How To Sell A House, The Correct Way

In life, at one point or another we all will experience moving into a different home. That would mean that we will also experience selling a house at some point in time. Selling a home is not as easy as putting up a for sale sign and advertising online. It takes strategy to get your house sold in a timely manner as well as getting top market value for it. Lets breakdown what you can do to properly list and sell your home!

First and foremost, you need to get adequate and proper help. There will be many agents and investors coming at you claiming that they know everything about the market and that they know exactly what they are doing. Your real estate is most likely your biggest investment in life. You should not trust that investment with just anyone. You need to find a professional, and build trust before working with them. This person will get you the results that you want and in the quickest time. Do not waste your time with someone who does put your interests and needs first and foremost.

Making improvements to your home can be a great way to add value to your investment. But believe it or not, sometimes we see people making too many unnecessary improvements. By this, we are seeing people trying to out due what the market is paying. That is a daunting task and usually a strategy that does not pan out very well in the end, ever if you put in the most spectacular work.

That does not go to say that you should not put some improvements into your home. Just be aware of what others are doing. A buyer looking to move right into their new home does not want to deal with unfixed items themselves. You need to present that you have been a responsible home owner that protected your investment. We also recommend that you get your home thoroughly inspected by a professional home inspector. Doing so will show prospective buyers a healthy home report. Wouldn’t you want the confidence that you are buying a quality product when you are buying something?

Look at pictures of homes on multi listing services and see what others around you are doing. You will notice trends taking place, and that is what is working at the moment. The style and design of your home matters to buyers. You want to make a great first impression when buyers come to see your home. Keep up with the current trends, whether it be a open flooring concept with granite counter tops, with a neutral color scheme. There are certain styles that the eye will capture right away. Go to other open houses and engage in conversation with other buyers to see what is trending and what they are looking for. When it comes time to selling your home, we also recommend that you hire a professional designer to stage the property for you.

Last but certainly not least, the listing price you try selling at goes a long ways towards attracting buyers. You may be getting a lot of people at your open houses as well as plenty of other showings. But where are all the offers? This most likely means that you are just over priced. Even if you feel like you added a lot of value to your home through the various improvements and remodeling, sometimes it is not enough to drive the market up. That is why it is so important to study your market and figure out when the best time to sell is. Is it a buyer’s market or seller’s market. Be patient, everything eventually sells, just maybe not at the price you want it to. Sometimes you actually might ever get over listing offers! If you have any other questions relating to selling a home please never hesitate to reach out to us!

http://www.paulbuyshomesforcash.com/

 

 

 

Advertisements

Uphill Battles Ahead

Last week was by far one of the most stressful weeks of our lives with respect to our business. We received the appraisal back from our hard money lender (Alpha) and were told that our property did not appraise. In fact, not only did it not appraise, the after repair value provided by the appraiser was only $255,000, which is $90,000 lower than our estimated after repair value! We were shocked beyond words and our immediate reaction was that the appraiser was dead wrong. We called Alpha right away to let them know there must be some sort of mistake. Our contact there told us he would try to see if the appraiser could review his report over again to see if he would come to a different result. In the meantime, we frantically reached out to our attorney to see if there was anything that could be done for us to get out of the contract if Alpha decided to side with the appraiser and NOT give us our funds back. Unfortunately, our attorney told us that there was nothing she could do and told us that we had never requested that she put in a financing contingency and given that our inspection period had since lapsed. We were devastated by this news because it would mean about $17,000 would be on the line. If we couldn’t close, we would have to say goodbye to our deposit.

We reached out to a couple of our mentors, Doug and Shomail, to see if they had any advice. We were told to try reaching out to other hard money lenders to see if they were willing to lend or come to a different result. One of the lenders, Ashmore Partners, who we already had a preapproval with, told us that in order to move forward, he too would have to order an appraisal, which is definitely something we were hoping to avoid. Our other option was Glen Galucchi, who is a real estate mogul who now lends out his money for a living instead of flipping homes directly. Glen’s application process was quite extensive and detailed. At a conference we attended, I remember him saying that he never once loses money on any deal he lends on because he and his staff vet the deals that come in so vigorously. This mean if our deal was accepted by his team, we should be golden, right? The other good thing about going with Glen was that he did not require an appraisal.

We filled out the necessary information right away and submitted our application the following morning. Paul decided to attend the Flippers and Funders networking event that same evening because another contact we have built a relationship with throughout our investing journey told Paul Glen would be at the event. At the event, Paul told Glen about our deal and how about our situation. Glen promised he would review our deal first thing the next morning and give us a decision by the end of the day. That day was the longest of our lives but well worth the wait. As promised, by 1pm the next day, we received a final answer, that they agreed to fund our deal! Although the points were high (4 points), the interest on the loan was 10%, which is lower than most hard money lenders. We were just so thankful and grateful that he decided to give us funding and believed in our deal.

Lessons Learned

– Never assume that your attorney has your best interest at heart and always make sure you tell the attorney exactly what types of protections you want in place.

-Always prepare a detailed comp sheet in advance with all the solds, current properties on the market, and current properties under contract to be rock solid in your numbers and your deal

– Never give up!

Flip It or Hold It?

As an investor in real estate, we always study the trends of the market. Is it a buyer’s market or a seller’s? Is it more advantageous as an investor to hold and rent out a property, or to fix and flip it? At this moment we are certainly going down the path as flippers because the inventory is not at its peak.

Primarily, we find it more appealing in the short term to invest in fix and flips for the properties that we can snag up for a good price.  It is a quick turnover of income rather than investing in a hold and seeing if it pans out in the end. As a flipper, we can purchase a home quickly and make our improvements where needed in a relatively short amount of time. It can take from a few weeks to a few months depending on the amount of work needed.  When you hold a property, you have to worry about the maintenance and upkeep. Owning property means that you have to protect your investment, and that means you will need to put a lot of money into making sure everything is functioning properly and looks presentable. It can be very stressful to keep track of all that over the years! Flipping a home by no means guarantees that you will get a significant return on your investment, but you can expect at least a full return on your initial within a short amount amount of time. In a hold, you can expect to wait years and years depending on how the market shapes up.

Investors who buy and hold real estate usually find people to rent out the properties. This is when things can get tricky. Becoming a landlord is no easy task. You need to find some loyal tenants that pays rent on time as well as doing their part in maintaining the house. You are putting your trust in these strangers to basically take care of your investment. For some investors it works out great, and for others it can by a nightmare. By flipping properties, you are only dealing with the improvements on the property. The things that you are in direct control of rather than putting it in the hands of tenants to take care of it for you.

Another great reason to flip over hold is that you will have the ability to influence the selling price. You basically control your return on investment. Now there is strategy involved in all of this in order to come out on top. With a buy and hold, you are limited to the rental income each month and there is usually only a limit in which tenants are willing to pay. Some areas in the country are even rent-controlled! With a flip, you are basically adding value to the property with your home improvements, and the more you do, the more you increase the value. In the end, there are advantages and disadvantages of both fix and flip, and buy and hold. But in the end, a flip outweighs a hold for us. If you want to find out more about what we do and how we do it, visit our website today! Best of luck to you investors out there.

http://www.paulbuyshomesforcash.com/

Obstacles in our flip project

We hit our first major obstacle in our business. We just received the appraisal report back for 249 Clerk and it came in at $265,000, which is about $90,000 lower than our expected ARV. Paul and I were both floored by this report. If the appraisers assessment was correct, we would also not get the funding from Alpha and would have to let go of the deal. We called our contact at Alpha back and told him that we thought this appraisal was inaccurate and demanded that they re-do it. We also sent comps on what we thought were comps the appraiser had overlooked. He said he would get back to us so we are waiting to see what happens.  Our attorney, who we hate so much, told us that there is no way we could get out of the contract without forfeiting our deposit of $17,000 because she failed to put in a financing contingency into the contract. I regret not thinking these things through more carefully before signing the final agreement but we were so confident in the ARV based on what other agents told us about the area and how Bergan Lafayette has been trending as a whole. Hopefully things work out in the end and we can get the comps back up to where we need them to be but this is definitely not looking good for us right now.  Stay tuned for whether we were able to turn a potentially bust deal into a closed transaction!!

Dumont Flip – 248 Lexington

248 Lexington is a 3 bed/2 bath multi-family home we are converting into a single family home and will be our first flip as real estate investors! We found this property off of Zillow. By chance, when we called the listing agent (who happened to be the seller’s niece), although they were currently under contract with another buyer at the time, because that buyer was using an FHA loan, they were requiring that the seller make all of these repairs before the bank would issue them the loan. Due to the headache of it all, the seller decided to give us a chance and we went to visit the property the day after New Years. At first glance, the property seemed to be in pretty good shape and the rehab would likely be cosmetic in nature in addition to replacing windows and the roof. We made an offer at $250k and had it accepted immediately.

One challenge we are facing with this property so far is the layout of the bedrooms/hallway on the second floor. The space is a bit tight and originally, we were thinking about adding a fourth bedroom which used to be just a big wide open space. However, by adding drywall there, it would essentially close off the space and would leave very little hallway space, which would like pretty awkward. We are now thinking that we just leave the space open and could be functional just as a playroom, reading room or an office.  Another space issue we have is how to address an area on the far left side of the hallway which was originally used as storage. We went back and forth about leaving it as storage or just opening up the space to make more room in the hallway but decided to just leave it as storage (which would be the most functional use of the space).

Successes so far

  • We were able to obtain lending from a hard money lender right away – used Alpha Funding
  • We found a private money lender who agreed to lend us $50,000 at 15% interest – our networking paid off!
  • Our estimated rehab costs were pretty spot on – both of the bids that were submitted came in around $40-45k, which was what we originally anticipated when analyzing the deal.
  • The initial appraisal came in at $400k – which is what we estimated the ARV to be.
  • Sweep found an oil tank but was removed with zero contamination
  • Smooth closing

Lessons learned so far

  • Always document everything!
  • Make sure the statement of work is as detailed as possible (i..e, cost break down of materials versus labor and who is responsible for what…for instance, what types of materials would we as the investors be responsible for picking our and getting delivered versus materials the contractors will be providing)
  • Prepare change orders for any adjustments made to the statement of work.
  • Request contractor for all receipts/invoices.
  • Never pay anything up front in cash – we made the mistake of paying the contractor the first draw in cash without documenting it.
  • Create a detailed timeline and request the timeline be confirmed by the contractor. For instance, initially we had no idea when certain items needed to be ordered (i.e., windows, flooring, appliances, etc)  in order to keep momentum going.

Rough timeline of rehab process based on conversations with contractor (Jim)

  • Obtain necessary permits
  • Order dumpster
  • Demo process – 2-3 days
  • Granite countertop – request contractor to order granite samples and also provide any sample styles you would like to have
  • Windows – takes less than 1 week to order and pick up standard windows
  • Flooring – this will be close to the last step but important to pick out materials/color and decide whether the home will house engineered hardwood or hardwood; whether you would like to preserve some of the original flooring and just stain and refinish, etc.

Jersey City Flip – 249 Clerk St

Clerk street is the first property we ever made an offer on located in the Bergan Lafayette section of Jersey City. This property is a single family attached row-house. The rehab is a medium rehab, consisting of cosmetic elements as well as new roof and possibly a new water heater and furnace, based on the inspection report.

Challenges

There are a couple challenges associated with this property. First, the ARV has been difficult to calculate. Because Bergan Lafayette is a section of Jersey City that has been on the upswing only fairly recently, there aren’t any renovated properties on the same street and most renovations that have been done within a mile radius are not exact comps. For instance, some properties are brownstones or detached properties versus attached and also have a different look/feel to them then the subject property.

We have also been dealing with a difficult agent. Tara Duffy is the agent we have been mostly in contact with since the very beginning of our real estate investing journey. In the beginning, she was really helpful and great about giving us access to properties, sending us listings and making offers for us. However, as time went on, she became increasingly difficult about letting us make offers she thought were too low and even seemed to balk at the idea about making offers for us and analyzing deals when we met her for coffee one day. Additionally, our experience with her by going through the Clerk Street deal has been awful. When we asked her to send us comps to support the ARV, she told us we had to dig through our emails and find the ones she already sent us even though we made it clear that the link she initially sent three months ago had since expired. She then went on the complain about how pulling comps took her too much time and she couldn’t stop wasting her time doing these sorts of tasks for us. She also made it difficult for us to access the property when we needed to get in there to show our potential JV partner, Jamal, the property. When we met with her, she just had this sour attitude the entire time. To make matters worse, every time we try to make some sort of requests to the seller or negotiate the deal terms (for instance, when the inspection report came back, we requested credits and the seller rejected them all and threatened to pull out of the deal if we didn’t respond that we would proceed that same day by 2pm). Tara frantically texted us and questioned why we were asking for so many repairs and said that we could lose the deal if we didn’t respond right away that we would move forward. It is just a shame that instead of looking out for our own best interest, she seems to be looking out for her own interest and seems to want to push the deal forward whether we are comfortable with it or not so she could make her commissions.

I also am not too fond of the current contractors we are planning on using for the deal. The statement of work they provided was very general and not specific at all. I sent them back our own break down of the statement of work and asked them to fill in the blanks, which they then responded by saying they would have to get into the property again to do a more thorough analysis. I am also worried that the ARV won’t stick and that the level of repairs will be much greater than anticipated, especially given all of the repairs the inspector told us we would have to make and the current condition of the home.

Inheriting a Property

Events take place in our lives that we just cannot control. Inheriting a house is one of those rather large surprises that suddenly occurs out of nowhere. While this new possession brings warm and mixed feelings of countless memories, it also brings a monetary value. And as much you may want to keep that inherited home, sometimes you have no choice other than to put it up for sale. Selling a home is no walk in the park, it can be a extensive and strenuous process. But with help from the right people, it can be a breeze. We have been noticing that more times than not, people who inherit a home just end up selling it. Especially right now and right here in New Jersey where the market is flooded with buyers. This can be the absolute best time to sell that extra home that you have on your hands.

If you are or know someone who may be in this situation, there are a few factors to consider before putting the house on the market. Let me explain! First, there is the emotional aspect. The toughest part will be letting something go  of something that holds such sentimental value. Years of memories have flooded this home and the process of removing everything from the home is just too much for someone to go through. And we all know that when emotions spiral out of control, business and emotion do now mix well. But as many memories that you might have had in that home, you will be creating an opportunity for someone else and their family to do the same. Another huge problem to deal with is the costs involved with making updates to attract buyers. We all want to sell a product in which we can make top dollar on. But what happens if you do not want to put in the time and the money to make this happen? And there is never a guarantee that if you do make these updates, that it will even attract buyers that will meet your wants and needs. Last and certainly not least, you may run into potential costly liens or other problems that seem to pop up the longer you hold onto it. There are legal and tax concerns that you need to understand in order to make the sale a success.

Most of us do not know the answers to these questions and concerns. Luckily there are people who know exactly what to do! There are specific real estate professionals that know the ins and outs of selling a inherited home. We are one of those companies that can help!  We deal with all sorts of situations to make sure that you can get what you need. We understand life consists of situations and events that are just out of our control. But our goal and vision is to make sure that when those situations happen, that you will have a trusted partner in real estate to help you out! Visit our website today to find out more about us and what we can do for you.

http://www.paulbuyshomesforcash.com/

 

 

First flip on its way!

248 Lexington is a 3 bed/2 bath multi-family home we are converting into a single family home and will be our first flip as real estate investors! We found this property off of Zillow. By chance, when we called the listing agent (who happened to be the seller’s niece), although they were currently under contract with another buyer at the time, because that buyer was using an FHA loan, they were requiring that the seller make all of these repairs before the bank would issue them the loan. Due to the headache of it all, the seller decided to give us a chance and we went to visit the property the day after New Years. At first glance, the property seemed to be in pretty good shape and the rehab would likely be cosmetic in nature in addition to replacing windows and the roof. We made an offer at $250k and had it accepted immediately.

One challenge we are facing with this property so far is the layout of the bedrooms/hallway on the second floor. The space is a bit tight and originally, we were thinking about adding a fourth bedroom which used to be just a big wide open space. However, by adding drywall there, it would essentially close off the space and would leave very little hallway space, which would like pretty awkward. We are now thinking that we just leave the space open and could be functional just as a playroom, reading room or an office.  Another space issue we have is how to address an area on the far left side of the hallway which was originally used as storage. We went back and forth about leaving it as storage or just opening up the space to make more room in the hallway but decided to just leave it as storage (which would be the most functional use of the space).

Successes so far

  • We were able to obtain lending from a hard money lender right away – used Alpha Funding
  • We found a private money lender who agreed to lend us $50,000 at 15% interest – our networking paid off!
  • Our estimated rehab costs were pretty spot on – both of the bids that were submitted came in around $40-45k, which was what we originally anticipated when analyzing the deal.
  • The initial appraisal came in at $400k – which is what we estimated the ARV to be.
  • Sweep found an oil tank but was removed with zero contamination
  • Smooth closing

Lessons learned so far

  • Always document everything!
  • Make sure the statement of work is as detailed as possible (i..e, cost break down of materials versus labor and who is responsible for what…for instance, what types of materials would we as the investors be responsible for picking our and getting delivered versus materials the contractors will be providing)
  • Prepare change orders for any adjustments made to the statement of work.
  • Request contractor for all receipts/invoices.
  • Never pay anything up front in cash – we made the mistake of paying the contractor the first draw in cash without documenting it.
  • Create a detailed timeline and request the timeline be confirmed by the contractor. For instance, initially we had no idea when certain items needed to be ordered (i.e., windows, flooring, appliances, etc)  in order to keep momentum going.

Rough timeline of rehab process based on conversations with contractor (Jim)

  • Obtain necessary permits
  • Order dumpster
  • Demo process – 2-3 days
  • Granite countertop – request contractor to order granite samples and also provide any sample styles you would like to have
  • Windows – takes less than 1 week to order and pick up standard windows
  • Flooring – this will be close to the last step but important to pick out materials/color and decide whether the home will house engineered hardwood or hardwood; whether you would like to preserve some of the original flooring and just stain and refinish, etc.

Paul and I are finally closing on our first flip project next week Tuesday. It has been an exciting yet stressful ride. There was so many procedural hoops to jump through and writing up the scope of work for the contractor was stressful since we didn’t know what we were doing as newbies. However, we were able to successfully find a private money investor who agreed to fund $50,000 of the deal, which is pretty sweet. He did however ask for so many documents from us, including a social security card, passport copies, and even asked us to put up our personal residence as collateral (Crazy!). We also got the independent contractor agreement signed up and paid our first draw of $5,000.

However, we are confident that this deal will go well and also trust that we found a good contractor. We also got decent terms on our hard money loan at 12.75% and 3 points (not terrible). In addition to that, we just paid for an appraisal ($450), tank sweep ($250), commitment fee ($1,000) and the lender attorney fee of $1500. Hopefully we get better rates the more deals we do.

The other flip project we will probably be starting soon is 249 Clerk Street, which we locked down at $170k. Jamal agreed to JV with us but we still need to figure out the financing. So far, we have hired an inspector and will need to go through the appraisal process.

As for the West Orange deal, we finally closed on that project about two weeks ago. Jamal was generous enough to give us all of the profits (including his share) because it only netted to $17k at the end of the day, but the frustrating part is he is relying on his other deal closing before he can pay us back for the $48k that we lent him. That deal was supposed to close last Wednesday but got held up and we are still waiting on the money. It isn’t that we don’t trust Jamal but we are just anxious to get our money back and are not sure what to think of the situation. Shouldn’t he have some sort of savings or something else to get us the money? What if he never had this South Orange deal to rely on, would he have never been able to pay us back? So many questions…I feel like we should have at least included a clause in the promissory note, penalizing him with daily interest payments every day he goes over the due date for payment…lessons learned.

Who Should You Sell Your Home To?

It can be tough to distinguish real estate market trends. Counties all over New Jersey continue to change. Some develop at a rapid pace, while others are getting even worse. That is why when it comes time to buy or even sell your home, it could amount to loads of frustration. That being said, it is still very much a buyer’s market in many counties such as Hudson, Morris, Essex, Bergen, and Somerset County. This is what is causing many homeowners to sit on their homes that they want to sell. They just can’t get that fair price that they are looking for or expecting. Some are willing to wait out months before testing the market again.

There is a solution though. Many homeowners are finding alternative routes to sell their homes. And that is to sell to a real estate investor. What exactly does a real estate investor do? I have gone into detail in previous posts on what exactly a real estate investor does and the advantages associated with working with them. Basically, these real estate investors/companies purchase homes, makes repairs, and use them to generate income. This can happen in a couple of different ways, either as a buy and hold (rental units) or sell them for a profit.

You may be asking yourself, these people are taking advantage of home owners, or how do I benefit from this? To address both concerns, real estate investors look for win-win situations. They help create a solution to get that troublesome home out of the owners hands. Just think, sometimes home owners are underwater in payments and the mortgage lender wants to foreclose on the property. What real estate investors can do it prevent that foreclosure from happening, and help the home owners out by purchasing the property from them. This way, the home owners are walking away with cash in hand to basically get a fresh start rather than having the foreclosure go through leaving them with absolutely nothing. That is just one example of how real estate investors can help.

Another common question that we get as real estate investors is how we determine the value of a certain home. Well, we do our research. We get as much information as we can from the home owner and then we will do our own home inspection to determine the cost of necessary repairs. From there we will determine what the best cash offer we can make. If the offer works, than we handle the paperwork and figure out a closing date of your choosing. It can happen in as little as 7 days. It is a very quick process and hassle-free. Also, you do not have to worry about paying commission fees to an agent, because we are not agents. Which just means more cash in your pocket! Now if you or if you know someone who is interested in putting their home on the market, give us a call first to see what we could do for you. We are a family owned business who love helping others. visit our website today to find out more about what we do and who we are!

http://www.paulbuyshomesforcash.com/

 

 

 

We are getting one step closer to getting our first deals under contract! We have Clerk Street and Dumont that look most promising. There are a couple other bank owned properties that we got offers accepted on but these banks for REO properties are super stringent on their terms and have refused to accept most if not all of our proposed changes reflected in our riders.

We took our first stab at trying to market a property we have under attorney review as a wholesale deal and got a lot of interest on Bigger Pockets and on Craigslist. However, once buyers realize that the property is in a flood zone, they run the other way. It has been a good experience because we were able to get a bunch of contacts to add to our buyer’s list and also get feedback from realtors and other flippers at to why this deal won’t work for them. After getting consistent feedback we realize that this deal is no good!

We also met with a few contractors last weekend for the Dumont property. So far the two quotes we received have been pretty close to our initial estimated rehab budget. We also found a potential private money investor for the deal – someone else we found through Craigslist. Her name is Whitney and we met her this past weekend as well as brought her over to the property for her to check it out and see what the contractors were doing. She seemed interested but her personality is a bit intense! She also ran some numbers on estimated repairs herself and came $30k over our initial estimate (as well as the estimates provided by the contractors). Crazy! We will see how it works out with her and whether we want to partner up with her on this flip as a JV or just interest only arrangement.