Found this great home!!!

I just found out for this really great property is owned by Fannie Mae and I need a special "Homestead Loan" to get into the house. I would need to put 3% down which is not a big deal, but I am scared that because I need to do so much work to it that the bank will not loan me anymore money to fix it. I am working on overload trying to get my first deal done.

Any suggestions????

Thanks,
Jen

What about a construction loan or entering this data into the contract as a stipulation for seller and buyer to meet and greet for resolution, i.e. Ask for a price reduction to offset the cost of repairs? You could also do an assignment to another investor or bring in a partner to assist with cash. Just a few things I have read; you might even be bold in asking the bank to assist with a loan for rehab? I don't really know - What about everyone else making some creative input?

Bill G

I agree with Bill.. I think you should be bold in asking the bank to loan you money, or even possibly seeing if they'll give you the money for the rehab. The worst that could happen is they could say ''NO.'' I guess it depends on how desperate the bank is to get the property off their hands.. If that doesn't fall through,I would approach seasoned investors who are pre-qualified (or have the cash) and explain about the great deal you've found. Have a plan clearly written out that would show the profit that the property has to offer, and tell them you're looking to split the profit on this great buy you've found..

Best of Luck

Jordan

Jordan and Bill have given great suggestions for creative financing. have you run your comps for FMV? Also, you did not mention if you have had a professional go through with estimates on the repairs. Roofs and mold are major issues and you need to be very, very, careful with them. For a first deal it sounds like a major project that could also have many unforseen issues arise as well. I am not trying to discourage you - just wanting to make sure you due all your due diligence for a smart investment! I remember I wanted my first deal so badly I would sit up all night trying to make the numbers work on house after house, but when they dont you need to walk away and look for the right one. Best of luck and keep us posted!

I agree with Laura and the others, the bank can give you a 203k loan for repairs with the mortgage, if you go that way see a broker and have them explain how that works to you. First find out the FMV as well as the arv. Then make sure there is enough equity in the home to make the repairs and still have a great deal to sell.
you need to have estimates of all the improvements so you know where you stand I would add 10% to the estimates for unseen problems as they always arise. Get atleast 3 differrent estimates and let each one know that you will make decision after you speak to the other contractors coming to give you their estimates. That will help keep them honest
If its listed at 109k put an offer in for 75k, that difference in price alone will cover a great deal of your improvements ,take pictures of the house (especially all the bad stuff and send it to the bank explaining thats the reason for your offer. how much of the house has mold, is it one room or the whole house ? If its 1 room or 2 you can gut them and then have a new roof put on. once that is done do your interior work.
good luck and keep us posted.
Richie.

Hi Jenn,
Just a roof(studs and plywood, and shingles, Ha!) Sheetrock and a little cosmetic and by the lake with no offers at 109. Your dream home. Don't be afraid of the roof. It can easily be replaced. Get in touch with a few spot builders or contractors and ask what it would cost to convert it. Give them the square ft and style home it is. They should be able to tell you over the phone a high and a low estimate. As far as the price BC is right offer the bank much lower. I would even say 50 thousand along with the estimate of repairs. After sitting in on a sheriff sale and seeing so many homes sold for pennies on the dollar. These amazing deals are still being done with more to come. All they can do is say no. But counter offer with a yes you will! But start low. The repairs sound major, But being in the business of home improvement. This issue can easily be fixed. If it is your intent to keep it for yourself. Since the roof needs to be replaced. I would look into seeing if the house would support an addition if it is a ranch or cape. Go over the existing roof. Since there is already going to be work done. This is why I suggested a spot builder. They have the capability of knowing what all it will take. The important thing is to make it all work number wise. And that the location is great. Go for it Jenn. If this is your dream home, step forward with faith! Continued success.........Lubertha

Don't forget the As-Is Value! if you decide to sell it to another investor.

I thought that all of your information was wonderful until I spoke with my agent this morning. She dug more into it and it looks like someone else previously made an offer on the house for $90,000 and the bank rejected it saying the offer was too low. Do you think at this point I should walk away from it until the bank is willing to negotiate some more?

Hi Jen,
I would call the listing agent and ask if there were any offers. Just to make sure. I find it hard to belive a bank would reject a great offer at that price. The other thing is you don't know the terms of the offer if one was submitted. They might of had too many contingencies. From an investment stand point of view I would keep it on the back burner. What's the FMV? But from a home ownership view the numbers should work to your advantage. There is still possibilities in this! Continued success.......Lubertha

A bank's motivation can change on a daily basis. Lubertha gave some good advice that sometimes high offers may not be what they appear. For example, I was looking at a REO bank home that was listed at $125,000. The bank rejected offers in the high 90's a few months ago. Today, they lowered it to $75,000 and fianlly got an offer.

Thus, a few things to confirm may include:
- how long has the home been vacant
- how long has the home been on the market
- what price was the home originally listed at
- how many price adjustments were made
- the average number of days between adjustments

You may be able to time a low offer just before another price adjustment. Good luck with this potential deal. Believe and Achieve! - Joe

Jenna.. Was it you that posted a comment a while back looking for ppl in the Seattle area?? I live in Everett which is 20 miles north of Seattle, so If you're interested in talking or in a potential partnership down the road, dont hesitate to email me at drplunk05 at hotmail dot com. I'm very familiar with deans material as I've read his books and have been submitting offers, but I don't have any deals under my belt yet.. But I would be interested in working on some with another person..

Let me know what you think
Jordan

Just had some time to read back through different posts and I'm wondering how this ever turned out for you? Any updates or different deals?

Jordan,

It was me that posted that blog. I live the puyallup area and I am open to the idea of a partnership. I want to be upfront and honest with you that I have not made my first deal yet either. I know all of the material I just need to get my butt in gear and get moving. I know that Dean says not to let money hold you back, but that is my number one stuggle. If you are interested in talking some more please send me a PM and I will send you my contact information.

I have not done any more with this just because I got really discouraged. I need to buckle down and just tell myself that not every house I look at is going to work out, I just need to work that much harder for the next one.

Does anyone know who does double closings in California??? Thanks

Hi Jen,

Even if the bank has rejected a higher offer, you should make an offer anyway. I bought my first house for $7,000. When I first saw it, it was listed for 13K. Then 11k, then 9k, then 7k. Once the bank wants that property off its books, they will begin reducing the price. In my area, once they start the price cutting, they will cut it every 2 weeks. Empty properties invite vandlism that kills the listing price and offers.

If you really like the property and the numbers work... Keep making offers... even if it is the same offer.

Good Luck.
Steve