Thread: Tough decisions to make.....

Drop the price to break even. See what happens. Its not worth it. Dump it, learn from it, and move on because right now, its nothing but mental trash.

Originally Posted by hakrjak

Apparently I need to wait 6 more months before any banks will touch it. Has anybody ever heard of this? Must be one of many new rules to help keep us safer from those evil lenders!

I can't say as I've heard this one, although, my broker told me that FHA is coming out with a new set of rules soon that will make it even tougher to get financing through them, so it wouldn't surprise me at all.

If you can swing a L/O they can be good, but you may be looking at another couple weeks (at best) to the point of getting someone physically in and paying. Any thoughts on contracting it to another investor for a small (ie, $3-8k) fee?

Originally Posted by PhxMJ

Dump it, learn from it, and move on because right now, its nothing but mental trash.

Agreed.

-Russ H.

Dump it, if its not selling its not priced right. Price is everything in this market.

what would you do if you sell for a loss? how much of a loss are you willing to sustain?
maybe you rent it out while keeping it listed on the MLS? at least you can take advantage of depreciation and other tax losses.... which is exactly what I am doing. I bought a property a couple of years ago hoping to make 35k on it but dumped more into it than I planned and also got slammed by lack of buying activity. So now I rent out the property (but this property cash flows positive)

if you buy a property with intentions of flipping, maybe apply a rental formula to the property just in case you have difficulty selling might make sense....

maybe the tax loss after rents will offset the negative cash flow?

bottom line is that you have to figure out what the opportunity loss is at this time.

I'd like to dump it, and feel like I've already got it priced too low, where people aren't buying it because they are asking, "What the hell is wrong with this picture?"

I'm worried that if I drop the price anymore it's still not going to sell.

What pisses me off the most is that 5 months ago when I bought this thing, I had $30k in cash sitting in checking, and now I'm flat broke and in major debt. I never thought in a million years I'd have trouble selling this thing, as I've sold 3 others on the same street for a lot more $$$$.... If only I had the money to buy the vacant houses on the street I feel like I could fix the whole neighborhood vibe and be flipping these babies like pancakes again!

Still thinking...... Can't wait too much longer though, the carrying costs are eating about $1k a month out of my bottom line, which is already stretched big time right now.

Cheers,

- Hakrjak

Hakrjak-I have some really nice homes around Dallas. I always did Lease Options. I always get higher-than-average rent ($1,650 - $3,400/mo.) compared to lower area rent comps because they're nice props and people really want the potential opportunity to own it (and are willing to pay a little more), but don't have good enough credit or a down. I put an ad in the paper saying "LEASE TO OWN YOUR DREAM HOME. Bad/No Credit OK." then brief description of prop/rent. Have gotten great tenants (families) who take care of the properties. Maybe you can fill it at $950/mo. w/ non-refundable deposit for option to buy. If you can't sell it, this may be a way to hold on to it without losing your financial shorts until the market comes back. Chances are they won't buy it, but will stay there for years like mine. Try the ad I made. Works for me everytime. Best O' Luck!

Sadly it happens, you can win at this game and lose. Write if off as a learning experiance and dump it. Go buy another and make your money back.

At least if you take a loss you can write it off against your taxes for this year.

I haven't been to this forum in months but I stopped by today and was reading your post. I've had a lot of tough decisions to make over the last year too. With a little luck, my head is still above water and I'm beginning to move forward again.

You might want to run recent comps in the area. I was surprised to see that the freakin banks were selling houses in a neighborhood where I own a house for half of what my house was worth less than two years ago. That is a problem. Especially when I'm not in a position to buy them.

I have done lease options for the last eight years and have no intention of ever doing them again. I've never had one sell because it was on a lease option. That has been straight landlording for me. You have entirely more control with a month to month rental agreement.

I've never looked into it but you might look at doing an auction just to get some action and see what you come up with. As far as I know you can always accept or reject your best offer.

I don't know where you are or how people treat houses in your area but houses in my area that fall below $150k tend to attract people who don't give a rip about taking care of your property. It is also very hard to sell a property when you have tenants living in the house.

Good Luck

Originally Posted by hakrjak

Flash forward to now -- I'm considering keeping the property as a rental, so I called my mortgage broker today to find out that he can't make a loan on the property now because I have had it listed in the MLS. Apparently I need to wait 6 more months before any banks will touch it. Has anybody ever heard of this? Must be one of many new rules to help keep us safer from those evil lenders!

Never heard of that before! Did you try going to a few different mortgage brokers to see if they could do the deal instead?

Also, what else are you doing to market the property besides the MLS? I recently filled a property with a Tenant/Buyer by using signs around the neighborhood (Rent-to-Own, Nice House, (xxx)xxx-xxxx). Although it may take you a month or two to fill the place you may be able to get a decent option fee up front ($5K?) that will slow the bleed even more. This would of course be if you couldn't sell it for what you owe....

dB

As of a few days ago, I dropped the price to $105k which is just about my break-even point -- just to be able to walk away and try somewhere else next time. Had some more showings since then, but still no contract. Funny thing is (I probably already mentioned) -- Previous sales we've done on this street in the last couple years were $126, $125 and $120k. Also this is bar far the nicest flip we've ever done in this neighborhood.

The monthly payments on the lines of credit, etc are eating me up right now due to some unforseen financial difficulties that have come out of nowhere and slapped me, soooo I'm really hoping for a quick sale at the new price.

Cheers,

- Hakrjak

Hak--

That really sucks man.

I don't know if lenders are allowing this anymore, but when I lived in CA many moons ago and needed a quick sale for my house there, I offered to pay all the buyer's closing costs and give them $5k at closing (for a rent back to me for 3 months.) Perhaps instead of dropping the price you guys could offer incentives like a new flat screen or a mortgage interest rate at 4.5% and closing costs paid or something.

Keep us posted. ...It's amazing for me to think about homes under $110k in Colorado Springs. What were these homes going for 4 years ago?

We almost bought a "really cheap" house about 2 years ago (Dec 2007).

It was in a neighborhood of $350K houses (all identical), and we were going to get it for $200K.

It needed work (whole new kitchen and bath), and we had to pay cash.

Our realtor screwed up, and we didn't get it (this was back when realtors were first learning how to bid on REOs/foreclosures).

I was p*ssed.

We had planned to fix it up fast, then re-fi it for $350K, and pull $130K cash out to use for other projects, while having tenants who paid the mortgage.

Fast forward to today:

On that same block, there are now 5 houses for sale.

1 block over, another 10.

ALL of them are trying to be sold for LESS than $200K.

NONE of them are moving (remember, this is a tract subdivision, ALL the houses are exactly alike as far as square footage, # bedrooms, baths, etc).

I have never been so happy that one of our real estate deals fell through.

We would have taken a bath on it---AND-- we would have done it w/money we sorely needed for other projects (tying it up forever), thinking we could've re-fied and gotten cash out like we had a year before.

Back then (Dec 2007), I didn't realize how much the market had changed.

I guess I'm saying we almost did the same thing you did, Hak-- slightly different numbers and dates, but you get the idea.

It was only an incompetent realtor that saved us!

-Russ H.

Originally Posted by yveskleinsky

Keep us posted. ...It's amazing for me to think about homes under $110k in Colorado Springs. What were these homes going for 4 years ago?

About the same... 4-5 years ago I was buying them up for $80-90k, putting in $10k and flipping them for $120k-125k

We just got stuck with this one because of a vacant house across the street, and a foreclosure down the block. It kind of dragged down the whole neighborhood. Everybody has been turned off by the vacant house, and the bank has owned it for probably a year now and has made no attempt to fix it up or sell it at all. Makes me want to sue them for lowering my property value!

- Hakrjak

Originally Posted by Russ H

I guess I'm saying we almost did the same thing you did, Hak-- slightly different numbers and dates, but you get the idea.

It was only an incompetent realtor that saved us!

-Russ H.

In my case I am operating in a neighborhood that I have been operating in since 2001. I've rehabbed and sold 3 houses on the same street (On the same side of the street even) for $126k, $125k, and $120k... All sold within 30-120 days -- Last one sold about a year ago. So logic dictated that we would have no problems here. I really think this vacant house on the corner is screwing us -- there is no other explanation. I'm searching the MLS in the $105k price range and there is ABSOLUTELY NOTHING in this price range for sale in town right now... But there is definitely nothing for sale that is this nice for less than $150k, so I'm baffled.

Giving it until the end of october at this new price point, and then will have to rent it out or start aggressively applying for loans. I've talked to a couple of local banks in recent days, and they've told me that even on their portfolio lending -- they are adhering to the same standards set forth by Fannie & Freddie... If not being MORE conservative than those types of programs....

I think it's safe to say that the lending environment has never been worse right now (In my lifetime)... Doesn't seem like anybody is trying to loosen it up either.

Cheers,

- Hakrjak

Do you stage your houses. I stage them all and it makes a huge difference. I just sold one at full price with in 10 days on the MLS. There are many other houses on the market around here for the same price that have been not selling for months. They are not staged. We are in a real bad market here in fl and my houses sell like hotcakes. I was told by a few buyers that they would of never bought my house when they saw it without staging.


Try a different lender,not all banks have the 6 month rule.

I do stage my houses... I go with a very minimalist staging... You an see pictures and a video tour on my sale site at Endeavor Custom Homes

Cheers,

- Hakrjak

I am sorry to hear about your financial situation -- financial loss always hurts.

I am curious as to what you did for the financing for yourself? I am trying to get into my first property, hopefully similar to this situation, but cannot obtain financing. I have a business income but without 2 years of tax returns they wont accept it. And, my employment income has 3 industries in the last couple of years, so that's not working for me.

I do have a good credit history with 4 trade lines (0 installment, all revolving at this point) which puts me at a 700ish score. Some of these homes (similar to the ones you mention that are depressing your price) are just at such a steal, I am wondering why I am even renting! I would actually have *less* liability per month owning something if I could get financed.