Atlanta REI

Monday, June 19, 2006

"See a lot of houses, make a lot of offers."

The great John Adams (not the former president) taught me this one. He is what I consider the father of real estate investing here in Atlanta. He said, "In order to be successful in this business you have to do two things. See a lot of houses and make a lot of offers." Although I do not write about it every week, I do see a lot of houses and make a lot of offers. I usually spend the week identifying properties that fit my criteria and every Saturday morning I am out looking at property. Then, on Monday, I am making offers (if I haven't done so already).

This weekend wasn't any different. I loaded up my 2 year old son and off we went. He loves looking at houses. This week I had limited my search results to only two properties. The first house we saw was an in-town property that had already been rehabbed. This house will be going into foreclosure in August and accoding ONLY to the listing price had considerable equity. Unfortunately, when I pulled up I didn't even want to get out of the truck. I knew from the outside that this house was not going to be worth what they wanted, but I had already set an appointment to see it. The problem? They had taken too many short cuts and did not pay attention to detail. Unfortunately, if I were to buy this house, I would have to tear out all of their improvements and start over. I really feel sorry for these investors because they already owe more than they are asking for it and are going to take a bath on this one.

The second house was a home run. It is located in DeKalb County and like the first one, needs very little rehab. This one only needs the grass cut, new carpet, and appliances (plus damages outlined below). Although, I will probably put on a new roof just to be safe. (A new roof is really not that expensive considering the long term benefit and the great curb appeal it will add to the property) This is scheduled for auction on July 5th. We will attempt a short sale with the bank, so cross your fingers. The sad part is kids have already broke into the property. Half the back door was missing and the window frame around the side window had been torn off. It is a nice neighborhood (less the vandalism to this house) and is right across the street from an elementary school.

The offer is at 64% of the ARV. Therefore, I should be able to buy the house, fix it up, 80% refinance, cash out my original investment plus about $5k, leaving $30k in equity and cashflow $200 a month in rent. Not too bad :))

6 Comments:

  • It sounds like a winner! Did they counter your offer?

    By Blogger Trisha#1, at 9:06 PM  

  • Nope. Offer accepted. By the owner that is. They have two weeks before the auction, so they really do not have a choice. Now we just have to wait to see if the bank accepts my offer.

    By Blogger Dunwoody, at 7:00 AM  

  • Well, best of luck on that! As long as your price covers the bank's loan, they'll jump at your offer, I'm sure.

    Banks never want to make more than what they are owed on any given property. They don't want to be responsible for paying taxes on a profit. But, I'm sure you knew that already!

    By Blogger Trisha#1, at 10:41 PM  

  • Do you have a standard packet that you generally fill out for your short sale offers? Or do you just call the bank rep and then informally negotiate?

    I got a short sale book from a class I took at GaREIA and they always did a packet. And from their description of the process, it could take several weeks to work it out with the bank. So your two week timeline made me curious how you were handling it. I've heard the bank will actually postpone an auction if they have a potential deal in the works.

    By Blogger NinjaPigeon, at 7:21 AM  

  • I'm very lucky to have come across the agent who brings me these deals. She specializes in helping people short sale their homes, so she does all the heavy lifting. Her primary motivation is helping people avoid foreclosure, so it is win/win. The sellers find her, she lists the property, then blasts an email to over 200 real estate agents. I am the only investor that she will work with directly due to some bad experiences with other unethical investors in the past.

    You are correct. If a bank has a qualified offer(which mine is always sent with an "Approval" not pre-qualifed letter from a lender),then they will stop the foreclosure. That is what I meant with they have two weeks to stop the foreclosure.

    The last deal I did, the bank stopped the foreclosure the weekend before it went to the steps, but never gave me an answer until two months later. So, I don't expect to close on this deal until the end of August or early September.

    By Blogger Dunwoody, at 7:11 PM  

  • Who do you do your refinancing with and how long before they will do it? My problem is that my bank wants me to be on title at least 12 months before doing the "cash out" refi.

    By Anonymous Anonymous, at 9:30 AM  

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