I was just wanted a quick idea of some actual deals that have been done by members of the Creative Investor. Just give some numbers and a sentence or two about the deal.
In the Boston area, multi family condo conversions are rampant and generating big bucks.
As for my most profitable conversion, I bought a two unit multi in Arlington Heights for $590, asking price was $640.
The exterior was in beautiful shape, but the interior was crap, just as old as the house (circa 1920).
I sunk approximately $100K into it, including two new kitchens (granite and stainless), two new baths, a new roof, central air, asbestos removal, unforseen expense of a new water main ($2500), 6 months of carrying costs, conversions fees (attorney, architect, surveyor: $7500), and realtor fees.
Sold the downstairs unit for asking, $350K. Sold the upstairs unit a few months later for just below asking, $450K.
As for labor, I rehabbed the entire downstairs by myself, with the help of my dad. I subbed out the majority of the upstairs to pros.
Bought a duplex, a triplex and a single family home from one seller sub-to. My out of pocket expenses were letting the seller live in one apt rent free for 3 months. (Wife had thrown him out) Lost rent was about 1500. I kept the duplex and triplex because they cashflow and sold single family on contact. Recived 10,000 down and when balloon is paid off will get another 25,000.
Bought a single family home sub-to for $10.00 sold it in one week on contact got $3,000 down, an extra $100 a month in payment and ballon will bring $20,000.
Now you asked for the best and easiest but I should warn you as well that I have and will most likely make some major mistakes. But I have learned something new from ever deal.
I send out letters to people in pre-foreclosure. I got a call off of a letter at noon. By 3pm everybody had signed the contract. First closing was fine. Rehabbed it and it was back on the market in 2 weeks. It sold in under 48 hours. I owned that house for a total of 60 days and made over $20,000.
Here in CA finding a property that cash flows is extremely difficult. I recently caught a duplex that was 3/2 per side. It needed work and had a bad tenant got it for $230. Bumped rents to market $950 each side, got rid of bad tenant rehabbed and holding. Market gos up quite a bit and the next spring I was in the area when I caught a sign at another one just a few units down. They were using the one I had picked up as a comp but the market had gone up by 20% since I had bought 8 months earlier. Got it for the same price $230k bumped rents and holding they are now worth about $400k each and I have only had for 2 years.
I negotiated to purchase a vacant parcel for $55K. I put up a $1,000 deposit with the title company. Sold my contract for $101,000 the following morning. I made $45,000 in a matter of hours.
Unlike FLA-Realtor, the law does not require me to tell the seller what his property was worth, because I am not a licensed real estate agent.[ Edited by GeneralSnafu on Date 06/25/2005 ]
The mortgage company can always sell notes, whether non-performing or not. Whether the new company can do what they did is another story. I would check TX law on this.
This is called forebearance, this company is giving her a chance to make up they are doing to payments into 1 the good thing about that is they are giving her a chance to catch up, the bad is it will always show she is late
The bankruptcy will cause much damage to your credit. I am not sure what you mean by second bankruptcy. In my humble opinion, declaring banckruptcy as an investment strategy is not a good idea and is not likely to work in volume. You might try to get to the loss mitigation department of the foreclosing lender. You might be able to negotiate a stay. With such short time, I would think getting a partner with or a hard money loan might be worth looking at.
Your deal does look good and it sounds like you have a good chance of pulling it off. Keep us informed or let us know if you need more ideas to solve some of the problems.
Even if you own the property, you can still have the mortgagor file bankruptcy to stall the auction. Soon after filing a Chapter 13 they can withdraw (not sure of the word) the Chapter 13. It will show on their credit that they filed and then withdrew - so it does affect their credit. But really, a foreclosure is much worse than a bankruptcy on the credit report.
You did not say anything about what you want to do with this property or what your financial circumstances are. These would likely influence what kind of transaction you might put together.
You still did not say anything about your situation, but if you are looking to do this with little or no money, you might consider a sandwich lease option.
You could offer her a lease option for a price that is below market and then give option consideration that would cure any defaults or arrears on the loan. You then turn around and lease option to a potential buyer at/near market price and collect a larger option payment to cover your costs and put money in your pocket and then have the lease payments cover the loan payment. I would set up an escrow to collect rent and pay loan payment to protect your option.
Does this help?[ Edited by edmeyer on Date 06/24/2005 ]
I would assume that you are interested in verifying what she owes on her loan. One way is to have her give you copies of cancelled checks prior to her failing to pay. You can also ask for copies of the monthly statements from her lender. You can do this as part of the offer so that she only need to produce these if she has an accepted offer in hand.
In the Boston area, multi family condo conversions are rampant and generating big bucks.
As for my most profitable conversion, I bought a two unit multi in Arlington Heights for $590, asking price was $640.
The exterior was in beautiful shape, but the interior was crap, just as old as the house (circa 1920).
I sunk approximately $100K into it, including two new kitchens (granite and stainless), two new baths, a new roof, central air, asbestos removal, unforseen expense of a new water main ($2500), 6 months of carrying costs, conversions fees (attorney, architect, surveyor: $7500), and realtor fees.
Sold the downstairs unit for asking, $350K. Sold the upstairs unit a few months later for just below asking, $450K.
As for labor, I rehabbed the entire downstairs by myself, with the help of my dad. I subbed out the majority of the upstairs to pros.
After expenses, I netted roughly $100K.
Happy Investing!
[addsig]
Bought a duplex, a triplex and a single family home from one seller sub-to. My out of pocket expenses were letting the seller live in one apt rent free for 3 months. (Wife had thrown him out) Lost rent was about 1500. I kept the duplex and triplex because they cashflow and sold single family on contact. Recived 10,000 down and when balloon is paid off will get another 25,000.
Bought a single family home sub-to for $10.00 sold it in one week on contact got $3,000 down, an extra $100 a month in payment and ballon will bring $20,000.
Now you asked for the best and easiest but I should warn you as well that I have and will most likely make some major mistakes. But I have learned something new from ever deal.
James
My first deal was my easiest.
I send out letters to people in pre-foreclosure. I got a call off of a letter at noon. By 3pm everybody had signed the contract. First closing was fine. Rehabbed it and it was back on the market in 2 weeks. It sold in under 48 hours. I owned that house for a total of 60 days and made over $20,000.
I wish they were all that easy.
Here in CA finding a property that cash flows is extremely difficult. I recently caught a duplex that was 3/2 per side. It needed work and had a bad tenant got it for $230. Bumped rents to market $950 each side, got rid of bad tenant rehabbed and holding. Market gos up quite a bit and the next spring I was in the area when I caught a sign at another one just a few units down. They were using the one I had picked up as a comp but the market had gone up by 20% since I had bought 8 months earlier. Got it for the same price $230k bumped rents and holding they are now worth about $400k each and I have only had for 2 years.
I negotiated to purchase a vacant parcel for $55K. I put up a $1,000 deposit with the title company. Sold my contract for $101,000 the following morning. I made $45,000 in a matter of hours.
Unlike FLA-Realtor, the law does not require me to tell the seller what his property was worth, because I am not a licensed real estate agent.[ Edited by GeneralSnafu on Date 06/25/2005 ]
The mortgage company can always sell notes, whether non-performing or not. Whether the new company can do what they did is another story. I would check TX law on this.
They could be offering her a workout plan. Most all work out plans increase the monthly payment for a period of time.
This is called forebearance, this company is giving her a chance to make up they are doing to payments into 1 the good thing about that is they are giving her a chance to catch up, the bad is it will always show she is late
I have seen investors suggest to foreclosed-upon owners that they declare Bankruptcy to stall the foreclosure process. Why? It works!
I was at a Courthouse sale with a 89 Case Number last year, which means the owner, using bankruptcy as a tool, held off foreclosure for 15 years!
The bankruptcy will cause much damage to your credit. I am not sure what you mean by second bankruptcy. In my humble opinion, declaring banckruptcy as an investment strategy is not a good idea and is not likely to work in volume. You might try to get to the loss mitigation department of the foreclosing lender. You might be able to negotiate a stay. With such short time, I would think getting a partner with or a hard money loan might be worth looking at.
Mike,
Your deal does look good and it sounds like you have a good chance of pulling it off. Keep us informed or let us know if you need more ideas to solve some of the problems.
Regards,
Ed
Even if you own the property, you can still have the mortgagor file bankruptcy to stall the auction. Soon after filing a Chapter 13 they can withdraw (not sure of the word) the Chapter 13. It will show on their credit that they filed and then withdrew - so it does affect their credit. But really, a foreclosure is much worse than a bankruptcy on the credit report.
Brenda
Thanks everyone!!!
I had enough money to re-instate the house and the house is all mine. LOL
You did not say anything about what you want to do with this property or what your financial circumstances are. These would likely influence what kind of transaction you might put together.
I would like to make it a rent to own. [ Edited by Cheri562 on Date 06/24/2005 ]
You still did not say anything about your situation, but if you are looking to do this with little or no money, you might consider a sandwich lease option.
You could offer her a lease option for a price that is below market and then give option consideration that would cure any defaults or arrears on the loan. You then turn around and lease option to a potential buyer at/near market price and collect a larger option payment to cover your costs and put money in your pocket and then have the lease payments cover the loan payment. I would set up an escrow to collect rent and pay loan payment to protect your option.
Does this help?[ Edited by edmeyer on Date 06/24/2005 ]
I would assume that you are interested in verifying what she owes on her loan. One way is to have her give you copies of cancelled checks prior to her failing to pay. You can also ask for copies of the monthly statements from her lender. You can do this as part of the offer so that she only need to produce these if she has an accepted offer in hand.
Am I spot on or wide of the mark?