We bought House #18 in August and 154 (5 months) days later we closed our sales escrow.  Once again, Christmas and New Years slowed down our sales escrow by 2-3 weeks and we needed a review appraisal which took another 7 days.

Our purchase price was 42.3% of the sales price and our repairs where 18% (I need to double check our final repairs costs).  Putting our purchase and rehab at an estimated 60%  on the dollar. The market has sure gone up since we bought this one!

We had it under contract about $15,000 higher than it appraised, I knew we would run into appraisal issues, and we ended up splitting the difference with the buyer (they paid $7,500 over appraised value).

Although, we have been making purchases our inventory level, especially with properties we are flipping is really low!  We did put one more under contract today that will be a flip.  But we really need more inventory to work on.  I think it is time to start really shopping for properties again.  We where supposed to close on 5 purchases in January, but two properties ended up getting the electric meter pulled while in escrow so the bank needs to fix it or give us a discount.

Our appraisal came in at a great number for the mansion house (House #26) so the buyer is ready to move forward, they are going to pay a little above the appraised value.

We got 12-14 offers on House #18.  Our FHA 91st day is 11/19 so it was time to decide which client we wanted to work with, or counter offer a group of them.

One of the main things I have learned when selling a property to a entry level buyer, is be PICKY.  Sure a lot of people can qualify, but it is an investor job to make escrow go as fast as possible.

Here is my process:

• I have offers emailed or faxed to me (faxes end up in my email too).
• I put every offer PDF in a folder on my computer.
• I ask that all agents send loan approval, credit scores and proof of funds with their offer.
• I compile a spreadsheet with: Offer Amount, Closing Costs Requested, Net Offer, Earnest Money Deposit Amount, Proof of Funds and Credit Score.
• First step, credit must be over 620, if it’s not that offer is out.
• Next step, the person must have at least $5,000, if they don’t have that much, I don’t know how they can qualify to buy a house.
• After I eliminate those, I sort offers by the most I will net.

It gets pretty subjective after that.  But my three favorite things: some one with lots of cash in the bank, some one who doesn’t want closing costs and a real estate agent that pesters me about their offer.  If the real estate agent contacts me so much it annoys me, I know they’re going to hustle to get the deal done!  I like it when the agent hustles and I don’t have too.

On this house, we had one offer at list price and the rest of them are all above list price.  The highest one was $25,000 above list price.  We price properties high on purpose, as high as I think it will appraise at and people are still going over top of that number.  This market never ceases  to amaze me.  It’s sure a great position to be in to have property right now.

Sorry for the lack of updates this week.  I have been really busy trying to hold two possible purchases together.  One of them fell apart for sure, but it looks like we are going to be able to make the second one work.  It is a little bit different then our normal stuff.

House #18 is finished.  It was actually finished last Friday, but on Monday when we went to the house we realized someone had stolen our brand new carpet!  That was a first, someone actually pulled the installed carpet our and took it.  We filed a police report and they actually dusted for fingerprints.  We suspected the neighbors, as they always where outside sitting in their front lawn, up to trouble.  But we couldn’t really do much.

On Tuesday, one of our appraisers was visiting the property and he called me and said that he saw a bunch of old carpet in the neighbors trash.  Are people that crazy?  So we called the police again and asked them to come back.  They sat all four of the neighbors on the curb while they inspected the house looking for our carpet.

Well, it turns out, much to our embarrassment the neighbors installed new hard-wood floors in their house.  So now we have angry neighbors and a vacant house.  I think we will be lucky if we don’t get broken into again!  My partner went over yesterday and apologized and offered them a small gift card, so we are hoping that is enough.

Front – Before

Front – After

Fireplace – Before

Fireplace – After

Kitchen – Before

Kitchen – After

Bathroom – Before

Bathroom – After

Master Bedroom – Before

Master Bedroom -  After

Master Bathroom – Before

Master Bathroom – After

I just got back from House #23 to meet the wholesale buyer and one of the “middleman.”  About a month ago one of my colleagues introduced use do one of the biggest wholesalers in the area.

He helped us sell House #21 and he is working on the duplex (thinking one of his buyers is going to submit an offer tomorrow) and he also brought in a buy for House #23.  This buyer said the deal was a little “too tight” for him personally, but was going to sell it to one of his friends.

Push comes to shove and there is myself, a wholesaler, another wholesaler and the end buyer in this deal.  Made things kind of difficult, but we finally all came together and got the property sold.  No one is making that much money, but it was just enough to make it happen and we are going to move on.

This buyer is going to close my escrow and I am going to give him a copy of the deed in exchange for our commission.  He is going to record the deed at the county himself, that way we do not have to do two escrows.  I am excited that it looks like I can really ramp wholesaling up, and we are working a ton of rehab houses right now.

House #19
We put in counter tops today, we need to put in french doors and it should be rent ready by the end of next week.  We ended up fixing this place up way too nice to be a rental property, but lesson learned, oh well…

House #18
We have almost ten guys working at this property yesterday and today and we finished what we needed to and are going to start painting tomorrow. It probably is 2 weeks from completion.

House #20
This is going to be a rental too and we are really trying to keep a tight budget for this house.  It is huge, almost 2,000 sq ft and really a great property.  We finished our plans and we have a crew starting demo there tomorrow.

House #16
This one is a bit on the back burner… we are trying to finish some of the rentals up and we should have this one ready right around our 90th FHA day.  Demo is done.

House #22
I closed escrow on this one yesterday.  We need to make plans, but one of our workers wants to rent it.  We’ve agreed to a number so now we just have to get it ready for him.

House #18 "Kitchen"

Tomorrow we are closing our purchase escrow on House #16 and House #18.  We probably will not start the rehab process for 30 days on either though.  Both are likely going to go to an FHA buyer and we need to wait 90-days to sell to them, due to the 90-Day FHA Rule.

House #17 should close Friday next week if everything stays on track (who knows if it will or wont) and as soon as we close escrow on this one we are going to start the rehab.  It is in a good better town and there is a chance we can sell this one conventionally.  So we are going to make this the top priority and hoping to have all the remodel done by the end of September.

It everything goes as planned, House #4, House #12, and House #13 should all close escrow this month, which will be a nice surprise, if it happens.  We are out shopping for more properties and would like one more flip and two rentals in September.  It sounds like we are going to get another one under contract tomorrow (it’s on the same street as House #18) and it has almost 1-acre of land.

This was a productive week for us!  We put three houses under contract and I think we will probably get at least one or two more next week.  House #18 pictured on the right is a total mess.  The layout is terrible, it is missing a kitchen, and it got 15 offers on the first day, I’m sure most of them above the asking price and somehow we got it.  That’s how crazy this market is.

House #17 we have been working on for a long-time.  It has gone to highest and best three times, with us missing every-time and for whatever reason the buyer always ends up walking away.  It is a 4 bedroom, 2 bathroom house that needs a lot of work (probably a 30,000 repair).  The kitchen needs complete renovations and it needs some major TLC everywhere else.  Overall, the layout is acceptable so we do not have to do anything too aggressive.  It is in a much better area than our main market, but we love to buy houses in this city at the price level we got this one.  The other exciting part is, the REO office that sold us this property, is probably the biggest on in the area.  So we are hopping to close quickly and impress them and do a lot of business with them.

House #18 is a 4 bedroom, 2 bathroom with about 1,400 sq ft.  As I said above the layout is terrible.  We have some big ideas for this one we are going to move the interior layout a bit and add a “true master bedroom”.  We also bought this one from a biggish REO office and are hoping to do a lot of business with them as well.

That makes for a very exciting week.  We don’t want to get to many because we think that inventory levels are going to increase drastically around November or December.