Flipping, Flopping, Renting and Selling

Posts tagged ‘Flipping’

Closing Day

317The house we purchased was a bank-owned house so it can be a little more complicated than purchasing from an individual.  As described in my earlier post, when we finally found the house we were interested in purchasing, the bank rejected our offer.  They came back two weeks later with a counter-offer we could live with on our budget.  My dear spouse immediately went to Real Estate agent and signed all necessary paperwork and then we waited and waited.  After a week, we called and the Realtor said everything looked good.  They were just waiting for the bank to sign off on paperwork.  We waited. It is now the end of the month and the Realtor calls and says if you will close tomorrow, the bank will give you a $200 credit.

The next 24 hours were a whirlwind.  Although we had all of the cash, it was currently sitting in three different accounts.  We needed to get all of the cash into our business account.  We started the LLC at the beginning of the year, as we had two other accidental rental properties and wanted some protection before we expanded into more houses. What we did not realize yet, is transferring money into a business account is much different than transferring between personal accounts.  Apparently, if you do an online transfer from a personal account to a business account, it can take up to seven days for the funds to be available.  We only had 18 hours, not seven days.  Fortunately, all of our accounts are at the same bank.  Mr. Frugal Princess immediately went to the bank and got everything moved into the business account so funds would be available.  We use PNC Bank for our banking needs and I highly recommend.

After he was finished at the Bank, he immediately contacted our insurance agent and got homeowners insurance on the property to begin the next day.  This is important, as you do not want your new property uninsured.

We now have all of the money together, but we still do not have a closing statement.  Without the closing statement, we could not set up the wire transfer to the title company. Keep in mind, we are at the end of the day and we are scheduled to close at 11 next morning. Friday morning comes, still no closing statement.  We FINALLY got the closing statement at a little after 9 on Friday morning.  We reviewed and made sure everything looked good on the Statement.  Mr. then went to the Bank and did the wire transfer.

I want to take a minute and talk about the wire transfer.  When you get the wire information, do a little due diligence and make sure everything is legit.  If you are working with a reputable title company, there should be no issues.  However, be aware there have been issues with scammers tricking buyers into sending their money to a fraudulent account.  It took my less than 10 minutes to verify everything was legit.

When you are figuring the closing costs, have a small reserve for hidden costs. For instance, the cost of the wire transfer was $78 because it was coming from a business account.

Amazingly, everything came together and the closing went off without any problems.  We now had a new rental property.  Now the real work begins.

 

 

So You Want to be a Real Estate Mogul

north street listing picWe all watch those shows on HGTV showing how easy it is to buy, renovate and sell a home.  Now you think YOU want to be a house “flipper,” a landlord, or whatever.  This is all about the reality vs. TV.

We are going to start by talking about finding property. It is nothing like what you see on TV.  You don’t just look at three properties and pick one.  To find the right property, in the price range you are going to look at 50+ listings.  By the way, the 50+ number is conservative.  When we are looking at properties, we look for a good deal.  This means in many cases we are looking at bank owned homes, or homes sellers are trying to get out from under.  We try to find houses we can get for 70-75% of their appraised value.  Because of the current market, this does mean we really are going through a lot of listings.

We started our search by using Zillow.com (all bank listings), Hudhomestore.com (HUD listings), and Homepath.com (Fannie Mae listings).  We would sit down on Saturday morning and make a list of all of the houses we thought looked promising.  We would then get in the car and do a drive-by.  The drive-by is very important, as it allows you to see not only the condition of the house, you also can see the neighborhood. While on these drives, we looked for any other houses we may have missed or empty non-listed house.  We would write these down to research.

When we would find a house in hour price range and in the right area, we would contact our Realtor to really take a look at the house.  I cannot emphasize enough if you are new to this, you need to use a licensed realtor.

In early Spring we found a house meeting all of our criteria.  The listing price was decent and in our price range.  The neighborhood is going through a re-generation.  Although the house had been empty for 18+ months, it did not appear to have any structural damage.

We made an offer. The seller REJECTED our offer, so we walked away.  We felt we had made a fair offer for the condition of the house.  Although we were disappointed, we knew there would be other offices.

Two weeks later (near the end of the month), the seller came back and accepted our offer if we would pay some of the closing costs.  We accepted and waited…..

Next Up Financing



 

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