hassansr

title came back clean. proceeding with the wholesale closing. also time for me to address some of the concerns raised by others on this topic. Ok, we'll start here. I have two main facets of my real estate investing business, a wholesale (investor properties) unit and a retail (owner occupied homes) unit. For the wholesale properties I am simply assigning contracts or buying and selling on options. These are properties that I never or rarely own, that don't fit the bill for what I am seeking as it relates to retail properties. Normally wholesaling is about 25% of the business, however over the past year it has been about 80% as I had been wary of risking my private lenders money in a market where property values have been sliding backwards. For the retail biz, I predominantly use private lenders to fund the purchases of the properties that I repair and resale to owner occupant buyers. It's not because I don't have money or credit. It's because of the fact that my money and credit are limited resources. Once I commit them they are locked up in the properties until I have them resold, an open ended process that can take just a few days, or 6 to 12 months or more. The effect of this is that there is a financial limit to the amount of deals that I can do, not a risk that anyone should take while you have other things going on in your life that consume cash and credit. That said, I have to spend a large portion of my time creating relationships with potential private lenders; regular folks like you and me that aren't millionaires, just thousand-aires (if thats a word) with 10k-100k+ in investable capital. These private lenders are folks with under performing cash sitting around in IRA's, 401k's, checking and savings accounts. Working with them gives you the flexibility to target deals at prices that make sense for you, not the seller. Finding private lenders is a bit harder than it used to be, but still worth doing. I use several methods to find them, including: 1. Reaching out to family and friends about upcoming opportunties that I have 2. Networking at professional, business, real estate investing and investing clubs. 3. Holding meetings with small groups to explain how the process works As part of the process of finding private lenders you have to have some opportunities for them to consider already in the bag. This means that you have already viewed the inventory on the market and have some potential deals in the works, which only comes as the result of your making offers. There is a saying in this business, that 'if you are not making offers, you aren't making money'. I agree. If you don't make offers, you'll never have an opportunity to present potential investments to private lenders when they have their money available. You also won't be engaged in the game, resulting in months or years going by without you ever earning a dime in real estate. So it's a delicate balancing act that you have to perform as you have to keep your head in the game while you match up real estate investment opportunities with the people that have the money to lend, when they are able to lend it to you. I don't put out 10 low ball offers hoping that one will get accepted; that would be dumb on my part. I put out 10 lowball offers with the knowledge that the seller I am targeting, banks, can afford to and in the right situation are willing to sell at the prices that I need to buy the houses to at. Most private sellers can't do this as they have high debt loads and low equity. I am not concerned with the fact that I may or may not have the funds already lined up when I make offers, as I know that if I do everything that I need to do in securing the right deal and packaging and consistently communicating the private lending opportunity to the private lenders in my market, the funds will come. If the funds don't come I still have the opportunity to wholesale the deal out to other investors that can close in their names fast. By starting my offers at 85% of the maximum that I am willing to pay and working upwards during negotiations, I am making sure that I don't overpay, and making sure that I have enough time to line up potential private lenders. This process works well for me and many other investors. If I wait til everything is perfect, I'll never try, won't be engaged in the market, nor will I make money. For those of you that invest by using your own cash or credit, that is ok as well. Just try to be careful and minimize your personal exposure.

Looks like I am going to be wholesaling this property on Cherie. The appraisal came in quite a bit lower than I needed it be ($75k vs my initial est of $90k) and the trend doesn't look promising., something I'm not willing to live with in today's market. The big issue is that there are far more pre-foreclosures and foreclosed properties on the market than I thought there were for this area. The other issue I have is that last week Bank of America decided that it would be a great idea to slash my personal credit lines from $75k down to $25k (when do I get my bailout?) and I still have been unsuccessful in securing a private lender with terms that will work for me. The thing that really bugs me is the credit line being slashed as it will affect my credit scores for quite awhile as my debt usage to availability ratio is now significantly higher than it was before just cause the bank wanted to reduce their risks. I should have taken the step of cashing out the credit lines and depositing the funds into a bank account, but now I am where I am. I will continue seeking private funds as that is now the best way for me to go for future purchases and I don't believe in quitting. All is not lost, however as I can still wholesale it to make some cash. The good thing I learned from the appraisal is the fact that rents have not dropped in the area that the house is in and are stable This trend supports my wholesale buyer's cash flow based strategy. Wholesaling a bank owned property is a pretty straight forward process. The trick to doing this type of deal is that I can't assign the contract or do an option on it, nor do I want to tie up my money on a deal that I wont be holding. That said, I'll have to do a double closing which will cost a little money, but not so much that it kills my deal. A double close is done when you have a house under contract between you and the seller for one low price, that you will resale to a third party buyer at a higher price on the same day. In this situation you are going to take title to the property just for a few minutes and then sell it and transfer that same title to the third party for a higher price. Normally it's done when you are forced to take title because of the nature of the deal or when you don't want either the buyer or seller to know what your profit is going to be. Double closing in GA requires the person doing the deal to bring what's called "wet funds" to the table. This means that you have to have the cash needed to buy the house to get title before you can transfer it to your end buyer who will also bring cash to the table to buy it from you. If you have the cash on hand you can use your own to fund it or you can borrow it from another person (some attorneys will do this) just for the day. You have to have wet funds because some states have made it illegal to use the end buyers funds to cover both the cost of your initial transaction as well as theirs, which is how many of the 'gurus' out there claim that you can easily do; trust me it isn't. Now my buyer wants to pick up the property at a cost, purchase, rehab, closing expenses and my fees are no more than 50K. He also wants the deal to be one where the net annual income (total rents less expenses like taxes and insurance) bring in at least a 20% return on his investment each year. Based on his due diligence the estimated rents for the area are in the $850-$875 range and the repairs are a little higher than I estimated ($13,500 vs $11,280). He agreed to the tax rate, though it will most likely be a bit lower due to his purchase price, and is able to get the hazard insurance for a couple bucks less each month. Thankfully he won't factor in a vacancy factor nor will he be using a management company to deal with tenants. That said I have to make some adjustments to my figures to get him where he needs to be. His Est Rent $850 x 12 months = $10,200 (year) Tax $92 x 12 months= $1,108 (year) Insurance $45 x 12 months = $540 (year) Total Net Income $713 x 12 months = $8,556 (year) To determine what his bottom line on income will be, all I need to do is take the net annual income and divide it by 20% to find out the max the deal can cost him. Then I can work my way backwards to see what I'll make. The math works like this: $8,556/ 20%= $42,780 which is the most he can pay in total to get the deal to work for him. To get my fee and his purchase price, I take that 42,780 and deduct the costs: Buyers max cost $42,780 Less repairs $13,500 Less Closing Costs $1,200 Equals Buyers Purchase Price $28,080 From this number I have to back out the costs to get my profit. At first glance it looks like I'll be making about $7,080 from the wholesale proceeds as his purchase price of $28,080 less my contract price with the Wells Fargo Bank is $21,000; unfortunately it will be a little less as I'll be doing a double closing on the deal. The cost of doing a double close for consists of two components, the admin fee and the use of funds fee. The admin fee is just $500; it is what the lender charges me just for setting up the deal and wiring the funds into the closing attorney's account on the day of closing. The interest charge is a percentage or flat fee on the amount borrowed. In this case I'll be borrowing $22k just for a day and the lender will charge me $1,500 for the use of his funds. Normally he charges the greater of 10% of the amount borrowed or a minimum of $2,500, but since I have worked several deals with him in the past he will give me a break. My total cost for the double close will be $2,000 ($500 + $1,500), the buyer will pay his own. After all of that is factored in my profit on this wholesale should be $5,080 which is as follows: Buyers purchase price $28,080 Less my Purchase price $21,000 Less my double closing costs $2,000 Equals my net profit $5,080 The buyer has agreed to buy this house from me in it's as is condition for $28,080 and has signed the contract, which is written up on a standard purchase and sale agreement with the buyer paying $1,000 in earnest money to me with a closing date on or before March 26, 2009. The only stips are that I must be able to get clear title on or before the date of closing. The buyer will also pay all closing costs on the 2nd closing. He has agreed to use my closing attorney which I have instructed to check title. Hopefully the bank was able to clean up any issues when they foreclosed on it. If not the closing attorney will have to clean up the mess or the deal won't close. we'll see. As for the remaining properties here are the statuses: 2. Exeter: asking $54,900, my MAO 37,350, my orig bid 31,748, bank countered at 48k, I up my offer to 33k. Bank countered at 47k, not very motivated and slow to get back with me. Update2: bank countered at 45k and I raise my offer to 34k. Update: this house is in the same area as the house on cherie so I am very concerned about the value. The bank is still sitting at $45k and I am sitting on my offer of 34k. I've resubmitted at that price and will check in with them in 2 weeks. 3. New Castle: asking $55k, my MAO 21,415, my orig bid 18,203, bank countered at 45k, I up my offer to 19k (might not get this one). Bank countered at 40k, still too high; I'll let the bank eat silence on tis one as well. Still waiting for bank to get real, I'm upping my offer to 20k. I noticed that they lowered asking price on MLS to $49k from $55k and that it was originally priced at 70k; meaning that the bank really is interested in moving this one. Update: someone beat me to the punch and now has it under contract. 4. Burnt Leaf: asking $60k, my MAO 35,299 my orig bid 30,004, bank countered at 48k, I up my offer to 32k. I'll stand at $32k and have re-faxed the offer and left the realtor another message as the property is still actively listed at 60k. Update: Bank finally responded and countered at 45k. I stand at 32k and will followup in two weeks as well. 6. 3867 Trenton Dr, Snellville, GA (FMLS # 3788896): asking $59,900k, my MAO 29,330 my orig bid 24,931, bank countered at 31k, I up my offer to 26k. Update: bank is standing firm at 31k, I'll stand firm at my offer of 26k and see who blinks first (won't be me). b]Update: reo realtor called and said that its under contract as of March 2. Pending close date is March 25. I liked this one too, sad I couldn't get it. I'll monitor to see if it actually closes later in the month.[/b] Update: still waiting to see if this one closes. Well, this has been an interesting experience. As you have seen it is not as easy as it looks to get a deal that makes sense for you. Yes it is very easy to today's market to buy a house, but to get it at a price where you can make the profit you want isn't. Market values are dropping and the things that we usually take for granted (like our usual lenders or credit lines being there) aren't as we expect them to be. That being the case however you still have to go forward. At the moment I am stuck by my reliance on using private lenders to fund my deals. I don't want to risk or use my cash or credit to fund my deals, as they can be tied up for a long time. I can still wholesale, but retailing will be an issue til I resolve the funding issue. The places that I normally would seek private lenders (real estate investor associations and meetings) are not of much use as the experienced investors want too much in return and the inexperienced ones aren't as anxious to get into a deal. So I'll have to expand the circle; it's not a problem, but a challenge that I'll have to meet. To do that I've gone back to the old tried and true method of writing down a list of everyone that I know of and calling them to let them know of the opportunities that I have access to. I've also joined a couple of professional groups that are not related to real estate investing to start building relationships in. It'll take a little more time than I originally anticipated, but it'll work. In the next post I'll explain the strategy I'm using in more eloquent terms. I'll also give updates on the statuses. I noticed that some of the readers of this post have had their doubts about it and my ability; but that's ok. Not everyone is going to agree with my methods or goals and that's also ok. What's important is that one sets their goals and does what ever it takes to ethically achieve them. The means by which one gets there will of course change to reflect actual conditions in the market and you learn from it. Til next time... good luck and good hunting.

Ok, I got one private lending offer late last night to consider. It didn't impress me. By email a private lender consultant (a guy that finds private lenders) proposed a $50,000 private loan to cover the following: Closing costs 1,500 Marketing 5,300 Purchase 21,000 Repairs 12,000 Misc 5,200 Broker's fee 5,000 Total Loan 50,000 Terms, 12 months, no monthly payments, guaranteed $10,000 interest due at the end of 12 months with the return of principal. The broker's fee is the amount that the person that located the private lender wants to charge for bringing the lender to the table. Remember, the house is optimistically worth 90k, but we're in a backward sliding market. Without the fixed interest, the Loan to value would be 55%, with it the LTV would be 66%. For those of you that understand private funding, would you accept these terms? I am tempted, but will probably decline the offer as it would limit my ability to sell the house to an end buyer to either an all cash or credit and cash buyer within 12 months (I couldn't owner finance or do a lease to own sale). Please give your thoughts on the loan proposal and how you structure your private notes. btw, if I have come across as rude to anyone that has commented negatively, I appologize. Please understand that going thru this exercise is for my benefit, so as to keep me on track towards my goal. Please also remember that we are working in a dynamic market that keeps on changing, so my plans for achieving my initial goals when I started this thread will be a little different as I adjust to what I experience in the real world market. When your business model is based primarily on using private funds, there is a delicate balancing act that you have to perform. The processes of finding private funds and securing great real estate deals both take time and you have to manage both concurrently. It's hard to find private money without a project for the lender to focus on. On the flip side, it's hard to successfully get a deal closed and funded without the private money, so you have the classic chicken vs egg issue. If you try to find the private funds first and then the deal, your lender could go away due to some other issue in that lenders life. If you focus on the houses first and then the lender, well you can run into a situation where you may not be able to close as quickly as you would like or have to let some contracts lapse and lose your earnest money. So you have to try to do both at the same time. That is what I am attempting to do here; it ain't easy but I'll prevail. Please continue to chime in with your thoughts, both positive and negative. I would really appreciate it if those of you that have used and are using private lenders would give your thoughts. Thanks again

thanks

I guess I need to explain a little more whats going on for the naysayers out there. In this biz the last thing that you want to be is a motivated buyer, especially in a market where values are still sliding backwards. That being the case I take my time in making offers, however I do it consistently. Yes I will lose out on some houses, but that's ok, becuase the ones I do get will at a cost that makes sense for me. In the case of the one I just got under contract, if I had just accepted the first counter offer that the bank made a few weeks ago, I would have lost out on several thousands of dollars in potential profits just cause i couldn't wait a few weeks. When making offers to banks you have to realize that the competition has dropped off drastically due to the fact that most potential buyers are not cash buyers and can't qualify for an investor loan. Lenders have raised credit score requirements so high as to that it's hard for folks with decent credit to cash in on a deal. At the same time these wonderful lending institutions have had the bone headed idea of closing those same potential customers lines of credit which has had the effect of reducing good credit scores as their percentage of debt usage has now been forced way up; narrowing the pool of credit buyers. What I'm trying t say is that you are now for the most part only competing with cash buyers, of which there was never that big a pool to start with. When I make offers I know the max that I am willing to pay and I never exceed that amount. To get there I have to wear down the seller til I get the number I want. I'll make offers every other week on the same house until I get there. I don't just those on one house but several, knowing that some sellers will accept, some wont (and so what, someone will). It takes a while but it does work. When you consider the fact that there really isn't too much I can do about the topline value of the house, I have to target the cost as aggressively as possible. In this case time is my friend

Ok, here's the update. After several weeks of back and forth with the banks I have finally come to agreement on one of the houses that I have been targeting: Cherie: asking $59,900, my MAO 21,940, my orig bid 18,649, bank countered at 56k, I up my offer to 19,500. Update: Bank countered at 50k. I let them think about it for a few weeks and the stood firm on my offer of $19,500. New update: guess what? The reo realtor called me on Monday and countered at $21,000, I accepted at a price of less than what i was willing to pay!. The next step for me is to have two of my contractors take a hard look at the property and really let me know what the bottom line will be. If all goes well with the estimate and the title is clean I'll be closing on April 10. I'm giving myself that much time so that I can verify that the property is what I expect it to be and doesn't cost more to repair than I am willing to pay. I also have not yet secured the type of private lender that I am comfortable using to fund the deal, so I need some more time to work that. I did locate 3 private lenders thru networking at real estate investing events, but since they are all pretty well experienced, I probably won't work with them. More experienced investors tend to want to have much more input into what I'm trying to do, want higher returns than I am willing to pay (they want 20% or more) and want their funds back within 12 months, which is a deal killer in todays market as it eliminates my ability to sell with owner financing or on a lease to own basis. If I can't secure better lenders I'll have to either close with my cash or wholesale it to another investor. I already have two investors in mind that are interested in buying deals where the cash on cash returns are at least 20%. That being the case, their monthly and annual math for the deal would need to look like this: Est Rent $900 x 12 months = $10,800 (year) Tax $92 x 12 months= $1,108 (year) Insurance $54 x 12 months = $650 (year) Total Net Income $754 x 12 months = $9,042 (year) $9,042 / 20%= $45,210 which is the most that the buyers can pay in total to get the deal to work for them. To take it further and get to where they need to be: Buyers max cost $45,210 Less repairs $11,280 Less Closing Costs $1,200 Equals Buyers MAO $32,730 (what I'll sell it to the investor buyer for) Less my cost $(21,000) Equals my est profit $11,730 The numbers here are different because the investors are cash buyers that would hold the house as income producing inventory; not to flip it. As for the rest the statuses are as follows: 2. Exeter: asking $54,900, my MAO 37,350, my orig bid 31,748, bank countered at 48k, I up my offer to 33k Update: Bank countered at 47k, not very motivated and slow to get back with me. Update2: bank countered at 45k and I raise my offer to 34k. 3. New Castle: asking $55k, my MAO 21,415, my orig bid 18,203, bank countered at 45k, I up my offer to 19k (might not get this one) . Update: Bank countered at 40k, still too high; I'll let the bank eat silence on tis one as well. Still waiting for bank to get real, I'm upping my offer to 20k. I noticed that they lowered asking price on MLS to $49k from $55k and that it was originally priced at 70k; meaning that the bank really is interested in moving this one. 4. Burnt Leaf: asking $60k, my MAO 35,299 my orig bid 30,004, bank countered at 48k, I up my offer to 32k. Update: bank still has not responded to requests for status on my offers. I'll stand at $32k and have re-faxed the offer and left the realtor another message as the property is still actively listed at 60k. 6. 3867 Trenton Dr, Snellville, GA (FMLS # 3788896): asking $59,900k, my MAO 29,330 my orig bid 24,931, bank countered at 31k, I up my offer to 26k. Update: bank is standing firm at 31k, I'll stand firm at my offer of 26k and see who blinks first (won't be me). Update: reo realtor called and said that its under contract as of March 2. Pending close date is March 25. I liked this one too, sad I couldn't get it. I'll monitor to see if it actually closes later in the month. Obviously it'll take me awhile to get the deals I want, but as i said before, there's no rush. what I will need to do (and have been doing) however is look for some more houses to make offers on. I'll have that list out shortly. As for the process of trying to find other sources of private funds, I have joined 2 business organizations and am considering joining a couple of stock and mutual fund investing meetup groups here in the atlanta area (for those of you that don't know what a meetup group is, its where people with like minds meet to discuss their goals and needs). The goal here is to meet folks with money to invest that are not as demanding as the seasoned real estate investors I've been dealing with that demand too much. Talk to you soon...

Ok, I'm back. Sorry it took so long, but I have another biz to run and need to focus on raising cash at least once a month :mrgreen: Anyway, since I last made a post a couple of changes have occurred. 1. Sunderland:. asking price $33,900, my MAO 29,280, my orig bid 24,888, bank countered at 31k, I up my offer to 26k. Update: under contract with another investor at 32k 2. Exeter: asking $54,900, my MAO 37,350, my orig bid 31,748, bank countered at 48k, I up my offer to 33k Update: Bank countered at 47k, not very motivated and slow to get back with me. I'll stand on my offer and let them eat silence for about another week. Don't want to be viewed as a motivated buyer. 3. New Castle: asking $55k, my MAO 21,415, my orig bid 18,203, bank countered at 45k, I up my offer to 19k (might not get this one) . Update: Bank countered at 40k, still too high; I'll let the bank eat silence on tis one as well. 4. Burnt Leaf: asking $60k, my MAO 35,299 my orig bid 30,004, bank countered at 48k, I up my offer to 32k. Update: bank has not responded to requests for status, so I'll back off on this one for about 2 weeks. again I don't want to be seen as the motivated buyer. 5. Cherie: asking $59,900, my MAO 21,940, my orig bid 18,649, bank countered at 56k, I up my offer to 19,500. Update: Bank countered at 50k, we're getting somewhere slowly. I'll hit them up again in about two weeks as well. 6. Trenton: asking $59,900k, my MAO 29,330 my orig bid 24,931, bank countered at 31k, I up my offer to 26k. Update: bank is standing firm at 31k, I'll stand firm at my offer of 26k and see who blinks first (won't be me) 7. Downs: asking $59k, my MAO 37,500 my orig bid 31,875, bank countered at 58k, I up my offer to 33k. Update: Under contract with another buyer. Sad cause I liked this house too... :cry: The reason I don't want to seem too motivated is because it makes the banks feel as if they are in control. Fortunately I too am in a slow market so I can take my time. Normally I would make offers and counteroffers about 2-3 weeks apart, so I'm doing ok. I also have not been able to find the private money as easily as I used too, and the last thing I really want to do is use my own. As for the private money thing, I am still looking. I have gone to several networking events over the past few weeks and have only found tire kickers so far. Those folks that I thought could do it couldn't perform when presented an opportunity. I'll keep trying though, found 5 professional organizations to target in my search; a chamber of commerce, a dr association, an MBA association, a hispanic business organization and a internet marketing group. We'll see how it goes.

Sorry for the delay, but I had to spend some time setting up my money for february and march. Ok, got responses from the banks as follows: 1. Sunderland:. asking price $33,900, my MAO 29,280, my orig bid 24,888, bank countered at 31k, I up my offer to 26k 2. Exeter: asking $54,900, my MAO 37,350, my orig bid 31,748, bank countered at 48k, I up my offer to 33k 3. New Castle: asking $55k, my MAO 21,415, my orig bid 18,203, bank countered at 45k, I up my offer to 19k (might not get this one) 4. Burnt Leaf: asking $60k, my MAO 35,299 my orig bid 30,004, bank countered at 48k, I up my offer to 32k 5. Cherie: asking $59,900, my MAO 21,940, my orig bid 18,649, bank countered at 56k, I up my offer to 19,500 6. Trenton: asking $59,900k, my MAO 29,330 my orig bid 24,931, bank countered at 31k, I up my offer to 26k 7. Downs: asking $59k, my MAO 37,500 my orig bid 31,875, bank countered at 58k, I up my offer to 33k 8. Blacksmith: 3 bed 2 bath, asking $60k,my MAO 33,495 my orig bid 28,471, another investor has it under contract 9. Marbut: asking $85k, decided to pass on this one as the neighborhood has gone to pot I'll keep you all informed as we go forward. In the mean time I have not been as successful as I had hoped in finding private lenders; none of the ones I saw as potential lenders panned out. One thing that I have noticed is that I have been spending too much time networking at events where real estate investors frequent, causing me to run into the same folks over and over again. What it also means is that I have been presenting deals to folks that have become tone deaf to offers as they have been approach multiple times by other investors with similiar deals to pitch. What I'm going to have to do is expand my circle of networks to potential lenders that haven't been exposed over and over again to real estate and private lending. This means that I have to find a couple of professional and social organizations to focus on. We shall see... btw, now that football season is over, what exactly are we supposed to do on sunday afternoons this winter? Guess I'll break out the old golf clubs again...

I did a little followup with all the realtors that hold the listings for the REO's that I am interested in. So far none of the banks that own the properties have said "NO" to my offers; they are considering them. This could be a problem; maybe I have bid too high. I'll find out sometime next week what they want to do. In the mean time I really need to get some private lenders secured. I presented my case to several people at a couple of events last week and maybe have one or two good contacts. I have to step it up or when my offers get accepted I'll have to use my money and credit to fund the deals, which is the last thing I want to do, as it will limit my ability to handle new opportunities and issues. On the next post, I'll layout that plan for you.

If I stay focused on these I'll get them either this month or next. Today I'll start doing the math and making offers

Yes. Normally I start with the buyer first and then find the house. They way you described is correct in terms of equity. The buyer, is this usually an investor? Or do you market for owner occupied as well? If so, do you market for these buyers the same way you described the direct mail list (apartment renters)? Both, However the buyers are normally found as the result of marketing OTHER properties.

Yes. Normally I start with the buyer first and then find the house. They way you described is correct in terms of equity.

I have a couple of realtors that will send me info on what's available on the MLS. I also have access to several people that have purchased REO portfolios in bulk at prices lower than what's listed on MLS. You need to find a good realtor and cultivate a relationship.

Ok, I have finally completed the task of riding the east atlanta area looking at the rest of the houses to consider making offers on (yes that took a while). Some were private held, some held by investors, most were held by banks and just a few were owned by HUD. Normally I would have property locators (bird dogs) out looking for and at houses for me, but this time I wanted to get back out into the street again to see how things really are on the ground in my market. I found these houses by doing searches on craigslist, MLS, HUD.gov and other wholesalers websites. I also did an email blast to people on my email list to solicit leads. As a result of the search I found about 50 potential candidates to review and personally visited and inspected about 30 of them. I looked at homes in Snellville, Lithonia, Stone Mountain, Norcross, Lawrenceville, and Lilburn, Georgia. Having looked at a bunch of them over the past two weeks, I finally got around to viewing the remainder today. Except for 2 homes in Snellville, none of the HUD homes impressed me. Most needed too much work, were in badly depresses areas, or were properties that I would never touch. On the HUD.gov pages there were some decent property descriptions plus photos, which for some reason I didn't bother to look at prior to going out (I guess I got lazy). Normally I would look at photos to eliminate houses that don't look promising, but since the HUD homes were in the path of the other REO and investor held properties that I was going to be seeing, I just added them to my mapquest list and rode out to see them; boy was I surprised when I arrived at some of them. Do your self a favor and make sure that you see photos of what you're going to see prior to going out so that you dont waste time looking at houses you'll have issues moving. Of the remaining bank held (non HUD), privately held and investor held properties, I identified 5 additional properties that appear to be promising. Here are the details (because I don't want anyone else making offers on these properties and giving the owners hope that there actually is demand for their ugly houses, I'll just give the street name and values): 1. Sunderland: 3 bed 2 bath, taxes $1,061. asking price $33,900, ARV in today's market about $90k, ARV in a normal market about $120k. Repairs: Interior paint Carpet Linoleum flooring Appliances Drywall repair Pest control (bugs and rats, I think) Minor roofing repairs Landscape Misc expense 2. Joel Court: 3 bed 2 bath, taxes $1,234, asking price 36,900, ARV in today's market about 90k, ARV in a normal market, about $105k Repairs: Interior paint Carpet Linoleum flooring Appliances Drywall repair Pest control (bugs) Minor roofing repairs Landscape Misc expense HVAC Cabinet repairs Copper wire Plumbing 3. Holland: 3 bed 2 bath, asking $48k, ARV in today's market about 80k, ARV in a normal market, about $100k Repairs: Interior paint Carpet Appliances Drywall repair Pest control (bugs) Minor roofing repairs Landscape Misc expense HVAC 4. Carole: 3 bed 2 bath, asking $53,900k, ARV in today's market about 100k, ARV in a normal market, about $110k Repairs: Interior paint Carpet Appliances Drywall repair Pest control (bugs) Minor roofing repairs Landscape Misc expense 5. Exeter: 5 bed 4 bath, asking $54,900, ARV in today's market about 100k, ARV in a normal market, about $120k. This house was kinda turned into a duplex with two kitchens. Don't know if I would keep it as such or make it a single family home; would need to discuss with contractor. Repairs: Interior and exterior paint Carpet Bath flooring Appliances, both kitchens Drywall repair Cabinet repair Mold abatement Pest control (bugs) Minor roofing repairs Landscape Misc expense HVAC repair 6. New Castle: 3 bed 2 bath, asking $55k, ARV in today's market about 80k, ARV in a normal market, about $100k. Has backed up sewage problem that flooded basement; will need deep cleaning. Cute house, but I'll probably pass on this one. Repairs: Interior and exterior paint Carpet Appliances Drywall replacement Pest control (bugs) Mold abatement Flooring needs leveling in kitchen Landscape Plumbing Misc expense 7. Burnt Leaf: 3 bed 2.5 bath, asking $60k, ARV in today's market about 100k, ARV in a normal market, about $120k Repairs: Interior paint Carpet Appliances Pest control (bugs) Landscape Misc expense 8. Cherie: 3 bed 2 bath, asking $59,900, ARV in today's market about 90k, ARV in a normal market, about $115k Repairs: Interior paint Carpet Appliances Drywall repair Pest control (bugs and termites) Tilework Landscape Misc expense 9. Trenton: 3 bed 2 bath, asking $59,900k, ARV in today's market about 90k, ARV in a normal market, about $115k. I like this house, light rehab Repairs: Interior paint Touch up exterior paint Carpet Appliances Pest control (bugs) Landscape Misc expense 10. Downs: 4 bed 2 bath, asking $59k, ARV in today's market about 90k, ARV in a normal market, about $117k Repairs: Interior paint Carpet Appliances Pest control (bugs) Landscape Misc expense As you can see, property values have dropped a bit in the areas that I have targeted; this implies that I may have to lower my price expectations for selling them to retail buyers; which I will; lowering the current ARV range to $90k. That's ok, because I am taking a long term view at all these properties. If I can flip them in 6 to 12 months the prices will be lower than if I hold them for 13 to 24 months; I'm ok either way. It also means that I'll have to push my offering prices even lower to account for at least 6 - 12 more months of sliding values. For most people that last part would be a major issue, however I see it as an opportunity. In my mind, the longer the recession goes on the better. To make things even better, the longer the period that the FHA, HUD and REO bank's make it hard for regular investors to take the excess inventory off the market, the larger the pile of it will be; further reducing values and making it easier for cash buyers to make a killing. In the next addition, I'll discuss how I formulate my offers, how I write the contracts and how I present them to the sellers / realtors/ HUD. I'll also show how the followup process works and the additional steps I'm taking to find private lenders. One last thing I'll do is upload some photos so you can see how they look. Oh yeah, one more thing. as the result of me putting my thoughts out there and getting active again, I found several sources for bulk REO portfolios that I can get and wholesale (or rehab and flip) for much less than the prices listed on MLS and HUD.gov. 2009 is going to be a great year! Thanks again for following this thread and your input. Please keep the questions and comments coming.

it's always going to be high because for the most part they are fixed. Meaning that if you consistently advertise you'll pay them direct. If you don't consistently advertise your houses then you still pay for them via extended holing costs. People my age and above (40) still have a habit of reading newspapers for info so I don't see it going anywhere soon.