Love Austin Homes Investing Blog

Large profit on the table! We are completely over extended! 1920
Victorian, 2700 sq. ft. two story house, 70% refurbished. 3/3 w/large
rooms, new metal roof, all new MEP installed except for final
fixtures, original hardwoods in good shape; no need to replace.
Master bath has been enlarged and customized with travertine tile,
deep Kohler tub, etc. Neighboring houses of the same era in the
historic district are selling for $100 – $135 sq. ft. There are a five
additional lots on this 1.75 acre site ready for development. Site
has been surveyed and plans for future development approved by the
city of Bastrop. All permitting and code requirements have been met
to date. Cost to complete renovation $50K or less depending on your
skills and labor contacts. Will sell house and lot as is for $195k or
entire site for $240,000. Call Chris xxx

Answer

Chris,

Not to be picky…but…you caught my attention with “Large Profit on the Table”

If this costs $195K, and it’s going to need $50K to complete, and the cost of sales is 8% or $22K, and the cost of money is 7% or $19K (or much more), and it’s going to sell for as little as $100/ft or $270K, then it looks like this is an opportunity to lose $16K. Where is the “Large profit on the table”?

Tell us why this is a deal. Is the assumption that you are going to get top dollar for it, because it’s a top house? How so? Will $50K in additional rehab get it to a (top top dollar) $365K ARV? Are there a lot of $350K homes in this area? At 2700 feet, is this one of the smaller or larger homes in the area? Obviously bigger homes get less per foot and vice versa. Has this thing been finished out with top quality specifications? Does it have an actual historic designation, or is it just in an area with historic homes? A non-historic home is just a home, after all. Has some of it already been restored (as apposed to rehabbed) to it’s premium historic state? Historic homes can get more $$, because of their restoration and designation, but only with pain-staking restoration.

I’m looking for a deal…

Phill

I have a house that must be sold this week on a short sell. Asking price 95K call me and I will help you to negotiate tthe offer with the Bank . The House is a Pre-foreclosure and is located on Pleasent Valley.
You can find it at craiglist or contact me for more info.

Carolyn

Answer

Carolyn,
Without an address, estimated value, home description, condition description, or any other information on this property, I can’t help you. We all have houses to sell…

I assume that the home is facing an auction, if it has to be sold this week. I hope you already have an short-sale approval letter from the lender if you really hope to sell it this week.

If you have have an approval letter – you should be able to tell people the price that has been negotiated – this would be helpfull. If you don’t have an approval letter, you can’t close, and it’s unlikely that you will be able to get an approval letter in a week, unless you’ve alreadly filed all the short sale paperwork with the lender weeks or months ago.

Phill

I have a group of houses, mh’s and lots for sale as a package. The
portfolio has a discount and some parts have owner financing with 10% down.
Value of 827K for only 591k A almost 30% DISCOUNT!!!!

Email me with questions. some of the properties are listed some are not

Ron

ANSWER

Ron,

I am interested! I have many rentals and these look to be complementary to my portfolio. I would like to buy the entire package. Let me do some research. Please call me before accepting an offer.

Regards,

Phill Grove

I have a Sub 2 available. $30K arrearage, can provide a 50% return on
investment with a maximum term of 4 to 5 months. Secured by $450K home
with $300K balance. Monthly payments on PITI will be covered by
current owner until property is sold. Appraisals and other docs in
place. Please respond asap for additonal information.

Jerry

ANSWER

Jerry,
Sounds like something I might be interested in. I’m doing a nearly identical deal in San Antonio. I assume the project is to pay up the arrearage and collect rent to cover the mortgage payments until the home is sold?

Can you tell me more about this?

Phill

I have a lead for a a foreclosure deal going to auction Dec. 5
20K left on mortgage. 100-110K value. Must be experienced working with
bank to bring payments current or pay off before auction. I will
accept 1k finders fee. serious only I’m busy. Thanks

ANSWER

Well, I’ve negotiated about 300 of these deals – does that count as experience?

Give me a call.
Phill

I am wholesaleing a Luxury Home in Argyle, Bartonville,­TX just outside DFW

4 year old appraisal was for $2,300,000 Replacement cost well above this.

tax value is set at $1,900,000

Its about 10,000 sf and sits on 1 acre
Additional 7 acres attached that have an Agricultural tax exemtion and can be subdivided.

Land alone in this area is going for $100,000 an acre

$400,000 into the landscaping alone

I currently have this property under contract and am looking to wholesale it (assignment of contract).

I will look at ALL serious offers. You must be able to close within 2 weeks.

email for more details be sure to include your contact information.

Serious inquiries only.

Jose

ANSWER

Jose,
Can you provide a little more information here?

1) The tax records and old appraisals are academically interesting, but I really need a realtor’s price opinion. Can you tell me what this thing is worth as-is, in the current market?

2) How much are you asking for this?

3) What is the ARV and repairs/remodeling needed?

4) Can you further explain the $400K in landscaping? I’m currently building a $3M home on 3 acres, and am spending far less than $100K for quite extensive landscaping, and pond, that looks to me to be 10 times more extensive than what I see in the aerial picture.

5) Can you tell me more about the features of this home? The pictures don’t look particularly impressive as one might expect from a home worth $2M. Is the value mostly in the land?

Also, I’m sure you are a high-integrity investor, but I just like to remind everyone – to please be honest and realistic when pitching these properties. Anyone seriously considering this (or other deals) is going to do a lot of research before buying, so any spin or exaggeration during the pitching and exploratory phase will only waste everyone’s time and potentially get people angry. For example, if this home only has 10’ ceilings and hollow-core doors, it’s probably not be worth more than $1M depending on the land value, regardless of what an old appraisal says.

I am in the market for high-end deals, by the way…

Regards,
Phill

I am selling a house in Austin in the Avery Ranch development. House is 2 years old and has been rented the entire time I have owned it. Current tenant is on a 2 year lease and rent is $1450/mo. Rent increases to $1550/mo Dec 1. Leased through Dec 2007. House is great condition. 3 bed, 2 ba, Den, 1985 sq. ft. Asking $240k. Property appraised at $235k last year.

Thanks!
Melissa

ANSWER

Melissa,
It does not take a math genius to calculate that $1550 rent is not going to come anywhere close to covering costs on a $240K property. I typically own $120K rental properties that I rent for ~ $1000/mo, and I’m lucky to come close to breaking even after factoring everything in.

Why anyone would pay $240K for such a rental property escapes me, unless the property is absolutely worth $300K, and the massive negative cash flow is temporary (yes, I have taken deals like that).

Phill

I have found what I think is a good deal on a house
for my personal residence. It is a KB home. Has
anyone ever purchased a KB home? Please give me your
HONEST opinions.

Thanks,
Michael

ANSWER

Michael,
I have bought and sold dozens and dozens of KB homes though my short sales. As a general rule, they are the least expensively built homes of any homebuilder and therefore offer the highest size per dollar. They are generally a low-end builder, however, they do have several ‘grades’ of homes, some being higher quality than others. Although there are some web sites that claim that KB is low quality, I would say that the quality is average.

The fact that they are cheap, does not in itself mean they are low quality. Most of the cost savings comes from the fact that they have streamlined the building process – their costs are lower.

The bigger problem I have with KB homes is that they DO NOT HOLD VALUE well at all. KB sells to first time home buyers, people with less than perfect credit, and has several zero-down purchase options. While this seems great for buyers, it results in neighborhoods full of people that have credit problems – resulting in extremely high foreclosure rates in KB neighborhoods. Obviously this means everyone in the hood is toast because resales are constantly competing with foreclosures and REOs.

I know of a KB neighborhood, for example, where 100% of all homes sold are foreclosures/­REOs. This is not an exaggeration. The non-foreclosure homes are priced so much higher than the foreclosure homes (because they are priced to the loan pay-off), that they never sell (causing some of them to eventually fall into foreclose).

Now, would I buy a KB home? Yes, I would, but it would have to be significantly discounted (NOT NEW!!!) to typically $45 to $55/ft or whatever the cheapest REOs have sold for in that neighborhood. I would also prefer their higher-end neighborhoods – you can tell these immediately by the amount of brick/stone on the exterior. Lower end KB is 100% hardy plank or vinyl, while the higher grades go up to 3 to 4 sides brick on the exterior with upgrades on the interior.

- LAH Blog

I have a unique opportunity available for someone who would like to pick up a million and a half dollars in equity AND live next door to David Robinson. The deal involves the ability to put down $100,000 RIGHT NOW and the ability to close by October 20th.

1) You will get a property with at least 1.5 Million Dollars in equity (perhaps more). A full appraisal is available to document this figure.

2) This San Antonio home is about 14,000 sq/ft on a beautiful 2.0 acre hilltop with an amazing view. It has 7 bedrooms/ 8 bathroom/ 5 car garage / 3 Fire places and Elevator.

3) Your next door neighbor would be David Robinson.

TIMING IS PARAMOUNT. ANYONE WHO DELAYS OR WANTS TO THINK IT OVER WILL LOSE OUT. Call Ken at (512) 444-7653. Do not waste my time with inquiries if you cannot do the terms as outlined above as they are non-negotiable.

Brenda,

ANSWER

Ken, Brenda,

Brenda,
After running some comps, this house looks to be about 1.5-2x the size of anything else on the market. At $200/ft it’s worth $2.4M. At $250/ft it’s worth $3M. I guess it could be worth a little more or less, but usually when you are the biggest house, you get less per ft. That puts the cash or ‘quick-buy’ value at $1.7 to $2.1M less repairs. That’s what I would expect to see the bank ultimately sell it for. An appraisal on a house like this could say just about anything – it’s fairly subjective depending on what comps the appraiser uses, and how he factors in the huge size differential. If an appraiser used the highest square foot calculation and multiplied it by the highest $/ft comps, they could claim $5M, for example, but good luck getting that…

Usually these deals bounce around for a while because nobody can come up with the $$ and/or the wholesalers that broker these deals don’t know how to price and pitch these to the people that do have $$. I’m currently working on a similar deal in west Austin where I bought a $2.9-3.6M home for $1.35M that I am finishing out. That deal was repackaged several times, and fell apart several times, before I got it.

What’s the current sales price?

Phill

Three weeks ago I went to New Orleans to look at some houses to
rehab. But my primary reason for going was to write a report on “How
to invest long distance in New Orleans”. I have decided since that
trip, that a basic report is not going to be sufficient to describe
the situation down there. And a comprehensive report would be too
long and boring. I am planning on writing some smaller specific
reports on various topics and how they are affecting investing in
New Orleans. I interviewed several people while I was there and
learned a great deal about the rehabbing and rebuilding of New
Orleans. It was not my first trip to New Orleans, but it was my
first trip with this project in mind. I also decided to buy some
houses while I was there.

Many have said that that they were interested in possibly investing
in New Orleans or reading my free report when it is completed. If
you want, I will send you the report when it is done and also put
you on my `update and special reports’ list. These updates and
reports will also help you to see the potential profits and risks of
investing in New Orleans. I ended up selecting three houses to
purchase in the New Orleans area and am looking to buy some more if
I can find the right partners. I am also looking for some rehabbers
and contractors that are willing to go down there and do some of the
work. I will be writing more about the contractor and supply
situation down there shortly. If you know what you are doing the
opportunity is great!

Stan

ANSWER

Stan,
Investing in New Orleans sounds fascinating. I guess my concerns would be:

1) With tens of thousands of homes needing work, how do you find reasonably priced and reliable contractors?

2) How do you manage this remotely?

3) I assume these homes are all in flood planes – can you still get insurance at an affordable price?

4) Are some of there opportunities in higher priced areas? How is the margin?

5) Is there a resale market? With tens of thousands of fixers available, how is the market and margin on rehabbed homes?

In general I advise AGAINST investing in a market you do not live in and/or understand. If you want to invest there, I suggest you move there and go for it!

Phill