would you do this?

[chiver78]

an interesting real estate opportunity has presented itself to me in the past couple days, I'm still wrapping my brain around all it involves.

I live in a 1250sf townhouse, 2BR/1.5 BA, with a garage. I paid $275k for it, just over 5 years ago. with current market conditions, I am not upside-down on my loan, but I have lost my down payment and change. there is a unit under agreement now that's comparable to mine(size and condition), at about the value of my loan note - $245k. I've made this place cosmetically mine, with the exception of blowing up the kitchen and the flooring on the main level. all else has been updated by me.

a larger end unit in my complex, ~1600sf, 2BR/2BA, garage, plus a 3rd floor loft - is up for short sale at $210k. its key bonuses are that the kitchen is 3 times the size of mine, it's already got the hardwoods I want to put in my current unit, and that there is no asshole in the adjoining unit (I know, for now). I have no clue what condition it's in, but will be going to check it out tonight (with my dad - a construction grunt (his words!)). knowing that the other unit is UAG so much higher, I have to believe the old owner had some fun trashing the place on the way out.

my mortgage guy ran the numbers 16 ways from Sunday to see if it was possible for me to add a new loan to my repertoire and rent out the unit I am currently in. unfortunately, with the new banking laws, I'd have to show 2 years of landlord history for those debt ratios, and I've only got the one year, a few years back. really, this wasn't at all planned. but it totally had to be explored!

what my realtor has suggested is an offer contingent upon selling my current place, and listing my current place "priced to sell" contingent upon taking the short sale to closing. so both would be contingent upon the other, and neither would move forward unless both do.

this would mean that I would end up taking a loss on my current place (~$30k) while moving into a larger place at a much lower price. I'd have instant equity, if I understand how short sales work - they don't count for comps as far as appraisals go, right? and I would have more space. all else is really equal, because it's within the complex. the board/management company/financials all stay the same.

assuming the unit is in OK shape, would you make this move? thanks in advance.
like I said, I'm still working it all out in my head...but I know where I need to go for sound financial advice.

[2kids10horses]

Have you seen the one that is under contract? It might be really, really nice! Otherwise, why would the buyer buy it (a smaller unit) than the one on the market for $210?

How would yours compete? Is is as nice as the one under contract? Are there others?

[Malarky]

All else being equal, if you can swing the two mortgages while getting the tenant, you'll be fine.
Condos swing back and forth around here. If I could do this now, I would. You met DH, risk averse doesn't even begin to cover it.

[chiver78]

I've only seen pics of the one under contract. it is pristine, but not at all updated. it's still got all the original "contractor's gold" brass fixtures. all the walls are cream, it's very basic. mine has been painted, still mostly neutrals, but can easily be painted back. it's been updated to remove all brass except door knobs/hinges. I would replace the carpeting before closing - if I stay, it's all coming up for hardwood (or cork, or whatever I end up picking)

mine's also pretty OCD-clean. it would show nicely, I think. really, all I had left to update was the kitchen/flooring.

[chiver78]

haha, love it. yeah, I don't see Mr Malarky taking huge risks.

unfortunately, I can't swing both mortgages. it's going to be either this one or the short sale. I was really hoping it would fly, but it won't.

I just got back from seeing the short sale. it's all cosmetic, but there's a lot of cosmetics. I have to run now, but will post back the list of issues when I get home.

[Malarky]

contractor's gold" brass fixtures

A couple of hundred dollars in pretty fixtures and paint makes peoples eyes sparkle. And makes them cough up cash.

I look at SIL/BIL who have complained for years about their upstairs bath...honestly a couple hundred dollars in tub/sink/toilet would solve the problem.

If you can update without moving plumbing, it doesn't cost that much.

[chiver78]

exactly, Malarky. I didn't really spend all that much to do the updates I've done already. the unit that's under agreement is the one still laden with contractor's gold. come to think of it, so's the short sale. no biggie - the last time I was in the Depot a few weeks ago, I wandered through the lighting dept for kicks. all the fixtures I bought are still available. I'll just recreate the place I'm in now, if I do this.

so, now that I have time to list the issues with the short sale, here goes. this place was a Bachelor Pad, and yes - capitals are appropriate here. pretty much every surface has a hot date with bleach and/or Formula 409 whether I'm the next resident or not. some of the walls, too. there are wires hanging out of the walls in pretty much every room in the house, blank switchplates from moving 'em around, all that. there's some oddly-placed patch jobs in the walls in the bedrooms (I shudder to think what was hanging in those locations...mirrors? trapeze? ) and stains of various sizes and shades in many carpet locations. while the carpet is in decent shape as far as thickness and treads, I'd still pull it completely and replace. they had a dog - I'd venture half the stains were dog, the rest, who knows. all of the baseboards need to come up, they are gnawed, as well as most of the decorative woodwork in the banisters. the first floor hardwood needs to be sanded down and refinished, the tile needs to be bleached/re-grouted. there are more nails/screws in the walls than I could count, from all the wall hangings. there is so much minor patchwork needed, it's ridiculous. quite a few uncased corners are gnawed/scraped down to the metal corner bead. there are also some random cracks in the walls, I'm guessing from a little too much horsing around in the house? past that, I got nothing. oh, and the afore-mentioned contractor's gold all needs to come out. light fixtures (including wall sconces, yuk!), faucets, bathroom hardware, all of it.

basically, where I'm at right now is - do I want to pretty much start over in making a place my own, knowing all the little stuff that absolutely needs to be done? I'm happy in my place now (with the exception of the asshole next door) and I'm OK with my current mortgage payment. obviously I'd like to lower it, but I am totally able to make my payments. the short sale will look beautiful when I'm done fixing it, but as my mom said earlier tonight, it's at least a year before I'm comfortable with the condition. while I have no problem putting the time/money/effort into fixing something up, I've gotten quite spoiled having a "nice place" to sleep at night. this one ain't there....yet. I was really hoping to be able to carry both loans and do the biggest things before moving myself over. having it come down as an either/or is really making me step back and think about it more. that's probably a good thing, I think.

to answer 2kids10horses, I found out tonight that the buyer for the UAG unit was the backup unit to the offer on the short sale. the offer that's in place right now (while the bank is also accepting backups) is one of those ridiculous lowball offers, where they thought they'd see what would stick. my realtor tells me from her chats with the listing agent that if I put in an offer, he will aggressively market my offer to the owners, for whatever value y'all put into that. I've got a high FICO score - 768, and I'm on the board of trustees already. the UAG buyer just got tired of waiting around and took the next available unit. fwiw, this is a very stable complex - we have a sizable reserves, low turnover, only a couple rentals in the whole place. back when I bought the unit I'm in now, the listing agent at the time was a unit owner herself. she said that she'd sold a few units, and waited for the one she wanted to come up for sale and bought it herself.

[Deleted]

Sounds worth a try. The only downside seems to be the effort to get yours ready to sell and living in a place that is for sale. I would bet your chance of pulling off such a deal at less than 20% though.

[DVM gone riding]

sounds like a head ache. I think you have to many contingencies but it might work if you really wanted it to, get out the Tums though.

[Peace Of Mind]

May 16, 2011 22:40:05 GMT -5 @mmc said:

Sounds worth a try. The only downside seems to be the effort to get yours ready to sell and living in a place that is for sale. I would bet your chance of pulling off such a deal at less than 20% though.

I thought her getting her place ready to sell was the easiest part because she keeps it so nice. I'm not a gambler so I wouldn't do it. Unless it was contingent on selling my place first (which she mentioned she'd do).

[chiver78]

mmc, that's kind of where I'm at. I figure I'll put in the heavily-contingent offer, and list my place. if it all works out, it's probably meant to be.

dvm - no Tums necessary. if it doesn't happen, it doesn't happen. past the asshole next door, I'm OK where I am. if this doesn't all fly, I'll follow up with the "gut the kitchen and make it mine" plan I've had all along. if that's the route I take, I'm not leaving for a long damn time....asshole next door be damned.

POM, the offers would have to be entirely contingent on everything falling into place just so. my mortgage guy told me that with the new rules on rentals, and a few other things, that I wouldn't be able to get the new loan unless I sold the current place. the offer/listing would have to all be contingent on each other so that I wouldn't a) get snookered into a contract I couldn't honor, and b) get screwed out of a place to live. as steady as I am on my own, I just can't float a double mortgage on my single salary....yet - I'll get there eventually!

I guess a lot of this should be expected, since I haven't really planned for this. it's a lot of "this sounds like a really good deal, I would be remiss if I didn't check it out!" sort of stuff. as always, I thank y'all for being my sounding board.

[Peace Of Mind]

Chiver - as you said - my main fear would be - what if my place sold and the short sell fell through? Then what? Could you get out of the sale of your home? But I'm a bit of a worrier and I really love my home.

I do wish you the best! Please keep us posted.

[2kids10horses]

So let me see if I've got this right... The Buyer for the unit that's under contract had originally wanted the short sale unit, but got tired of waiting for the bank to approve the short sale, and went with another unit?

I totally understand. A similiar thing happened with us. I buy foreclosures all the time. We wanted a unit in a condo for our own use, as a second residence. We found a nice unit that was a short sale. We offered "list" for it, hoping to close in a hurry. We wanted to be able to use the place as soon as possible. Well, the bank drug it's feet. We were told it could take 3 to 6 months to close. Meanwhile, a smaller unit (foreclosure) became available. Needed more fixup, but it was $15,000 less. We offered cash, quick closing, and got it and moved in in 3 weeks. We retracted our offer on the short sale.

The thing about short sales is the list price is set low to attract an offer. There is no assurance that the bank will accept it! In fact, the one we had offered on, did eventually sell, but for $10,000 more than what it was listed for.

The only way I can see that you could do this would be if you could qualify for both mortgages. I think there are a lot of people would would love to be able to take advantage of the lower prices of nicer homes, but can't buy them because they are stuck with their existing place. Unfortunately, you're one of them.

[Clever Username]

Captain Obvious wants to know: do you want/need more space?

I've got an aunt who literally counts the windows on a home when she thinks she'd like to move there. If you're looking to grow your family, etc, it might be a good thing. If not, imagine how nice your place would look if you put the time, effort and pocket money for this move towards upgrading your own.

[chiver78]

May 17, 2011 11:49:13 GMT -5 Clever Username said:

Captain Obvious wants to know: do you want/need more space?

I've got an aunt who literally counts the windows on a home when she thinks she'd like to move there. If you're looking to grow your family, etc, it might be a good thing. If not, imagine how nice your place would look if you put the time, effort and pocket money for this move towards upgrading your own.

need? no - I live by myself and there's plenty of space for guests. want? even in the nasty condition it's in, that huge kitchen makes me drool. I cook/entertain a lot, and am currently doing so in close to a galley kitchen.

what you say here - putting the time, etc. into the current place is exactly what I would do if this deal doesn't go through. in all honesty, I've been doing that since I moved in. all that's left is the flooring/kitchen. I knew those would be interdependent, and the most expensive, so I left them until last.

[chiver78]

so I just got off the phone with my realtor. I've decided not to pursue the short sale.

I spent most of the day today in a very boring training class, and I let my brain wander. it wandered back over all the little things that needed to be patched/fixed/updated aside from the very thorough cleaning it needs before I'd bring any of my stuff in there! yeah, it's all little stuff, but it adds up. I think I'll watch the market for a bit, and save a stash to use as a down payment (which I didn't have right now, because I hadn't planned to make a move right now) and wait for another good opportunity.

if any of you are interested in a short sale in eastern/central MA, shoot me a PM and I'll get you the MLS listing #. this is a highly desirable complex with a very stable association. and you'd be starting out with at least one cool neighbor.
thanks for all the good points to think about. I knew I came to the right place to ask my question!