We got our very first deal! It was not a very smooth transaction but applying all the things I've learned we were able to get through our very first property.
We made about over 10 properties in October and 1 got accepted in the 3rd week of Nov. Tooo many obstacles happened before we finally closed the deal:
It was an REO property, 2 bedrooms 1 bath condo listed at $55,000. I offered $45k, got a counter offer of $52k. I offered back at $48k (with higher earnest money).
November 25th : They accepted $48k and then now the challenges came!
Obstacles # Nov 26th-Dec 10th- - the bank that I have been dealing with now wants 20% down (from 5%) and has been so slow in taking actions in processing my loans.
We were given a deadline of Dec 24th because the banks wants the property out of their 'books' by the end of the year.
Obstacles #2 - never expected this -- I went to a hard money lender. They have a very good program and actually lining up my refinancing as well to exit from HML loan. Everything went ok until the broker saw the loan of my house is in ARM - negative. That is Dec 18th - 4 days away from closing deadline!
Obstacles #3 - my husband (again)- this is one I expected! Because of the so many challenges I encountered, he said that I better quit REI since I cannot get any loan anyway. He told me to call the academy and get my money back. I told him that I'm not a quitter. I will finish what I have started...and will continue my REI.
Last resort -- is to offer CASH -- but where will I get the money? I remembered a friend where I shared about what I have been doing lately and she told me that she is interested to invest. I called her and laid down my situation - I offered 50/50 share but we will have to lower down the offer to $40k.
My realtor renogotiated (verbally) and the bank accepted $40k! but wait... the night before the signing (Dec 24th) - my realtor got an e-mail from the listing agent that the bank wants $44k instead of $40k. Hhmmm, this time we did not re-adjust and said, we have laid down our cards -- $40k is what we can afford - take it or leave it!
Finally, they gave up and we closed the escrow on Dec 29th! It's also a good timing that the deal happened before the end of the year - the banks really want to get it out of their books!
The property was appraised for $70k considering all the repair that we will do (which we budgeted about $3k). We are almost done with the rehab and will try to do the lease option (which I'm still learning :=)
I have not made "true" money yet but with the appraised value - we have at least $30k equity from the property! The good side of this is that my friend is now interested in REI and looking forward on our next deals!
After this first deal, now I have to face my financing/lending issue - how can I get a loan when I have a negative amort in my house (where we live). I was informed that most brokers now calculate the DTI based on when the neg ARM reset and not based in current payment. Any advise?
- Sorry for the long post (got tooo excited!)
"We should not let our fears hold us back from pursuing our hopes" - JFK
I will lift my eyes to the hills, where does my help comes from? My help comes from the Lord, the makers of heaven and earth! Psalms 121