Update for 8/16/09

First, just wanted to remind people of the great rehab blog over at TomTarrant.com…not only do I appreciate the mention Tom gave of our first year recap on his blog, but I consistently learn a tremendous amount about the rehab process by watching his videos and following his flips. He does a lot of the tough work (foundation, structural, etc) himself, and I’m taking notes! In fact, check out the video he just posted…you’ll see why I love his blog…

Now, I wanted to give a general update on what’s going on with all our properties, and our search for more properties…

House #1: The Corn House

We were hoping to close on the lease purchase of this house at the end of this month, but given some recent events, I’m pretty sure that won’t be the case. First, the buyers were supposed to contact the lender at the beginning of the month to get their credit pulled and see if they were close to qualifying for the FHA loan they’d need to close on the house. They didn’t actually contact the lender until just the other day, so we don’t know if their credit has improved or not, and even if it has, there’s little chance we’ll be able to hit an end-of-month closing.

Additionally, the buyer’s rent check bounced this month. This is the first time this has happened, and while they were tremendously apologetic and immediately got a cashier’s check for the balance owed, it didn’t provide me any more confidence that they have their finances in order.

Tomorrow, we will speak with the lender about where their credit is, and we also have a meeting scheduled with the buyers to discuss next steps. Assuming they won’t be able to close on the house before the contract expires on 8/31, we need to figure out what we won’t to do with them. Our two most likely options are: we could cut them loose, and put the house back on the market; or we could extend their lease purchase for another several months. Considering we’re making great money off the lease purchase (both the rental income and the monthly option fee that we’ll keep if they can’t close), extending their contract probably isn’t a horrible financial decision.

That said, we still have $100K of our own cash tied up in this property, and with them bouncing their rent payment this month, I’m a little concerned about future payments. My wife and I need to sit down tonight and figure out our strategy before tomorrow’s meeting.

House #6: The Red Garage House

The Red Garage House is under contract again! We received two offers at the end of last week, and one seemed much more likely to result in a smooth closing than the other, so we pursued that one. The buyer immediately accepted our first counter-offer, and now has 7 days to complete their inspections and any other due diligence they want to do. We provided them a copy of the Inspection Report from the first set of buyers we had on this house, so they may not even choose to have another inspection on their own.

That said, it’s an FHA loan, so the lender will want to do an FHA inspection, and will also need to do at least one — and probably two — appraisals. I expect those to happen later this week, and assuming we don’t run into any appraisal issues, we’re scheduled to close on the sale of this property on September 7.

House #8: The 16-Bid House

It’s now been 24 weeks since we got this one under contract to buy, and we still don’t have a closing scheduled. At this point, I’m fairly certain they won’t get the title issues resolved anytime soon…while there is no possible title issue that should take this long to clear, my guess is that Fannie Mae (the seller) is just very backed up in resolving their title issues.

The contract expires for the 5th time at the end of the week, and assuming the seller doesn’t back out, we’ll just sign another extension. This time, I may ask for some of my earnest money back (we have $10,000 tie up in earnest money), though I don’t expect them to be reasonable about it. Between the listing agent and the seller, nobody’s been very reasonable in trying to help us with this deal.

Anyway, there’s nothing more to say here…it’s still just wait-and-see…

House #9: The Hat Trick House

After several delays due to RESPA regulations, we finally close on this house first thing Monday morning. It feels like forever since the last time we closed on the sale of a house, so I’m pretty happy about this one.

We moved all the furniture out the house on Friday, and we’re meeting the buyer and her agent over there right before the closing to do a final walk-through. The only issue that needs to be fixed is a roof problem that the inspector found a couple weeks ago; apparently the roofing company knocked out a piece of soffit at the top of the roof during the maintenance they performed, and just need to come out and reattach it. They’ve been putting off coming to fix it for two weeks, and with the walk-through scheduled for 9am, we’ve told them they better get it done very early so that the buyer doesn’t complain.

More on this after the closing…

House #11: The Sunglasses House

This one is almost finished. The oak hardwoods went in last week, and all that is left is the kitchen cabinets, a bathroom vanity, carpet, finish plumbing, and new garage doors. Hopefully all of that will get completed this week, and then it’s just the little stuff, like door knobs, switches and new outlets.

This project is going to end up going about 8 weeks (a week or two over schedule) and will end up costing about $65K. The results are fantastic.

I plan to do another video this week, so stay tuned…

House #12: The Mini House

We have buyers for The Mini House all lined up. After some back and forth with counter-offers, we finally came to agreement on terms and everyone is happy. Unfortunately, though, it’s an FHA purchase, and the buyer’s lender has informed us that they can’t even put the house under contract until after the 90 day seasoning period, which ends on September 26. That means we’d likely close mid-October at the earliest.

We’ve told the buyers that, as long as we don’t find another buyer who can close significantly sooner, we’ll hold the house for them. I figure that if we don’t find a buyer who isn’t subject to the FHA seasoning before mid-September, we’ll get the ball rolling with these buyers and have them start their due diligence. That way, by the time they sign the contract, we can be sure they they’ve completed their inspections and are ready to move forward as quickly as their lender can do it.

Making Offers

My wife and I spent about 8 hours today checking out properties, as we’re ready to purchase a few more. Unfortunately, we weren’t thrilled with the inventory that’s out there right now. We did find a couple houses that we plan to put offers in on tomorrow, and hopefully there will be some new listings in the coming weeks that are attractive investments.

That’s it for now…more tomorrow…