Posts Tagged ‘investment property’

Flip this Alpharetta Foreclosure

May 3, 2011

I – Clay Jeffreys and overseer of this blog 🙂 – thought it would be great to include this post from regular guest contributor Van Purser. While this blog details flipping a home, it also provides some insight into work that can be done on a home as a primary residence or investment property using the Fannie Mae HomeStyle loan I discussed in an earlier post.

In our last newsletter we reported on the status of a HUD foreclosure we were planning on purchasing to renovate and sell.  Since that time the renovation was completed and the property was resold and closed on April 12th.

We felt that this particular home, located in The Hunters Forest subdivision, off of Jones Bridge Rd, should sell for the mid to upper $140’s.  We had originally planned on adding a sunroom to elevate the price to the mid $150’s, but decided not to.  We felt that with our purchase price of $71,000 we would still be able to make a profit without adding the sunroom.

Our plans were to close just before Christmas, and to begin the renovation shortly after the beginning of the year, so that we would have it ready to return to market by March.  Instead we closed on November 30th, and started the renovation immediately, in order to provide work for our crew in advance of Christmas.  It worked out great. We finished on Christmas Eve.  Three weeks, and over $32,000 later we were finished and ready to put property on the market.

We started out $154,900, but after a month realized that the market would not support it and reduced the price to $149,900.  This increased activity, but did not yield a contract.  We continued to monitor the market and decided to reduce the price again to $144,900 after a couple more weeks.  Within a few days we were under contract at $142,000.  Not exactly what we had hoped for, but still worth the effort.

We were so please with the renovation, and the BEFORE & AFTERS show the transformation that took place.  One thing we did differently on this home was re-trim the entire home.  This added a lot of character to the home.  Another thing we did was add the dividing wall between the living room and dining area, to provide some separation.  Also, we had to add a new deck and start over in the bathrooms.

Homes like these are available for purchase, and will provide an opportunity to improve the neighborhood and to make a profit.  If you would like to try one, let me know.

Tools for viewing foreclosures

November 29, 2010

With all of the foreclosures and great deals on the market having the right tools on hand when looking at a property can save you lots of time and money. By knowing the tools and by having them on hand, you will be able to properly evaluate a home on the first visit, resulting in being able to make an offer afterwards, without the assistance of an inspector or engineer, and without needing to return for a second or third visit prior to making an offer.  This alone will allow you to make offers more quickly and will result in more deals going under contract.

A Flash Light
I can’t tell you the number of times would be buyers show up with a pin light on their key ring to look at property.  A heavy duty flash will allow you to examine attics, crawl spaces and basements.  In many case houses do not have utility service on, so no power and no lights.  Additionally, a heavy duty flash light can provide a defense to any one who may be in a home who should not be there.

A Collapsible Ladder
This should be a no brainer.  Many of the collapsible ladders will fit in a trunk, and when extended will provide access to many ranch, split level and split foyer roofs. In addition they are great for entering small attic accesses which do not have pull down stairs.

Binoculars
This is a great tool to have.  It allows you to see from the ground many of the things that you can not see unless you actually get on the roof.  Additionally, it allows you to take a very close look at soffits, gutters, window sills, and of course chimneys.  Just be careful and don’t be looking too closely at the neighbors homes or you may get in trouble.

A Probe
The one I like to have is home made.  Crafted (if you can call it that) from an extend-able painters pole.  Cut the roller holder portion of the paint roller off with a hack saw, and straighten it, you will then have an extend-able probe with approximately a 12-14 inch heavy steel pointed rod on the end of it.  This makes probing around foundations to detect soft spots or cavities in soil a breeze.  Additionally, it provides the ability to extend your reach to test for damaged siding and wood as well as first story gutters.

Camera or Phone for Photos
If you’re like I me, sometimes if I look at several homes I may get them confused.  Taking a few photos will help me recall the property and remember some to the more critical items associated with each property.

25’ & 100’ Tape Measures
Ok the 25’ tape will be used the most. for items such as counter tops, floor covering, windows, and the list go on and on.

The 100′ tape comes in handy for roofs, gutters, some decks, fences and driveways.

An Old Credit Card or Flexible Putty Knife
Talk about a time saver, this is huge.  I can’t tell you how many times I have gone out to look at house and there was no lock box, which means no key. By having one or both of these tools you will more than likely be able to push the edge between the door and door frame so that as you slide it down it will compress the door latch, allowing for the door to open.  Talk about a time saver, another trip out could be at least two hours and another day, and might cause you to miss the cut off time for an offer.

A Marble & a 4’ Level
OK, I know it sounds stupid, but using a marble is a great way to quickly determine if a floor is not level.  Believe me, you set it down on tile or hardwood and if it takes off, you better take a closer look at the structure below.

As for the 4’ level, it too is great for determining if floors are level and if door frames and walls are plumb.  I find it very helpful in checking out block or poured wall foundations for deflection or leaning.  Oh yea, it is great for determining if chimneys are pulling away excessively from exterior walls.

A Couple of the Basics
Don’t’ forget a pair of pliers and a can of WD-40.  The pliers are great for pulling up edges of carpet to see if hardwoods are underneath, and the WD 40 is great for spraying door knobs and keys so that they will actually unlock the doors.  You can’t depend on anything working the way it should.

Have fun with the tools we have discussed.  And do know, I am not suggesting or advocating your use of these tools in the ways I have described, however if you choose to use them in a similar way, I can assure you, you will save time and money.

“Shadow Inventory of Homes” OOOH!

October 20, 2010

First things first, what are these “Shadow Inventory of Homes”?

The “Shadow Inventory of Homes” is homes that normally would have already been foreclosure properties.  These homes have been delayed from going into foreclosure by loan modifications, moratoriums or otherwise being stuck in never-never land between delinquency and repossession.  Due to efficiency increases of banks and government, these types of homes are moving through the system at a faster rate and will soon hit the market as short sales or foreclosure sales.

What will this do to the value of homes?

From several studies conducted by independent consultant firms such as John Burns Real Estate Consulting, the Bookings Institute and many others and also the reports in the Wall Street Journal, the belief is that values will fall again.  Some feel that the fall will be rapid and hopefully short lived and others feel that the fall will continue on for several years.  No matter what happens the values will more than likely fall or in the best case scenario, remain constant.

The main reason for this value decline is the sheer numbers of homes on the market.  In the majority of the markets across the US the current supply of homes will take over 1 year to be absorbed.  This 1 year absorption does not take into account this new influx of homes.  To top all that off, many lending institutions have already exhibited their lack of tolerance in holding on to a property and selling it for a reasonable price.  Their goal it to get the property off the books rapidly and if that means lowering the price to do so, then that is what they do.

On the bright side, if you are an investor, these homes will probably be sold at a much lower price and this will help the movement of these homes through the market.  The hope is that the investor movement of these homes will be at such a pace (due to the low prices) that the effects of these homes coming on the market will be limited.

We can only hope!

Again, small business to the rescue…..You have to love those entrepreneurs!

Flip This House

August 24, 2010

One of our recent flips was a ranch on a full basement in Alpharetta.  The home had been lived in for a number of years by the then current owner.  The home needed updating to bring up the value, but it was mostly cosmetic in nature.  We thought it was about time to get one that did not need so much work.  Check it out.

On the outside we replaced the roof with an architectural roof, removed the LP siding, replaced it with HARDI Plank and repainted the exterior.  This made a huge difference in the exterior appearance, and did not represent a huge cost.  We also had to water proof a portion of the front foundation wall.  This required bringing in a back hoe, digging down to the footer, filling cracks in the block wall and then applying water proofing before covering it back up.  I would prefer not to have to do this again. Once finished we added concrete curbing to create a very attractive and curb appealing front yard.  At $3.50 a linear foot the curbing was a great investment.

On the inside we painted, replaced the majority of light and plumbing fixtures, replace kitchen appliances and added a Heat Pump and duct work in the basement so that we could consider that finished space.  At less than $4,000 it was a good investment.

In the end we sold the house for more than any other ranch had sold for in the subdivision.  If you have extra money; now is a great time to purchase investment property; AND if you need someone to manage the project from Alpha to Omega, give me a call.

3% down and no PMI

April 22, 2010

Yes, you read that correctly. Conventional loan, 3% down, no private mortgage insurance, and to top it off… no appraisal required! The program is known as HomePath Mortgage by Fannie Mae and is available to borrowers looking for a primary residence OR an investment property.

Investors using the HomePath Mortgage program need a 15% down payment, but will not be required to get private mortgage insurance or an appraisal on the investment property. Also, the limit on the number of total properties financed in an investors name is waived.

Fannie Mae designed this loan program to facilitate the sale of their foreclosures. There are numerous properties available, and you can search for them here. However, before you find a home and get ready to submit an offer, remember this is a foreclosed property and there are some things to keep in mind:

  • the property is purchased “as is”
  • the property may require some repairs
  • definitely get an inspection!
  • no contingency offers (on the sale of a current home) allowed

All offers must include a prequalification letter. If you are looking to get prequalified, learn more about interest rates this program, total monthly payments, etc., feel free to call or email me. It would be glad to help you through the mortgage process!