Offer #6 and Other Ramblings

Offer #6
I got a call from my loan officer's office that I need to give them a check for an appraisal. My agent told me last week that HUD had an appraisal done last November for the property, and I could probably use it, insteead of getting a new one. Unfortunately, the lender is requesting a newer appraisal for their piece of mind. I think this is bogus, but not much I can do. It's just another necessary evil of having to deal with conventional loans. To make matters worse, I have to pay by check - I can't pay by credit card. With earnest money, an inspection, and now an appraisal, I am already almost $1,700 in the hole with upfront costs. Plus, I'll still need to come up with another $2,000 or so at closing. Then I'll have to fork over ~$600 for repairs soon after closing and endure holding costs for who knows how long. A lot of upfront money just to make a profit of $10k or so later on. Going the HUD route via conventional financing sure does eat up a person's reserves rather quickly. I guess that's even more incentive to go the w/s flipping route.

My Wife's Resistance with More HUD's
I'm still trying to convince my wife to let me get another $1,000 cashier's check for some HUD prospects. Simply pleading isn't working, but I may have found her Achille's Heel. We currently don't have a couch in our family room, and she has been wanting one for a while now. We had her mothers sectional there up until about last October, but to make a very long story short, it's now in our garage. She mentioned last night that a furniture store is having a good deal where we can buy a couch, love seat, and ottoman now, and not have to start paying on it until next year (or was it the year after?). I think I may be able to bargain with her now. ;-)

Outside Inspection of Two Possible HUD's
On the way home from work yesterday, I stopped by two HUD properties that will be open to investors next Monday. The first one, coincidentally, was located in the very same neighborhood that my first FSBO was in. The property looked like it needed a lot of work. HUD will already give the buyer $4.5k in escrow to repair/replace some things inside, but the outside is also in need of repair. From my outside and peek-in-the-windows inspection, I could see that it needs a new range, new kitchen cabinets, new paint in the kitchen, major siding repair as there is a lot of rot, new window screens, and a new (or at least repaired) fence. The side and backyard also looks crappy. I quickly estimated repairs to be at least $10,000 - in addition to the stuff HUD mentions. So, I'll probably put $15k-$20k of repairs in any offer I make on this property.

The second property is what I really wanted to see. It has a low offer price, but HUD only escrowed $1,000 for repairs, so I thought it wouldn't need a whole lot of repair work. My inspection showed it had two cracked windows (HUD only says it has one), some wood rot in various places on the siding, a sagging gutter in the front, and it looks like various places of the roof needs new shingles. The good things are the inside looks really nice. It's a 2-story, so I could only base my judgement on the first floor. It's on a corner lot with a nice back yard, a good metal wire fence, and a covered rear patio. I figure repairs to run about $10,000, but I'd need to see the upstairs first.