When a loan officer asks you if a property is in "move in condition" this is NOT what they mean:
Believe it or not we have had applicants for investment grade mortgages tell us that a property like this was "move in ready" and adding "it only needs cosmetic repairs".
WAKE UP!
This property is NOT move in ready. It needs MUCH MORE than a little cosmetic repairs. The kitchen needs to be completely ripped out and replaced.
Last year I purchased a home from a respected member of the community who told me before I viewed it that it only needed cleaned up. Now it wasn't this bad but it needed this same amount of work. I purchased it, rehabbed it and have some great tenants now living in it.
This does not make this a bad purchase opportunity. In fact, I may complete a purchase like this myself. What this does do is disqualify this property for a 100% conventional investment loan. It does not make it a bad purchase.
In fact properties like this can usually be had far below ARV and can be turned into fantastic long term holds.
Just one more clue, investors. Don't drive your Caddy, Mercedes or Beemer to your slum property.
First you don't even want your tenants to know who you are. You want them to know who your management company is. If you have to go in person drive your TRUCK or your BEATER car. I keep one of each.
Wear your Sears work clothes. Seriously. Grey top and grey pants just like dad used to wear when he worked on the house. At least get yourself a pair of coveralls.
There is nothing wrong with not knowing the intricacies of real estate investing but there is something wrong with not eventually learning. Why? It is you, your tenants and the lender who ultimately can lose.
GET EDUCATED!
Comments(4)