A quick update on where each of the properties stand:
We’ve collected four on-time rent checks, and according to the contract, we should be closing on the lease-option on this one at the end of next month. Unfortunately, based on the credit check that the mortgage broker ran last month, it’s unlikely the buyers will be in a position to qualify for a loan by the end of August.
We haven’t talked to them about it yet, but my guess is that they’ll want to extend the option, and given how much we’re making in rent and option fees on this property, we’ll be inclined to extend the contract for them. I expect we’ll probably extend the contract through the end of the year, and hopefully by then they’ll be in a position to get funding and purchase the house outright.
The Red Garage House is still on the market, and we’re actually hoping we don’t get an offer before the end of next week. The Hat Trick House is in the same neighborhood and is under contract, and we’re hopeful that once it sells, that will help us generate a higher appraisal for the ultimate buyer of The Red Garage House.
If you recall, the sale of this one fell through when it didn’t appraise for what we needed, so having The Hat Trick House sell will likely help us to avoid that problem the next time around.
It’s now been 19 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.
The extended contract expires again next week, and we’ll see what the title company has to say before we decide if we want to extend it again or whether we want to just give up on this deal. My project manager stopped by the house last week to check on it, and apparently some kids decided to throw a 4th of July party there (used fireworks on all the floors); there was some other new damage as well, but until we hear something from the title company, I’m not even going to bother spending time trying to run the new numbers on it.
The Hat Trick House is still under contract, and we’ve already been through two inspections. On the first, the inspector from NACA (the lending program the buyer is using) did a full inspection and made a list of the issue that he and financing agency would be concerned about. There were about 6-8 little things that he noted, with only 2 issues required to be fixed in order to process the loan (inoperable garbage disposal and inoperable gas fireplace).
It turns out that neither of the two issues were really issues — the garbage disposal did work (he just noted it incorrectly) and the gas supply for the fireplace was just turned off at the meter. So when he came out for the re-inspection of those issues today, it only took about 5 minutes and everything was signed off.
The next (and hopefully final) hurdle with this loan is the appraisal. As I mentioned previously, the offer was significantly higher than the asking price (based on the way the loan is funded), so it must appraise for a good bit more than we had expected. It turns out that NACA has their owner appraisers, and that they will fund up to 110% of the appraised value of the property. So, we only need to the appraisal to come back at 10% below the offer price, which is good. And the fact that they are using in-house appraisers is also good.
I’m still concerned about whether this property will appraise high enough or not, but everyone is so motivated to make this deal go through (especially the buyer), I have a feeling we’ll figure something out regardless of where the appraisal comes in.
If you’ve been following the progress we’ve been making on this one (rehab video #1 and rehab video #2), you know that we were planning to complete the exterior landscaping and the interior painting this week. Well, we finished the landscaping, but instead of painting the interior this week, we switched things up and had the tilers come in to tile the fireplace and the shower instead. We also had our pest control company come in and do termite and rodent treatments.
Next week, the privacy fence goes up, the gutters go up, and the interior will be painted. After that, it’s down to reinstalling the HVAC systems, installing cabinets, fixtures, flooring and the finishing details.
My brother and his fiancee will be purchasing this house, and the last big renovation decision they need to make is whether to put a window in the downstairs “bedroom,” thereby officially making it a bedroom (county code requires an egress window or door to the exterior for the room to be considered a bedroom).
This property has garnered a lot of interest over the 3 days since it was listed. We’ve already had two showings and we have another three scheduled for this weekend. In fact, the first person who looked at the property has been back again, and supposedly she is planning to view it again this weekend with her family.
The only problem we face is that all the potential buyers we’ve spoken with would be getting FHA loans, and with the FHA 90-Day Rule, we wouldn’t be able to to sell to any of them until at least the end of September. Of course, FHA can take 45-60 days to process anyway, so even if we received an offer this weekend that we wanted to accept, the time frames aren’t that unrealistic.
That’s the scoop for this week…have a great weekend!