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Carlos Gonzalez · 2008-09-23T06:37:40-07:00

I'd like to say hello to everyone and would like to extend my appreciation to all the posters. I have learned a great deal by reading this forum for the past few weeks. I actually came upon it while browsing other real estate investment topics, but just now decided to become a member in order to interact with the community. I currently have a question about a foreclosure I am incredibly interested in. This foreclosure is actually located a block from my house. While I am incredibly new to the real estate investment idea (studying it for about 3-4 months now) I believe that this could very well be the house that sends me on my way to financial freedom. Some basics to the house are: 1) Foreclosure price currently at market for $85,900 2) After viewing the house, I found out that there are appliances that would need to be added, recarpeting for the downstairs, paint that needs to be redone and the tile in the kitchen would need to be replaced. They have actually added anti-freeze? to the plumbing system to keep the pipes from freezing. I'm not sure how much that would cost to fix. All in all I estimated the costs of repairs at $10-15k, which is an incredibly generous amount, but that would give me room for unforseen expindetures. 3) A family member of mine has the same exact floor plan to the house (although the foreclosure is more aesthetically pleasing and has a nicer feel to the inside) She also lives across the street. Her home is valued at $134,000. I have also spoken to my neighbors who have a fairly similair floorplan and although they are not fully aware of the exact going rate, they have expressed they believe their house value to be higher than $120,000 The main issue I am dealing with is I currently have very little money and my credit score, while not bad, lacks in potency for hard money lenders. I think it would be a shame to let this opportunity go to waste. I would love to try and use this as my ship. I am currently only running on two ideas, which are A) Wholesaling the house (I have looked all over different areas to see if the house is posted, but have only come across it once) and B) Finding investors to pool money in for the down payment in order to fix and rent the house or fix and flip the house. If anyone could offer some guidance whether it be on how to handle the situation or if I should take a step back and learn more before trying to invest I would greatly appreciate it. -Bert-

Joshua D.Pro Member

BiggerPockets Founder · HI · Member since 2008 · 16k+ posts · 5k+ votes

18y

Bert -
I just want to welcome you to the site! I'm glad that you're here to participate.

Gotta run, but I hope that others will help you out with the questions you pose in your message.

Podcast Guest on Show #100

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Christian Malesic

Real Estate Investor · Harrisburg, PA · Member since 2008 · 716 posts · 41 votes

18y

Originally posted by CG5471:

The main issue I am dealing with is I currently have very little money and my credit score, while not bad, lacks in potency for hard money lenders.

[some of post deleted]

I am currently only running on two ideas, which are A) Wholesaling the house (I have looked all over different areas to see if the house is posted, but have only come across it once) and B) Finding investors to pool money in for the down payment in order to fix and rent the house or fix and flip the house.

This is a terrible market for lack of cash and less than stellar credit. Your A plan seems doable, but is getting harder and harder as REIs who would be your potential buyers are not buying like they did because they can not get a loan either.

I do not see plan B as a real option unless you can pool enough money to do 100% cash.

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Carlos Gonzalez

OP

Real Estate Investor · Houston, TX · Member since 2008 · 7 posts · 0 votes

18y

Unfortunately, I see the stark realization of the difficulty we face in this market. With all these firms and banks bottoming out and the new bailout having to take place, which I am greatly opposed too. I see no new regulation laws being placed into effect and we're about to give those same firms hundreds of billions of dollars and possibly into the trillions without any consequences for their actions.

When you say that the pool of money would work and I would need to raise the money, you mean 100% of the house cost? Is this correct?

I am in the Texas area and it seems that this market is fairly strong, at least in comparison to the rest of the nation. Houses hear have posted a .6% growth if my facts don't fail me.

My plan of action has currently gone from offense to defense. I may take a step back and wait to see how the market does. I don't see any immediate fix for the loan situation. What I do have in control is my time and money, so I may try and come up with more money to use for leverage when trying to get a loan. I have actually been going to other neighborhoods as well as my own finding vacant properties to add to my list. I have found some decently valued foreclosures with good amounts of equity tied into them, but the main issue I am running into involves the amount of repairs these houses would need.

If anyone can give me some help on how I should go about estimating repair costs for these homes it might help me in deciding if these homes are potential buys.

I am considering going back to basics and continuing to compile my list of buyers. Seeing as money is currently king I think wholesaling and bird dogging would be my best bet to try and raise money to actually provide hard cash for the homes I am interested in.

If anything, I think it would teach me what successful REI's are looking for and help me in locating properties.

If there's any other advice I can attain from anyone, I would gladly welcome it.

-Bert-

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Christian Malesic

Real Estate Investor · Harrisburg, PA · Member since 2008 · 716 posts · 41 votes

18y

Originally posted by CG5471:

When you say that the pool of money would work and I would need to raise the money, you mean 100% of the house cost? Is this correct?

Yes that is what I was thinking. Work it through. You are a banker. 5-10 guys come in to say that between them they can pay 20% of a house plus closing costs. Whose credit do you run? Who is the primary?

Now - if you were to form an LLC or S-Corp with these investors it might work a little better. Except that entities are having more trouble getting loans now then individuals.

Try it. Do not let me discourage you. Go sit down with your friendly neighborhood banker and ask your questions. Report back what you found - especially if it is different then what we are finding.

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