Hai

I'm thinking of buying a foreclosed condo and doing a quick sale. I'm going to the bank this Friday to see how much I get pre-approved for. I'm not looking to spend more than $50,000. My cousin is a real estate agent who is willing to help me with the process, free of charge

I can do my own house repairs too, anything from painting to hardwood flooring. Plus I have many friends in construction who could help with a slight remodel without charging me a fortune.

Has anyone done this? Tips, comments, etc...let's talk about this

 

It could be good.. if you can afford the holding costs if it doesn't sell right away then do it.

Just remember if you sell and make a profit keep some of that profit since it will be taxable.

 

This would be a great question to post on nsxprime. Many of the guys there make their living in real estate, and they're always glad to offer advice....

 

You're talking about "flipping" rather than "investing" here.

What's the demand for condos in the area you're considering, and in the building/association containing the condo? If there are several others that are in foreclosure or for sale, I would be leery of trying to flip one there.

 

ding ding ding. Couldn't have said it better. You need to understand the market first before you dive into the real estate pool.

Real estate flipping is pretty much dead after the market tanked.

Why not buy it, live in it or better yet rent it, then once the market comes back, sell it or just continue to rent it?

 

I could afford payments without a problem. I don't eat out much, don't spend money on movies/dvd's, etc...and most importantly, no debt! Well besides the car but that's a small payment.

Thanks Tim! I'll be sure to visit the site sometime soon.

Yeah "flipping" is more appropriate here

From what I hear, it's all about location right now (at least in Charlotte) You could have a rundown condo but if it's in a very nice neighborhood, you can sell it for a fairly good profit after a slight remodel. The places(neighbhoods/subdivisions) I've been looking at only have 1 or 2 condos that are foreclosures so it's not like the whole place is going under. The neighborhoods are quite, clean and located fairly close to downtown and a major highway.

For example, a condo that's worth about $115,000 is selling for $65,000 right now, but the subdivision has an average condo value of almost $160,000. I think that would be a great buy. Again, just an example.

I'm learning as I go here so correct me if I'm wrong about something.

 

Condos have a bunch of different guidelines for mortgages. You'll need to know the owner-occupied stats and the financial state of the condo association as well as a couple other property stats. These can sink your hopes of getting a mortgage.

 

[quote=NSXNEXT;11970738]ding ding ding. Couldn't have said it better. You need to understand the market first before you dive into the real estate pool.

Real estate flipping is pretty much dead after the market tanked.

Why not buy it, live in it or better yet rent it, then once the market comes back, sell it or just continue to rent it?[/quote]

That's why I have Azine to educate me

You know I was thinking about that too. I could make it my own for at least 2-3 years and sell it after. I live with my aunt and uncle right now so moving out is definitely an option.

If I could make money flipping it right away then that's awesome. But if I get a good deal on a condo but it doesn't sell, I'm ok to live in it as well. I'm not in a rush here.

I just see so many properties being sold for dirt cheap and I thought to myself, why not re-sell for a little profit?

 

Ok, this is something I'll have to ask my real estate agent about. Thanks for the help

 

I'm a realtor out of Illinois...be sure to look at the comps, other homes for sale, others closed & others in foreclosure. Even if you're getting a good deal it is not good to buy in an area inundated with too many of them or it will be a long time before you get a return on it. Also, look into if the association has restrictions on what percentage of the units can be rented out. If there are a few selling for $50k range and allot of those are rented out, it could attract a bad crowd but I don’t know the area so I could be wrong.
Doing your own work and having family in the biz are definitely bonuses! Good luck.

 

Very true, I have had 2 deals fall apart in the last 3 months because a condo development or association lost their FHA approval. One was because the developer still owned more than 10% of the units and the other was because the associations budget was all screwed up. However, if you are spending less than $50k it may not be enough to get an FHA loan depending on your state so this may not matter. However, keep in mind a very high percentage of 1st time buyers use FHA financing so when you go to sell this you want the condo/complex/association to be FHA approved for a quicker easier sale.

 

That's what my cousin (real estate agent) was talking about too. He advised me not to look or buy in an area that has many foreclosures.

So far most of the properties I looked at are in the "pricier/rich" areas, old money basically lol there are a few properties around a very nice mall, SouthPark Mall. These areas don't attract a bad crown because it can get pretty expensive to live there. Mostly older folks or successful young adults around these areas

I'm actually surprised some of these areas have foreclosures they don't seem like the kind of area where people couldn't pay for their condo/home.

Thanks for the help I'm printing all this stuff out so my cousin further explain everything

 

If you don't currently have a primary residence and go through with purchasing the condo then make it your primary.. That way you can deduct the mortgage interest on taxes and if you sell it the transaction won't be taxable.

 

Hopefully I can go through with a purchase pretty soon It all depends on what the bank tells me this Friday.

 

Much better!
Once the owner lives in the condo 2 out of 5 years, the first $250K of profit is exempt from taxes for an unmarried owner.

If one buys and flips within a few months, all profit is taxable as capital gains. Then the flipper will have to calculate the purchase, tax, renovation and opportunity costs to see if there is a real profit.

 

I'm just hoping I could rent it out and see some profit from it. I'm not greedy, just a couple bucks would be okay. Most of the areas I'm looking at rent out condo's anywhere from $600-1500 a month, depending on size, etc.

I'm pretty sure my monthly payments will be less though, I hope

Anyways, can't really plan too much without knowing how much I can borrow Friday is the day!

 

What's your work history, credit rating?

Whatever you do, DO NOT mention flipping, renting to the mortgage company.

Repeat after me...."yes sir, it will be my primary residence".

 

Work history is solid: I've been with the same company for 3 years and before that I've worked with Stickley Furniture for almost 7 years. Plus, I'm picking up a second job in the evenings which should start next week. I get 40 hours a week plus overtime.

Credit rating might not be the best though or acutally not enough history. I have a loan in my name for the car and I pay on time actually I pay double each month. I messed up when I was a teenager with credit cards, like maxed them out and it took me like 2 years to pay them off. But currently, I have 1 credit card and everything is payed off! So basically the only thing I pay for right now is my car and I give my aunt/uncle $200 a month for food/etc.

Yes sir, it will be my primary residence!!

 

I'm a little confused about the unit prices and rents you have quoted. You are talking about paying $50,000 for a unit worth $115,000-$160,000? Where are the investors in your market? I think you guessed about rents and expenses as well.

I suggest that you slow down and do your homework. Your relative can get you recent sales prices and rents and expenses in the development where you are looking to purchase. This is the minimum information you need prior to considering a purchase. Condos that were worth $115,000+ a few years ago might only be worth $50-$60,000 now. Housing values go both ways. Best wishes.

 

Alex,

I'm going to suggest staying away from condos for flipping purposes. It is something we looked hard into, however, Charlotte is not like NY. Living inside of the city is a very new concept in the area and there is not much infrastructure to support it. There have been some advances as far as putting grocery stores and other similar places within the city... but right now Charlotte is a place to do business and a place to hang out... then you go out of the city to go home. The only condos/lofts/townhomes that we have seen a positive upside on have been the luxury/high-end units... but even in foreclosure you'll likely need to drop $400k plus to get something worth $600k or so.

Additionally, you have to look at all of the housing income in the area. There are a TON of single family homes in and around Charlotte and a TON of killer foreclosure/short-sale deals as well. People are buying those well before they are buying condos. I'll do a search as one of my sources forwarded me some stats.... I'll see if I still have it and I'll post it here.

Last thing I want to say... you can and will make money if you buy a condo in foreclosure or short-sale... however, do not expect to flip it. I'd leverage an educated guess and say to be prepared to sit on something 5-7 years or longer before you'll be able to see a significant profit. So if you want to scoop up something cheap and live there, it's a good investment, but it's not good for a flip. Think about it... if you can buy a $150k unit for $50k, so can soooo many other people b/c condos took a bigger hit then single family homes. So that means you would have to wait for all of the short-sale and foreclosure condos/lofts/townhomes to completely dry up before prices start to rebound... then it will be years and years before they rebound where you can make money.

 

Found it. Here's the section I was looking for. This is for 1st Quarter 2010 verses 1st Quarter 2009:

For your reference, the average days on market has only increased by 4 days for single family homes... so prices are up, volume is up, but days on market is about the same. Whereas townhomes/condos are trending the complete opposite direction. Even more concerning... volume is up almost 13%, but prices are down over 10%. If you're an investor and you see this stat... you run.

So again, I think it's a great idea for you and will be a great investment... but plan on living there for a while and get the flipping idea out of your
head
.

 

Think about the tenant aggrevation. This is a bigger commitment than getting a puppy. You should think long and hard before committing the next decade to a dog

Real estate I've owned, seems like it owned me. I'm sticking with REIT.

 

^This

 

Don't want to discourage you, sounds like a fine plan.

Real estate investing becomes a way of life, and I'm constantly taken to school.

One of the top shopping center developers in the country told me: "I will never understand commercial real estate if I live to be 100". At the time, he was in his 80's

 

UPDATE:


Ok so my credit history checks out, according to the loan officer. But, I don't have enough money in the bank. As of right now I have about $5000 but I use that money very often, so it doesn't just sit there for months. He wants to see at least $10,000 and it must sit in my account for 2 months without being used. Bump in the road for me but this was the first step, I'm pretty happy where I am right now. I just need to start saving way more!

And of course, I've been listening to you guys and feel that "flipping" a condo/house is not an option anymore. Most likey I will either live there or rent it out

Btw, you can't just walk into a bank anymore and talk to the person behind a desk about a loan. You come into their office and they end up calling a loan officer on the phone I always thought you spoke to a live person and got everything settled right there, not over the phone?

 

Thank you for the help, he is actually getting the info for me today Now that I have time, I can do all the HW.

Yeah I kind of slowed down on the thought of flipping a condo/house. I don't need to make money right away, I'd be happy to buy something real cheap right now and eventually make a little money selling it some years down the road. I really need a place to live, so that's the most reasonable thing to do.

I figured you and your wife probably tried this already, so if I have any more questions I'll just PM you. Thank you for the help

No worries I don't plan on doing this my whole life, just wanted to make some money but it doesn't look like it's happening anytime soon. I like the quote

 

Happy to help... if you need anything just let me know!!

Also, we've been working with a credit union (CMCU) and they have been 1000x better then any bank. Credit Union's also write their own rules, so much more flexible then any bank. May want to look into that as well

 

Hmmm, my car loan is through a credit union. I should give them a call I'll check CMCU out as well, thank you again