House #1: The Corn House

Nothing new with this house…just looking forward to collecting our third (on-time) rent check…

House #6: The Red Garage House

I’m so angry that it’s difficult for me to write this without screaming at my monitor. It’s now been over 6 weeks that the buyer’s loan has been in underwriting!

But, that’s not what I’m angry about…

We completed the second appraisal last week, and it came back above the purchase price, so we were confident that we had cleared that hurdle. In fact, the head of underwriting told us that once the appraisal was approved, we should get a clear to close on the sale. Today, at about 6pm, we received a call from the loan processor, who had just spoken to the underwriter…

Apparently, the appraiser that the mortgage broker used for the second appraisal wasn’t approved by the lender, and therefore the appraisal isn’t acceptable! Yup, that’s right…we wasted 2 weeks and $400 on an appraisal that we can’t use. And had it been done properly, we’d be scheduling the closing right now.

I haven’t yet gotten a hold of the broker, but when I do, I’m going to spend a long time chewing him out. Hopefully we’ll be able to get another appraisal done next week, and still get this thing closed. Okay, I need to stop writing about this, as I’m just getting more and more angry…

House #8: The 16-Bid House

It’s now been nearly 15 weeks since we got this one under contract to buy, and we still don’t have a closing scheduled. The title company has given up on trying to get two liens cleared from the title, and have passed the issue on to Fannie Mae, who is now working on getting the title cleared.

We got very frustrated with this one earlier in the week, as the listing agent and the title attorney were ignoring our calls. So, we started calling their bosses (including the head of a relatively big brokerage around here), and started making waves. We likely pissed off some people we probably shouldn’t have pissed off, but I don’t really care. There’s just no excuse for ignoring a customer, even when it comes to high-demand products like bank-owned foreclosures.

Ultimately, we extended the contract again, this time through July 27. I have a feeling the listing agent and the title company would prefer if we just asked for our deposit back and walked away, but I’m not giving them the satisfaction. They need to put up with me until they get this deal done or until they cut me loose.

House #9: The Hat Trick House

This one has been on the market for a couple weeks now, and while we’re getting some traffic, we haven’t yet gotten any offers. It’s listed a little bit high, and I’d like to drop the price, but I’m waiting until we get some closure with The Red Garage House (which is in the same neighborhood) before dropping the price.

If we can get The Red Garage House closed with our buyer, we’ll immediately drop the price on this one to try to get a quick sale, but until we have some closure on the other one, I’m holding off.

House #10: The Deja Duplex

This one is sold…

House #11: The Sunglasses House

We closed on this one earlier in the week, and renovation is underway. Thursday was spent doing mold remediation, including a bunch of demo of drywall and other moldy surfaces. On Friday, we had the HVAC ducts cleaned to remove any residual mold, had some structural work done on the front and back decks, and started demo on the interior.

I’ll have some pictures next week, but suffice it to say, the house looks a lot different (and a lot better!) than it did just 2 days ago.

House #12: The Mini House

As I mentioned last night, we’re completing a survey of The Mini House to determine if it is actually in a flood plain or not. I’ll have more to say next week, but according to the surveyor, it looks like part of the property will definitely be in a flood zone, but the actual living space may not be. This would still require us to get flood insurance, but the cost should be dramatically less than if the entire property were in a flood plain.

I’ll know more over the weekend, and will write more next week…

That’s the scoop for this week…have a great weekend!

I would consider this to be our first real wholesale deal, and while it would have been nicer to have just done a double-close (meaning we sell it the same day we bought it), holding it for a week in-between was really no big deal. The financial breakdown is below, but we essentially made $5K for about 2 hours work, which is by-far the best percentage return (even if it is was the smallest real return) we’ve seen on a property yet.

Anyway, here is the run-down of the project results, with the final set of statistics at the bottom…

Timelines

Here are the key timeline milestones:

• Purchase Offer Date: 5/15/2009
• Purchase Closing Date: 6/11/2009
• Rehab Completion Date: N/A (No Rehab)
• Sale Listing Date: 6/11/2009
• Sale Contract Date: 6/11/2009
• Sale Closing Date: 6/18/2009

Had we bothered to pick up the phone and call the buyer before we closed on the purchase of the property, could have bought and sold it the same day, and saved ourselves some time and effort. Live and learn…

Financials

We bought the property for $24,000. We sold the property for $28,600. And between the purchase and sale, the only costs we incurred were the purchase closing costs, cost to cut the lawn (we scheduled this prior to putting it under contract), commission on the sale (we worked with another agent), and a few dollars in property taxes.

Here is the breakdown of financials for this project:

In terms of purely financial ROI, my total investment into this property was $21,820.10; this puts my ROI at over 23%, and adjusted for the very brief time we held the property, my annualized ROI is well over 1200%.

Final Statistics

Here are just some of the final statistics that I’ve been tracking for all my projects, and that summarize the success/failure of each project pretty well:

• From Offer to Purchase Time: 27 Days
• Rehab Time: 0 Days
• Selling Days on Market: 0 Days
• Selling Close Time: 7 Days
• Total Hold Time (Close to Close): 7 Days
• Total Profit: $5,097.19
• Return on Investment (ROI): 23.36%
• Annualized ROI: 1218.06%

It pretty sad to think that we hadn’t considered calling this guy to ask if he wanted this one also, until we were on our way to the closing. Had we called him a week or two ago, we likely could have done a double-closing, and saved ourselves a couple days (and the $75 we spent to mow the lawn and trim the bushes).

While I think we could have gotten more for this place, the fact that we were able to sell it quickly and to someone we know can close quickly and reliably makes it worth giving up a couple thousand dollars. In the end, we should net about the same profit as we did on The Roach Duplex, which isn’t bad for a couple hours work…

Hopefully, we’ll be able to get all the paperwork done and the closing scheduled for next week…our buyer is ready to close “as quickly as possible.”

In fact, we may even sell it to the same buyer!

We called the buyer of The Roach Duplex today on the way to the closing, to let him know that we had another one on that street and to ask him if he was interested. He didn’t answer, so we left a voice mail message.

When we got to the closing, the listing agent mentioned that she may have a buyer for the duplex if we wanted to immediately turn around and sell it. We said “Sure!” and she told us that she was showing it to him first thing tomorrow morning. After a bit more discussion, we realized that the buyer she had lined up was the guy we just left the message for. He had called the listing agent when he saw the For Sale sign, not knowing we already had it under contract.

Even funnier, as we were having this discussion with the listing agent, that buyer returned my wife’s call. He was completely confused, as he still had no idea we were buying it (the agent told him it may be available, but didn’t tell him that it was from us, not the original seller).

Anyway, we straightened it out, and I have a feeling he’ll be putting in an offer on it. Additionally, we’ve already gotten a couple other potential buyers who have looked at the property, so if we can get rid of it in the next week or two, I’ll be very happy.

Hopefully I’ll have more to say about this one in a few days…

House #1: The Corn House

We received our second rent check from The Corn House tenants, so at least they’re off to a good start.

We also had the tenants check in with our mortgage broker to get an update on their credit situation (they’re scheduled to purchase the house by the end of August). While they don’t yet qualify for an FHA loan, they’re in a better position than they were three months ago when they first came to us, and we’re still hopeful that we’ll be able to close on this property by August.

We actually visited them a couple weeks ago, and they are well settled into the house. They’ve done a lot of landscaping and decorating, and it’s clear that they really want to own the house. I figure worst case, if they pay their rent on time every month, in about 8 years they’ll have paid enough rent to pay off the house, and perhaps I’ll just hand them the keys…

House #6: The Red Garage House

We’re now several weeks past our original closing date, and the buyer’s financing is still in underwriting. At this point, I’m fairly convinced that they will not get the loan, and that this deal is going to fall through. The mortgage broker has a call into the FHA underwriter, and we’re hoping that we’ll know one way or the other by mid-week, so we can start looking for other buyers, if necessary.

Actually, we’ve already started looking. We put the house back on the market this past weekend, and got a lot of activity. We told all the potential buyers that the house was under contract, but that we didn’t think it would close, so they knew that they’d essentially be putting in a backup offer if they chose to make an offer. We didn’t get any other offers, but all the feedback was great; the only downside to this house is that the neighborhood is a bit sketchy (especially with all the teenagers off school and hanging out all day), so that may make it a bit harder to sell this one.

That said, we got a full-price offer on it the first time around in about a week, so maybe we’ll get lucky again…

House #8: The 16-Bid House

It’s now been over 12 weeks since we got this one under contract, and we still don’t have a closing scheduled. For some reason, the title company just can’t seem to clear that one final lien from the title, and until they do, we can’t close.

I’m no-longer sure that I even want this house (for reasons I’ll go into in a later post), so I’m in no rush to push this through closing.

We have a contract extension through June 15, so we’ll figure out in the next week or so whether we want to extend again or let it drop.

House #9: The Hat Trick House

This one is on the market as of last weekend, and we got a good bit of traffic through it on Saturday and Sunday. It’s in the same neighborhood as The Red Garage House, so the neighborhood is going to be a slight negative when it comes to selling this house, but again, I think it’s priced right, and I’m hopeful we’ll have a contract within a few weeks.

Regardless, we can’t sell to an FHA buyer until July 20, so there’s really no rush on this one anyway.

House #10: The Deja Duplex

We are expecting to close on the duplex later this week, and immediately plan to put it back on the market to sell to another investor. I think we should be able to make an easy $5K on this one (perhaps a good bit more), and I’d rather just sell it than rehab it, especially given all the other projects we have to work on right now.

The listing agent who is selling us this property keeps telling us that she has buyers who are interested in buying it from us as soon as we close, but she’s yet to bring us any contracts. I guess we’ll see…

House #11: The Sunglasses House

This one was also supposed to close later this week, but we got word today that there’s a title issue, and that it likely won’t be closing before Friday. It’s a shame, as this is a huge rehab, and we have our contractors lined up ready to start early next week.

Hopefully this won’t be drawn out issue (like The 16-Bid House), but we’re going to prepare our contractors for the worst, and then hope that it’s not delay very long. Given the complexity of the scheduling for this one, any delay is going to be a real pain the butt for my project manager, and for our contractors.

House #12: The Mini House

We’re not doing an inspection on this one, and have already put together our (small) Scope of Work. Hopefully, it will only be about $8K in rehab, and we’ll be able to turn this around in less than a week. The question then remains, what are we going to do for three months while we wait for the FHA seasoning to expire?

Maybe we won’t rush the rehab on this one, especially given that we have 4 other properties to work on.

The Unlucky House

We’re waiting on the final contract for this house, and as soon as we get it, we’ll get the utilities turned on, get our inspector in there, and start working on the Scope of Work.

I don’t know why, but for some reason I have a bad feeling about this house (and no, it’s not because it’s #13 — I’m not superstitious). As I mentioned to a couple readers, this is going to be a tricky rehab; our budget isn’t big enough to do everything we want, so we’re going to have to be strategic about picking and choosing the right renovations and upgrades. (Update on this one)

Hopefully I’ll feel better about this one once we dig in and start putting together the Scope of Work.

We called the agent and found out that there had been a lot of interest in the place and that a couple offers had already come in.

So, we immediately faxed over our full-price offer, with full-price ($24,000) in earnest money, and told them we could close as soon as they wanted. Well, I guess no-one else had offered full-price with $24K earnest money, because we had a verbal acceptance within a few hours.

We close on this one in mid-June, and while I don’t know what we’ll try to do with it just yet, we have several options. I think we could get it into rental shape for about $20-25K, and sell it to an investor for a reasonable profit. And we could probably wholesale it to another investor for a quick $5K like we did with The Roach Duplex. Right now, those are my two primary exit strategies for this one…we’ll put together a more detailed plan as the closing approaches.

I don’t have any good pictures of the duplex, but since everyone likes pictures, I grabbed this one from the MLS listing (notice the duplex in the far background on the left – that’s The Roach Duplex):