I’ve had the busiest work week in recent memory this week (even compared to back in the corporate world). Things have been crazy, but in a good way. Here are some updates:
1. I met with a number of GCs this week to get bids on the Corn House rehab. I expect to have four formal proposals/bids in my hand by early next week, and I’ll go from there deciding what I’m going to do with this property. While I’ve been leaning towards rehabbing and reselling it, I have a feeling all the bids are going to come in above my allocated budget, and if I can’t figure out a way to get the prices down (or cut some less important rehab work), I will have to consider other options. The most reasonable other option would be to do a much smaller rehab — on the order of $4-7K — and then rent the house for the next year or two until the market rebounds, and prices increase a bit. Then I can consider doing the major rehab at that point, when I’ll have more room to spend on the construction costs. One way or the other, my goal is to decide by next week what I’m going to do with this house.
2. I still don’t have a closing date for the Corn House. The contract specifies that it will be on or before August 18, but because it will be a double close (the wholesaler I bought it from will also be attending the closing, as he is the one with the contract on the property), I will let the wholesaler take care of arranging the closing schedule. The other issue with having closing on the horizon is that I don’t yet have my financing lined up…
3. The lender that I’d generally be using refuses to do double closings (as do most traditional lenders, because double closings present some title risks), so I have to find another lender or pay cash for the property. Because the total cost of the property plus rehab will be about $100K, I really don’t want to tie up that much cash for what could be a long time (if I have trouble selling after the rehab). So, I really need another financing option. The wholesaler I’ve been working with has promised to line up a lender who should be able to help me finance this deal, but he’s been busy and slow to help me out. He’s promised to come through on this, so for the time being I’m going to trust that I’ll be able to get this done through him, and not spend any extra time on finding a backup source (hopefully that won’t come back to bite me).
4. I put an offer on another house yesterday. I don’t want to say too much about it, as I’m skeptical I’ll get it at my asking price. And, even if I do get it, I need to do some serious due diligence during the 10-day inspection period that I put in the contract. Two issues about the house are concerning me: 1) there is a former garage that has been converted to a rec room; if the conversion wasn’t done legally (i.e., they didn’t pull the permits and get inspections), I could be on the hook for fines or even have probably selling to certain buyers in the future; and 2) There is a big bulge in the center of a (presumably structural) wall that runs through the house…the bulge is on both sides of the wall, and I’m not sure if they sheetrocked over an obstacle (like a plumbing pipe) or if there is a structural issue. If the offer is accepted, I’ll use that 10-day due diligence period to check things out.
5. I’m running into more concerns around the financing for my properties. While I have secured (with a partner) traditional residential investor financing, in today’s credit climate, that may only be good for the first 4-7 properties I buy. After that, lending restrictions, debt-to-income ratio, and a host of other factors may converge to make it very difficult to acquire additional property. The one lending vehicle that I believe will help the situation is commercial loans where I’m able to buy property under my corporate entity. So, it’s back to the banks over the next few days to try to work something out; I’m not particularly hopeful, but I have to give it a shot.
That wraps up an exciting week…while I’ll try to post as much as possible in the coming 10 days, I’m getting married next Friday, so I won’t be focusing on the business nearly as much as I have been. It’s probably better that I slow down for a couple weeks anyway…