I mentioned that I was going to try the technique advocated by the book "How to Sell Your Home in 5 Days" last weekend. I spent several hundred dollars advertising the property, bargain priced it below my acquisition costs at $9,900 and handed out flyers at the local REI club meeting.
The results? Four people showed up, no one was willing to put in any type of bid. So much for a "sure fire" way of selling a house.
I've advertised my expensive rehab for next weekend using the same technique. I've direct mailed postcards to every person in Buffalo that could qualify for loan for this house as well. I hope I get some offers on that house since I'm bleeding $2300 per month on it. My biggest fear now is that no real estate is going to sell until the spring.
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4 comments:
10/23/07 Are you planning on getting a mortgage to pay for the "new" house? It seems that you plan to rent out your present residence. Do you know how much renters detract from your trying to sell a property?
When you did your rehab borrowing, didn't you have to prepare proformas showing worse-case scenarios, which I take to mean no sale in this situation. Even if not required, surely you did them for your own info. I assume you already have financing planned for the "new" property, since you had made a purchase offer.
(I previously was a landlord; many years of experience, very happy to be out of the situation.)
thanks for your comments. In answer to your questions:
- yes I am getting a mortgage for the new house.
-I plan on renting out my existing home as a lease-purchase. I've had great success doing this with another property. Tenants take care of the property since they have large option money downpayment and take care of maintenance. I landlorded for 12 years previously in traditional way and hated it too.
-my rehab was bought "subject to" existing mortgage. (I kept existing financing in place). Money from rehab came from line of credit on my "rental" property, so no, I did not have to tell anyone anything.
I found your blog last night. I started reading on December 22, and followed it through waiting to see how it all turned out. At first, I was really excited for you, as you had such a strong start. You were confident and determined. Remember what you were taught in school, you can do anything you put your mind to.
So, here I am, hours later, in awe that you could not sell a house you bought for $5,000. The other house, well, I have to be honest, it didn't sound like that good of a deal when you described it. When you first mentioned your weak estimation skills for work needed, I had a bad feeling. But I figured it would work out in the end.
You and I started the year off in similar places, but by April we had split paths, and I have been kicking back making money, while you have been losing it. So, I just wanted to try and help you out a little bit, like others have helped me. I am only mentioning this because you seem like you are willing to try anything, and you can sure use to get this albatross off your neck.
Last year I bought a house that was tipping over. At the time, I planned to knock it down, and didn't care. Well, since that didn't work out like I planned, I was left with property I couldnt sell (who would want it?) and I couldn't rent it (it could collapse!). So, for 2 months I sat on it feeling sorry for myself. After that, I hired a contractor to raise and support the house. Nothing fancy (2 days and some 4x4's), but at least it wouldn't collapse. I put $3000 into paint, carpet and junky appliances. Before I finished the work, I not only had it rented out to stop the bleeding, but I also managed to lease/own 30 days with them. Once they moved in as renters, I just pushed them through the buying phase and got that mess off my hands. In the end, I made about $8000 on it, and learned what not to do.
My first advise to you is, fix up that 5k house for 3k and rent it out. Maybe even get a manager so you dont have to worry about it.
Next, i bought a nice flip house, stayed in budget, even had a buyer at some point. Market continued to decline and I was left with $2000 PITI + $300 Heloc + $200 Credit Card. No way I could rent mine normally either. Instead, I found a relocation company that placed homeowners after disasters. In my case, a family lost the house to a fire and they needed a place to live 'short term' that turned into a way over-priced regular rental. So, Nationwide is paying the overpriced "short term" rent which pays everything and puts plenty of money in my pocket.
My second advise would be to refinance that rehab at 80%LTV to lower your monthly by $300, skip 2 mortgage payments (close on the 13th), do a no cash out (it can still give you $1700 cash at close) and put a distressed family in there. Even if you did an option, you lowered your monthly PITI, charge a bit more rent, and your $3k option fee (and $1700 no cash out) should offset any money lost monthly. At this point, its a world better to fix this mess now, and move on with your life.
I made it sound like I had an easy time, but I did not. It was seriously hard fixing the two messes I was in. However, now that I can shake it off, I feel so much better about my future.
thanks for your thoughtful and lengthy post. I've really resisted the idea of fixing and renting the $5000 house. I rented to poor people in the 80's and hated it beyond anything I've ever done and swore I would never rent to poor people again. Dealing with rats, maggots and scummy people is too much for to handle. Maybe fixing it some has some merits but theft is an issue. The furnace was already stolen and I'm told thiefs will come for the copper plumbing soon.
I've explored the idea of refinancing the rehab but it would cost me $4k and the pay back is 14 months.I wanted to delay that until I tried this 5 day sale idea. If I use the lease-purchase concept I think I will re-finance.
The idea of a relocation company placing people after disasters is intriging and I'll have to research to see if I can find a company that does this locally.
Again, thanks for your advice
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