taekwondodo
03-31-2008, 04:19 AM
OK,
So my wife and I have "dabbled" in trying to play the foreclosure market a few years back ('03, '04). We're in the South Bay area (San Jose) and had about $400K in various paper to play with - the problem was that the market in the $400K range was very competitive on the courthouse steps and you really couldn't make a reasonable profit with that many bidders, and really needed to play in the higher end (~$800K and up) before the bidders dwindled... So we stopped going to the courthouse steps.
Flash forward to now - Lots of REOs on the market in the South Bay area... and we ran across one listed for $399K and, after following the foreclosure trail (foreclosed in Sept '07) made a ridiculous bid on it, and played back and forth with the bank till we met at $315K (ARV of similar homes in the same area were selling for $420-$440, but with the recent market drops, I would guess $400-$420 would be closer...). And, speaking with the neighbor, the bank turned-down an offer in Sept/Oct for about $440K (lol - dunno how he knew...). And, not that it matters much now, but the home was worth about $500K at the market peak.
This home needs lots of work: Yard/Fence, New Roof, windows are S/P and 30 years old... new kitchen/baths and paint/carpets/inside doors/hardware.
We are closing this week (all-cash) and so far have done a lot of work up-front to find costs:
Roof: $10K
Landscape clean-up and Grass/Concrete-removal/200' of Fencing: $15K
Replacement Windows: $5K
Plus ~$5K holding in the two-three months it will take us to fix it.
I could save a lot and do most of this myself (I grew up around my Dad's construction company and put myself through college doing all of the above) - but the real job has to pay the bills for the current home and will keep my weekdays from doing a lot of the work myself - that, and "hiring" from Home Depot's parking lot concerns me somewhat on the liability front (particularly in redoing the roof).
So the pain begins...
I'm guessing before we're done, we'll have another $20K on the inside putting the overall repairs to ~$50K, for a total-cost of $370 (with the holding costs) by the time we're all done.
Our intentions were to flip, but recognizing the slowness of the market around here realize we could sit on this a while so we may put it up for rent for about $2000-2200 and wait a couple of years for the market to turn-around...
So, as a first time real-estate investor we're learning (my wife-and-I) as we go along, and I wish I would have found this forum before we got into this (we're $10K in earnest money already and close this week). I figured the best way to learn was to "jump-in" and stop standing by the sidelines and not learning...
I'll have lots of questions as we move this project along, and looking for feedback, advice and just overall moral support as we clog through this project.
So my wife and I have "dabbled" in trying to play the foreclosure market a few years back ('03, '04). We're in the South Bay area (San Jose) and had about $400K in various paper to play with - the problem was that the market in the $400K range was very competitive on the courthouse steps and you really couldn't make a reasonable profit with that many bidders, and really needed to play in the higher end (~$800K and up) before the bidders dwindled... So we stopped going to the courthouse steps.
Flash forward to now - Lots of REOs on the market in the South Bay area... and we ran across one listed for $399K and, after following the foreclosure trail (foreclosed in Sept '07) made a ridiculous bid on it, and played back and forth with the bank till we met at $315K (ARV of similar homes in the same area were selling for $420-$440, but with the recent market drops, I would guess $400-$420 would be closer...). And, speaking with the neighbor, the bank turned-down an offer in Sept/Oct for about $440K (lol - dunno how he knew...). And, not that it matters much now, but the home was worth about $500K at the market peak.
This home needs lots of work: Yard/Fence, New Roof, windows are S/P and 30 years old... new kitchen/baths and paint/carpets/inside doors/hardware.
We are closing this week (all-cash) and so far have done a lot of work up-front to find costs:
Roof: $10K
Landscape clean-up and Grass/Concrete-removal/200' of Fencing: $15K
Replacement Windows: $5K
Plus ~$5K holding in the two-three months it will take us to fix it.
I could save a lot and do most of this myself (I grew up around my Dad's construction company and put myself through college doing all of the above) - but the real job has to pay the bills for the current home and will keep my weekdays from doing a lot of the work myself - that, and "hiring" from Home Depot's parking lot concerns me somewhat on the liability front (particularly in redoing the roof).
So the pain begins...
I'm guessing before we're done, we'll have another $20K on the inside putting the overall repairs to ~$50K, for a total-cost of $370 (with the holding costs) by the time we're all done.
Our intentions were to flip, but recognizing the slowness of the market around here realize we could sit on this a while so we may put it up for rent for about $2000-2200 and wait a couple of years for the market to turn-around...
So, as a first time real-estate investor we're learning (my wife-and-I) as we go along, and I wish I would have found this forum before we got into this (we're $10K in earnest money already and close this week). I figured the best way to learn was to "jump-in" and stop standing by the sidelines and not learning...
I'll have lots of questions as we move this project along, and looking for feedback, advice and just overall moral support as we clog through this project.