listed by builder in January 2008 at $1.35M
  • Lender refused several short sale offers from investors at $850-$900K
  • Lender foreclosed in September 2008, re-listed at $1.1M
  • Listing expired in March 2009, apparently fell through the cracks when lender was bought out…
  • New lender re-listed the first week of June at $650K to try to get it sold in June…
  • We were the first offer in; at just over $600K; had only been back on the market one day.
  • The listing agent was subsequently swamped with calls inquiring about the “new” listing and from people wanting to submit back-up offers in the event we couldn’t get our sale closed in June. Community consensus was that the bank panicked when they realized they had a dormant listing and drastically under-priced this one.
  • There are several similar homes (not bank-owned) listed in the $1.05-$1.25M range, no comparable inventory under $1M
Our intention is to live in the home for a couple of years to satisfy our capital gains residency requirement; then sell it in (in 2-5 years? ) when the market recovers and (hopefully) use the net proceeds to put our ER funds over the top… Realize this much house is a bit of a gamble, but you have to live somewhere...

We closed Monday; here are a few photos of the home:

FinanceDude 06-30-2009 01:34 PM

Papagos Mountains?

FinanceDude 06-30-2009 01:36 PM

Quote:

Originally Posted by Westernskies (Post 831241)
We have been watching the RE market, trying to time the bottom, wanting to invest and move up at the same time.. We submitted five offers in two different states on bank-owned homes, explored a couple of short sales, but weren't having much luck finding what we wanted. We were getting burned out looking at homes (online and in person), and generally disgusted by how these properties were being marketed, offers handled and deals being done.

So, we decided to take a break, and decided that we would not look any longer, but if our (new) realtor found anything we would be open to looking… Turned off the computers, went out to dinner, and made plans to go pick out the new puppy we had been putting off getting until after the move. Told our realtor we were taking a break, but if he could find us an incredible deal on a home we could ordinarily never dream of buying in a neighborhood we could ordinarily never dream of living in…. Anyway, the next afternoon he called… in a panic… A new custom home had just come back on the market that morning in a very exclusive community; it had previously been on the market for over a year, the listing expired, it fell through the cracks and the bank wanted it off their books in June. They dumped the price to get it sold quickly; he believed it wouldn’t last a week at the new price.

We went over right away and looked; fell in love with the house and the setting, and made an offer on the spot-and only gave the bank one working day to respond. They grudgingly accepted with the caveat that we could close in 22 days… before their Second Quarter was over. And our 15K earnest money was non-refundable if we failed to close on time.

Getting appraisals, inspections, and a mortgage done in 21 days has been a marathon. It is no wonder why banks are taking such a bath on their RE assets- this was a million- dollar plus home and they refused to turn on the power, water, or gas for our inspections- we had to pay to put them in our name; even though we didn’t legally own the house. (good thing it didn't flood or burn down...)
All the appliances were stolen by the previous owner missing, along with some of the lights & plumbing fixtures, but overall the house was in great shape. Brand-new, was staged for showing at one time , but never lived in. Our lender wanted to see a working kitchen and bathrooms, so I installed the missing fixtures, brought in old appliances, and sweated through the appraisal. The HOA wouldn’t sign off until the yard was cleaned up, etc, etc, etc. It was touch and go, and a heck of a gamble but we did get the sale closed- a day early. ;D

Here are the details:
  • 4000ft2/ 4Bd/4.5 baths/ Den/Library/ Guest house/ oversize 3-car garage/ 24-7 guard- gated community with 2 Nicklaus Signature golf courses, clubhouse, 3/4 acre lot, bare-bones landscaping, no pool.
  • Lot sold for $300K in June 2005
  • Construction loan in late 2006 at market peak was $800K
  • Home was completed in late 2007, just as market started to turn; listed by builder in January 2008 at $1.35M
  • Lender refused several short sale offers from investors at $850-$900K
  • Lender foreclosed in September 2008, re-listed at $1.1M
  • Listing expired in March 2009, apparently fell through the cracks when lender was bought out…
  • New lender re-listed the first week of June at $650K to try to get it sold in June…
  • We were the first offer in; at just over $600K; had only been back on the market one day.
  • The listing agent was subsequently swamped with calls inquiring about the “new” listing and from people wanting to submit back-up offers in the event we couldn’t get our sale closed in June. Community consensus was that the bank panicked when they realized they had a dormant listing and drastically under-priced this one.
  • There are several similar homes (not bank-owned) listed in the $1.05-$1.25M range, no comparable inventory under $1M
Our intention is to live in the home for a couple of years to satisfy our capital gains residency requirement; then sell it in (in 2-5 years? ) when the market recovers and (hopefully) use the net proceeds to put our ER funds over the top… Realize this much house is a bit of a gamble, but you have to live somewhere...

We closed Monday; here are a few photos of the home:

Beautiful house......sometimes luck finds you.........;D

Purron 06-30-2009 03:03 PM

I'm so happy for you Westernskies!!! It's breathtaking:) Looks like a nice place for that puppy you were thinking of adopting. :flowers:

Arif 06-30-2009 03:10 PM

That sounds like a great deal. There's nothing like instant equity on a good deal. Imagine if you did that deal three or four times in this market.

bbbamI 06-30-2009 03:23 PM

Wow...that house is AMAZING! ER forum party perhaps? :whistling:

Purron 06-30-2009 03:32 PM

Quote:

Originally Posted by bbbamI (Post 831317)
Wow...that house is AMAZING! ER forum party perhaps? :whistling:

I'll bring the chips and dip;)

DangerMouse 06-30-2009 03:51 PM

Maybe this is karma after the last disaster you had on the previous saga. Looks beautiful.

Westernskies 06-30-2009 05:04 PM

Quote:

Originally Posted by FinanceDude (Post 831259)
Papagos Mountains?

further east- The Superstition Mountains

Purron 06-30-2009 05:14 PM

Quote:

Originally Posted by Westernskies (Post 831361)
further east- The Superstition Mountains

Cool! Here's our celebration song:

YouTube - Stevie Wonder ~ Superstition

Westernskies 06-30-2009 05:15 PM

Quote:

Originally Posted by Purron (Post 831310)
I'm so happy for you Westernskies!!! It's breathtaking:) Looks like a nice place for that puppy you were thinking of adopting. :flowers:

We had literally just come through the door with the new puppy when the realtor called... after us joking on the drive home that getting the dog might change our luck...We were going to name him Lucky, except DW lost a Super Bowl bet with her daughter and we had to name him Ben...

Purron 06-30-2009 05:20 PM

Quote:

Originally Posted by Westernskies (Post 831366)
We had literally just come through the door with the new puppy when the realtor called... after us joking on the drive home that getting the dog might change our luck...We were going to name him Lucky, except DW lost a Super Bowl bet with her daughter and we had to name him Ben...

PICTURES!!! Please, oh please!

Moemg 06-30-2009 05:26 PM

Congratulations , Absolutely gorgeous house !

Leonidas 06-30-2009 05:40 PM

Nice house and a sweet deal.

Saw an interview this morning on RE recovering in some areas, but it was all in the lower price ranges. $1M plus range is still real week and expected to stay that way for a while.

I wish I could find something like that, but we didn't participate in the housing bubble here and the economy is still doing alright. It's a little weak in the high end houses, and I'm starting to keep track of the sales in the upper range in hopes of some further weakness. Thanks for sharing the story, I see now that I will have to be ready to move very quickly if I want to do something similar.

NW-Bound 06-30-2009 06:16 PM

Congrats!

It sure feels good to buy something at half the price that the previous guy paid. :)

I tried to think of the same thing about my stocks. So many good stocks, I feel like getting more on margin (I have never bought on margin). Unlike houses, there's margin call to think about. :(

Anyway, are you selling your current home? Keep us posted on that activity too.

Rich_by_the_Bay 06-30-2009 07:03 PM

Nice catch - beautiful view, interesting looking house. Sounds like highway robbery in your favor.

Enjoy it. You may never want to move out for FIRE so keep saving ;).

FinanceDude 07-01-2009 09:26 AM

Quote:

Originally Posted by Westernskies (Post 831361)
further east- The Superstition Mountains

Are you on the scenic Arizona highway? I said papagos too soon. I pulled out my pics from Superstition I took last year and I kind aknow where you are............beautiful area, a little cooler than Phoenix.........;D

Westernskies 07-01-2009 09:47 AM

Quote:

Originally Posted by FinanceDude (Post 831521)
Are you on the scenic Arizona highway? I said papagos too soon. I pulled out my pics from Superstition I took last year and I kind aknow where you are............beautiful area, a little cooler than Phoenix.........;D

You were about two miles away, when you were sitting on the porch, drinking sarsaparilla, watching the gunfight...;)

JOHNNIE36 07-01-2009 10:35 AM

Congratulations on a beautiful home with a beautiful view and for such a good deal. Makes me long for those good old days when I had the guts to do this sort of thing. I'd love to but age and my nerves won't let me. Best wishes!

Ronstar 07-01-2009 10:39 AM

Great buy!, and a great place from which to begin your search for that stash of gold in the Superstitions.


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