Eric Karrfalt - realtor/broker

Great plan. Sounds similar to what I did starting out with my first home 17 years ago. I bought my first listing ever, rented half, lived in the other. I then moved on to other property, either flipping or keeping and eventually built some new construction. There is so much to cover in so little space. If your looking for an experiencd agent with speific knowledge of buying, renting, rehabbing, flipping, I'm your guy. I have done it through personal experience.
So here is a quick lesson.: Location is always key. I would key on areas with population growth and good economies, schools, etc.. This is where you will find stable markets with better prospects for appreciation. Hamilton County would just be one example.
Budget. budget, budget. Cost overruns and estimating were things I really focused on. If you have done construction, it's easy to see how a $1000 bathroom cleanup can overrun into the thousands. Watch your cash output.
I would focus on property that only needs cosmetics. Heavy remodeling is expensive and time consuming, especially if you plan on doing it yourself. Hire contractors when appropriate. Just because you can drywall, does not mean it is smart money to do it when a crew can knock it out in 2 days for $1000. Time is money and you need to remember every day you are working on a project, is every day you are not focusing on being a project manager.
Factor in all your time when considering a purchase. It does no good to buy a home put a lot of sweat equity into it and only break even on your sales price.
Financing. There may be better alternatives to FHA financing. It does limit you somewhat in that it takes time to get materials to the job, contractors to finish the work, then you submit your invoices for payment and get a check cut. You can't negotiate the best pricing that way. If a contractor has to wait to get paid, it will usually cost more. You are also limited in who can recieve the FHA draw checks for work. I don't believe they will cut them to homeowners anymore. They get cut to contractors, so this poses new issues. How do you reimburse yourself????
Duplexes vs. single family. My gut feeling says duplexes have not appreciated much over the last few years, at least not enough to make a big spread on their sale. I might suggest some of the newer 3-5 year homes that are repos right now. I can demonstrate with actual appraisals and sales I have done that they can be purchased $10-$20k below their appraised value. Cleaned up with paint and carpet gain more on the market value sales price. If I were starting out, this is where I would look. They are just a better deal right now. One last thought, whenever you look at a property, you need to also add in it's carrying cost and sales cost when determing if it is a good value to buy and flip. Sales comissions, cut into your bottom line. Not an issue if you plan to hold, but ultimately cut into your bottom line. Now I could go on into such things like 1031 exchanges rent to owns, contract sales, etc., but that's a graduate course.
Sounds like you have a great plan. It would be a pleasure to talk with you about your plans. Check out my profile and feel free to contact me. -Eric - Wed Nov 12 2008, 06:59

Yes, 3-5% down is attainable depending on your credit, income and reserves and is pretty normal. Now you are in good shape if you put 20% down since it eliminates mortgage insurance. MI is paind on all loans with less than 20% down to insure against a statistical default rate. FHA will allow 3% down and allow the sellers to pay your closing cost on your behalf up to a certain percentage of the sales price. So lets say you are buying a $100k home. You need $3000 for your downpayment and could ask the seller to pay $3000 on your behalf for closing costs escrows, etc. Now you would probably pay full price at $100k to do this. By asking the seller to pay $3000 you are essentially offering $97,000. This is just one quick example of low down payments. There are a multitude of programs to finance a home. Which one is best for you? Ask for advice from real estate pros and mortgage pro's. Good agents and mortgage reps should be able to present a few options for your circumstance, be able to break out all costs, and be able to explain why one program might be better than another. Depending on what type of home you are looking to purchase will have bearing on what type of loan you are getting. Repo, new construction, fixer upper, custom built? All these types of homes may have a more deserable type of financing. I would be happy to help. Review my profile and see if we might be able to start a professional realtor/client relationship. -Eric - Mon Nov 3 2008, 09:35

Home sale date is compiled by local board of realtors listing cooperatives. In Indy it's called the BLC, brokers listing cooperative. It is funded through realtor’s membership and dues. It’s a tool organized and set up by realtors to facilitate our business therefore not available to non-paying members. It would be unrealistic for Trulia to become members of all real estate boards nationwide just to gain access to sold comps and then distribute them for free.
You need to contact a BLC member to get sold information, or, check at your courthouse for sales recordings. - Thu Oct 30 2008, 08:04

Callie,
Sold comparable information is compiled through MIBORS, (Metropolitian Indianapolis Board of Realtors) Broker Listing Cooperative. (BLC). Realtors have access to this through their membership dues and technology fees they pay for the service. You need to contact a realtor who is a member and has access to this information. You could also check court records for mortgage and sales recordings but you would not have other valuable information like days on market, sales incentives, improvements, etc.

If you have not established a relationship with a realtor, I would like to offer my services. I can email any sold information you require. All I ask in return is for the chance to build a profesional relationship and for you to consider me as the realtor to call if I can ever be of assistance in the future. So much of what we do is building relationships. I would be glad to help. -Eric - Thu Oct 23 2008, 08:59

I would first consider your market. What are home values doing in your community. Are you looking at huge drops in valuation? Are the current sales taking big list to sales price differences to sell them? Are you realistically valuing your property? How does it weigh on a cost/sq ft basis to your surrounding sales/community? Hamilton county has weathered the housing slump fairly well, all things considered. Some price ranges are doing very well at this time. If you think your market will recover over the next two years, renting could be a good option. Second, do you want to be a landlord or can you rent your home, pay a management company fee, pay any rehab/fix up after your tennant moves, and still sell it and not take a loss down the road? I have 3 clients who are doing exactly that but are not using a management company. 1 is renting to a corporation who placed their employee, one is renting to an insurance company for a displaced homeowner, one is renting to a tennant of their choice. All three have weighed the risks and figured they will do better two years from now, plus, the home they bought was at such a discount, they could justify taking a small hit if they are still in a loss position two years from now. Things they considered: Will the tennants pay or damage the home. Will the market be any better or worse two years from now. What will economic conditions be two years from now. What will repo homes in your community be doing in 2 years. What will interest rates do two years from now since they are a driving factor in home affordability and peoples desire to purchase. You need to make an educated guess and run your income vs. expense numbers to see where you stand then do a little "educated" guessing. If only my magic eight ball scould give me the right answer! I have been getting a lot of calls asking to rent my listings so I think you will be able to screen and pick good tennants if you go that route. Good luck. - Tue Sep 30 2008, 11:01