Discouraged...
I currently have 3 investment properties.
the first one is a condo that I lived in, that I decided to lease/option instead of sell, because I figured I could get money from it faster that way. Unfortunately, the tenant/buyer only have me 1/3rd of the deposit (I agreed to let them give me the other 2/3rds when their first rent payment was due), and is now completely unreachable, and I'm having to evict.
the second one is a rehab property I bought for 240, in an area where similar size and good condition sell for 300-350. I've put alot of work into it already, but its not done yet. I decided to put it on the market in the mean time and see if anyone makes an offer... Everything I've heard from every person has been "you'll never get that" or "thats too high for that". So, I think I've made the mistake of buying at the wrong time, the market seems to have dropped out in the area. Needless to say, I'm a bit worried about the 60k I have tied up in it...
the third one is a small townhouse in a not-so-great area I bought for 55k, where similar houses, in good condition, sell for 80-90k. I put it under contract when I had more resources available, but as I got closer to closing I decided I couldn't rehab it, but would try to resell it for a small profit. I put it on the market for 60k, but I've had no serious bidders.
with everything that's happened I'm running out of money and my credit cards are getting maxed out.
being so fantastically stressed out about all this that I can't think clearly, I'm just looking for some suggestions from people.
Thanks.
-Joe
Joe,
Don't get discouraged yet!
It sounds like you may be able to break even or even come out of this with some money in your pocket. It's not clear how much you owe on your condo (prop. #1) but if you have some equity in it, it sounds like you could potentially sell for profit after the tenant is evicted. #2 and #3 sound like break even deals if you complete them. So look at it this way, you either break even or make a little money PLUS, ON TOP OF THAT you get A LOT of free education! =))
A possible solution is to create a note at closing and then sell that simultaneously to a note buyer. I'm finding that with a good note broker they will pay around 90% of face value even with bad credit.
This vastly widens up your market. I'm doing a loan right now on a flip property where the borrowers have middle scores of 538 and 627, and their entire credit report is pretty much negative. They have nothing to put down either.
The good thing??--They want in the house BAD. They are willing to pay whatever for the house as long as they can afford it. They are getting a 30 year fixed loan at 9%.
The best thing about the whole thing is that you can close in a week to a week in a half as long as you have your paperwork in order.
Feel free to post any questions to the board (and email me with a link to invite me back to respond).
GOOD LUCK
I sure hope it works out that way... the condo I owe 190 on, worth 220. property number 2 I owe 213 on, with an arv (or what I thought would be) of 325... number 3 I owe 50 on.
My worry comes from the fact that I am almost out of money. I had other emergencies come up that I had to use some money for, but I was also expecting to get that little bit of money from the condo lease/option. I don't want to get into the situation where I'm making mortgage payments on 3 properties when only 1 of them can be rented out...
Never ever let someone pay your for a hamburger on Tuesday when they want it on Monday. Start the eviction process if you haven't already on the 1st one.
Find a way to fix the 2nd property to completion and get it sold for full money.
Rent out the 3rd one asap.
The problem is:
the 3rd property requires approx 10k worth of work to be livable.
the 2nd property has more work remaining than I can afford, and isn't livable yet either...
How about finding a partner with some cash and skills, fix one and sell it...split the profit.
Joe,
1. Don't get discouraged. You are in a good area. You said you put a lot of work into the rehab, but you didn't say how much money you spent on the rehab.
2. Where is the townhouse?
3. Check your pm
Myfrogger,
Could you please send me info. about owner financing and using a note broker. I am considering doing that. What paperwork is involved? How to find a good broker who will buy a note with bad credit at 90%? etc.
You can email me through my profile.
Thanks,
Scott
Joe,
I'm sorry to hear about your predicament. You obviously know this by now, but you clearly got ahead of yourself in purchasing properties, and I also strongly suspect that you overpaid in spite of what it may seem to you. I would evict the 1st tenant as rapidly as possible. This may sound sexist, but you probably need to have your wife, or girl friend take a look at the second house to give you advice on what to do to it. I have never seen this in a book, but most people need to find someone who has that "Martha Stewart" eye for things. My wife can drive up to a house and tell you with an amazing degree of accuracy if a single guy lives in it. Few people are great decorators and rehabbers at the same time. Hopefully you can get out of this one for what you have in it, and count your time as education. The same goes for the last house.
REI really is like any other business. Everyone makes mistakes when they start. It's just better to make them one at a time.
Dav is correct in his sexist statement. Rehabs need to appeal to those who are not estrogen challenged if you want top dollar.
Again, I am in your back yard, and can help if you want me to.
Joe,
Don't listen to the 'Nay Sayers' at best it leads to frustration, confusion and irrational thinking.
I believe you've come to the right place for wise counsel. Take a deep breath, regain your composure & go crush the enemy!
Good Luck
MDH