On Friday of last week a HUD property came back on the market after about a year of being MIA. I was watching it for a while last year and then it was off their website, not listed on mls, etc so I forgot about it. I was surprised to see it listed again on Friday so I put an offer in and it was accepted. The house was listed for $129k, it's ARV is about $149k and I have it under contract for $66k. After work I took a drive over to see if it was still in the same shape as last year. Walking through the house I'm thinking, "this is better than I remembered" until I.......... got to the basement. At the bottom of the stairs I could see that the floor looked wet but it was dark so I wasn't sure how wet. Slowly I put my foot on the concrete floor and hit water. Yep, there is about 6" of water in the basement. My initial thought was, "Crap!" But decided water in the basement may or may not be a big deal. Of course we cannot have it there for the ETERNITY it takes HUD to close and we need to find the source. I told my realtor what I found and she must have mentioned it to her broker. He said he would take a look (he has a basement waterproofing co. on the side). He didn't see anything concerning and says we just need the sump pump on to get rid of the water for now. So, at this time, not a deal breaker. Should be a pretty good deal!
I have 2 closings set for Friday but neither are solid. Can you believe this? I'm not sure what is going on with the banks around here!!?!?!?! WTF? The one that seemed solid said she (the lender) was concerned with how much money I am making on the deal. She wanted to be SURE I put money in to the property because I bought it so cheap. What the hell is it to her how much money I make? Lucky for me this happens to be the property that I had all that plumbing work done so I supplied her with my invoices. In the end I'm only going to be making about $6.5k profit. The bank for the other property (that fell through last month) required a 2nd inspection that came back fine according to the buyer. The bank states that the inspector suggested seperate roofing, electrical and plumbing inspections. Again, WTF? I had a plumbing inspection and the roof and electric were new as of about 7 years ago. Neither go bad in that amount of time. Soooo, not sure what the hell is going on BUT I'm really trying to stay positive and have positive energy/thoughts that these properties will close. I pre-signed both sets of closing docs yesterday so I have everything done on my end.
I've been thinking how to avoid these problems for the next flip and here is my solution. I will be making a contact at a local bank in the same town the property is located. I will explain the situation to the lender and see if their institution/underwriters will have a problem with seasoning, my profits, not doing any work on the property, etc. If they do have a problem I will move on to the next bank. If they do not have a problem all of my buyers must go through them or pay cash. I'm not sure if this will limit my buyers or not but I just can't have these fall through days before closing. I just don't get it? Don't the banks look at any of the information more than 5 days before closing? I mean, why do we wait a month to close? It should be 5 days : ) Okay, enough complaining.
Still submitting offers. I hope to have another one under contract in the next couple weeks.
Still working out. I missed 1 work out last week so I did 5 out of 6. This week I will probably do 5 out of 6 again since I am going out of town for a birthday. I am measuring myself again this weekend too. Last Sunday I weighed in at 149.5 so 2.5 lbs lost (which is probably all water weight) and I measured my waist just to see and it appeared I was down .5". We'll see what the tape measure says this weekend!
If any of you follow Shae's blog and haven't read it recently, she has some outstanding news!!! Head on over to www.goodfaithinvesting.com and real all about it!
Have a wonderful day!