Spouse - Posted by Al

Posted by Al on August 08, 2005 at 23:45:48:


The problem is that I don’t have the $120,000 or the $20,000 to rehab. My credit score is pretty good that’s why I’m borrowing the money. Any other suggestions/advice would be greatly appreciated!

Spouse - Posted by Al

Posted by Al on August 08, 2005 at 20:03:01:

How does one sell a killer deal to his significant other. I have the opportunity of purchasing a property for $70,000 under fair market value (foreclosed property). She doesn’t like the house and I can’t get her to realize this is a temporary thing. I will be receiving $40,000 within a month after closing ($20,000 for the rehab/$20,000 in my pocket). I will sell the house 2 years later for another $15,000 in profit. Any advice/suggestions would be greatly appreciated!

Re: Spouse - Posted by Brian (UT)

Posted by Brian (UT) on August 10, 2005 at 09:36:23:


Listen to your wife now or you can spend the rest of your life hearing about it even if it works out financially.

In 1962 my wife found out she was pregnant and we decided to buy a house. I found a fixer-upper at a great price in Piedmont, Ca a highly desirable area.

We lived in it during the remodel, but I also had a 60 hour a week executive job, which really extended the remodelling time and she hated it. Also she really didn’t like the house when we first previewed it and let it be known. We did come out ahead moneywise.

Learned 3 things (1) Don’t live in a rehab unless your single. (2) To listen to my wife’s feelings about houses, the ones she didn’t like were much harder to sell and I didn’t net as much money after I rehabbed them then those she thought were crap but o.k. (3) Getting it done, and flipped as an investment, and getting on to something else was more profitable in the long run.

And I heard about that house again only a few weeks ago, I guess I’ll hear about it for the next 20 years too.


Re: Spouse - Posted by advice

Posted by advice on August 09, 2005 at 22:51:41:

Don’t make the wife move into a house she does not like for two years. Especially when you would need to fix it up while living there. That is called a “divorce-in-the-making”. It will not be fun.

You found a house at a great 65% of ARV price. Treat it like an investment, not like some golden goose to nurture for two years while you bleed off the profits and irritate the wife in the process. Turn it fast to make some cash. If you can’t figure out a way to do this deal, when will you ever?

Instead of an OO loan, get a NOO loan even if it is just a hard money loan. If you can’t find enough rehab dollars in your credit cards, lines of credit, or a loan of some type, then find a partner. Get some money out of the deal and use it to move on to the next deal. Time is money. You will make more by doing more deals. Skip the two year rehab experiment. Forget about playing musical houses especially if your wife is not 100% in agreement. Treat your deals as investment houses, not homes.

Re: Spouse - Posted by michaela-ATL

Posted by michaela-ATL on August 09, 2005 at 11:51:11:


2 years - sounds to me, as if you’re planning on moving in and then selling. ALso, your loan looks like an
owner-occupied loan. Can’t blame your wife about feeling awkward. It would be a different story, if this was only a rehab on the side.

Does she like to decorate? Maybe you can sit down and ask her how she would chnage the house, if she could. Let her be part of it. Ask her, why seh doesn’t like the house? Weird floorplan? Small kitchen? Too cut up? Find out, what would make this a house, that she’d like.


Put your foot down and do the deal - Posted by Jeff

Posted by Jeff on August 09, 2005 at 11:21:27:

Nuff said

Re: Spouse - Posted by Sean

Posted by Sean on August 09, 2005 at 08:45:57:

Well, you have a choice to make…

Appease your spouse and miss the deal… or get the deal and deal with the consequences of your spouse.

You can try to explain the deal to her, but if she is closed minded, she’s closed minded… you may or may not be able to change that.

If you aren’t able to change it, then you are left with doing a good thing financially and dealing with the emotional and psychological fall out of ramrodding it onto your wife. Me personally I always choose the path that brings the least amount of stress in my life…

There will always be another deal… but for me anyway, there will never be another Mrs… Deals come and go… an spurned woman lasts a lifetime.

Re: Spouse - Posted by dealmaker

Posted by dealmaker on August 08, 2005 at 21:07:08:

Maybe if you explained the numbers in a straightforward way! Which you haven’t done here. You say it’s $70K under FMV. You also say you’ll get $20K for the rehab and another $20K in your pocket. Does that mean someone is paying you $40K for doing the rehab? Or does it mean you’re borrowing $40K and spending $20K.

Then you say you’ll be selling it in 2 years (why wait 2 years?) for another $15K. That’s only $55K on something that you started out saying was being purchased at a $70K discount! What happened to the $70K?

Explain it to us and maybe we can help you explain it to her.


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That’ll be great for his marriage …n/t - Posted by michaela-ATL

Posted by michaela-ATL on August 09, 2005 at 11:52:15:

buy and sell now - Posted by ken in sc

Posted by ken in sc on August 09, 2005 at 14:34:48:

Al is right, no reason to wait a year or two to sell. Borrow the money any way you have to, fix it up then sell!

And Clint is right - take your wife on vacation with some of the profit or buy her something extravagant. She will deserve it after she puts up with your moods swings during the rehab process and sale :slight_smile: And she will be your biggest cheerleader after that, which in turn will make you more money in the long run. Having a wife who supports you is half the battle in my opinion.


Al… - Posted by Clint

Posted by Clint on August 09, 2005 at 06:46:30:

If your wife doesn’t like the house, will other women? Is it a horrible floor plan, or is it just ‘dark’ and needs some lightened improvements e.g. carpet, paint, etc.?

Show your wife the numbers. Let her know that you indeed will make $55K in (x months).

Her buy in to the deal is paramount! whether or not she does any labor.

Let her know you don’t want to live there, it is strictly an investment.

As far as the $$ goes. Use an ELOC on your own home (if you can) - Don’t pay yourself the 20K - yet. Get it on the back end when you sell, now you are at $75K.

And when you sell, fly, first class to your WIFE’s Favorite Vacation destination!


Re: Spouse - Posted by Al

Posted by Al on August 08, 2005 at 23:02:22:

I have an opportunity to purchase a 3 bedroom house (3792 square feet). The asking price is $120,000. After the rehab is complete the house will be worth $190,000. I will receive a 90/10 loan off of $180,000 ($162,000). I will borrow $40,000 ($20,000 for the rehab and $20,000 in my pocket). After 2 years I will sell the house for anywhere from $195,000 - $205,000 ($15,000 - $25,000) profit. Does this make sense?

Re: Spouse - Posted by Natalie-VA

Posted by Natalie-VA on August 09, 2005 at 14:27:45:

You replied:

I have a lender who will does this. If the appraisal comes in at $190,000 he would do a 90/10 based off of $180,000 ($162,000). He said I could do this because there would be no seasoning issues. I was told by the Dealmaker to get this in writing. Does this make sense?

I agree with Dealmaker that you should get this in writing. I’m not saying it’s impossible, but most lenders base their loan on the purchase price, even if the value is higher. This might be too good to be true which may be why your spouse has doubts.


Re: Spouse - Posted by Natalie-VA

Posted by Natalie-VA on August 09, 2005 at 11:46:09:


How are you going to get a 90/10 loan off 180 when the purchase price is only 120? Do you already have a lender lined up that will do this?


Re: Spouse - Posted by dealmaker

Posted by dealmaker on August 08, 2005 at 23:16:21:

OK, now the numbers make sense. But why go to the effort of taking out the 90/10 loan? If you pay $120K now, put $20K into the rehab and sell for $195K your profit is $55K, NOW. Taking out a loan doesn’t change that! Or did you think it did?

Waiting two years to get a crappy 7% annual appreciation isn’t worth it. Waiting ONE YEAR to get long term capital gains treatment on the $55K MIGHT be worth it depending on your marginal tax rate.

IMO the best thing to do is buy it, rehab it up to today’s market and sell it now. Pay the ordinary income tax on the gain and look for another one to do. This borrowing money and holding two years (why two, it only takes one to get long term capital gains treatment?) is just foolishness.


Re: Spouse - Posted by Lyal

Posted by Lyal on August 09, 2005 at 07:21:32:

Sounds like he’s planning on living in it for 2 yrs to get the tax exclusion. That might also explain his spouse’s reticence. Not too excited about living in a house that needs rehab and depending on hubby to do everything he says he will to fix up and re-sell (been there…).