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Updated about 9 years ago, 11/13/2015
My mentor offers my first deal
so, some people I attend church with told me last year they were investors. I shared I wanted the same , so they let me use their real estate book. Last week, they offered to wholesale to me my first deal.
Question: do I need a real estate agent?
Facts: they have a contract with the seller, there is a tenant scheduled to move out Dec 4th, the sellers agent still has the sign in the yard and I can't see the property without proof of funds. I will be using hard money! I need comps and other info, should I get an agent?
Lastly, why would I ever need an agent to buy from a whole seller or anyone?
You don't NEED and agent to buy from anyone. However if you don't know how to get and evaluate comps or if you don't know how to go through the process of buying a property a buyers agent can be helpful.
A hard money lender should be able to give you proof of funds if they are willing to finance the deal.
Personally I am not buying a property I can't inspect unless it is so cheap I can do a full renovation.
@Dottie W. depending on your situation hard money may not be great idea. Do you have the ability to refinance the property and pay them off quickly? In my area I would not be able to cash flow many rentals at the rates hard money lenders loan at. Is there a reason you are not using conventional or a HELOC loan?
@Ned Carey Thanks for the advice. I'm scheduled to view the property Saturday at 10:30am. I will know if I get the pre qualification letter thursday🙂.
@Jerry W. I'm going for a 1 year hard money loan. I. The mean time, I think I will sell and use the money to pay off my car. If I can't sell, I will hold then refinance. I'm not doing a conventional because my score is 600 not 620. I'm not doing a heloc because I don't want 2 loans under one roof. This will be my first deal, really- I just want to profit $20k
Why would someone you just met hand you a deal that makes $20K in one year after paying hard money for one year? This deal has me worried. Please look at it carefully and if you can find someone from BP in your area not connected to this deal to give you a second opinion. It may be a good deal, but I have some concerns. You also need to make sure it cash flows during the one year or you could end up in the hole a fair bit before selling.
I would have someone who is more experienced take a look at the deal. Post the numbers in a thread and get some feedback... !
good luck :) from a fellow newbie!
I have problems where a mentor farms the students to sell off anything (wholesale, flips, SFR or MFU) - - to me, I see that as a conflict of interest.
If YOU are to become the investor, then YOU need to learn how to find and structure deals for yourself. I see the relationship as Advise, Counsel, and to teach you to "see" for yourself.
Sorry to be a wet blanket - -
@Dottie W., if you don't mind, you can share the numbers of the perspective property and the HM loan you are planning to get. I am sure you will get plenty feedback on how sound the deal is.
From what I've need told, they have a property that has been sitting empty for a few months. I guess they are wholesaling this deal to me to pay back their hard money. This house looks like it needs walls, ceiling, siding, moving Windows, walls, cabinets and more. I'm scheduled to view this Saturday.
They are asking $19,000 for this deal. I got the sellers agent to run comps for six months but I don't know how to read it.
This house was built in 1938 and has hardwood floors and a metal roof. The siding is wood.
Something's not adding up here. Without more detail, it's hard to know what's missing and whether you have a great deal from an altruistic angel or a scary mess from which you should run like hell.
From the picture, I can see the property needs some TLC, to put it mildly.
can someone send me a link on analyzing for hard money. I'm going to do siding, add a heat pump, stabilize the floor, add shutters and cosmetic stuff per the suggestion of my buddies.
This is a 1928 2 story home. Wood burning stove with chimney. Oil tank, 3 bedroom 1 bath. 1,418 sq ft. $20 per sq foot, city water and sewer.
Do you think a HML will give you money considering you are a beginner? That is a big project. I would not want to tackle that as a first project, and I know how to do the remodeling work. If you don't know about construction, and don't have a great grasp of costs and an accurate after repaired value, you could lose your shirt here. There is a reason an experienced investor is passing on this. By the way, they ALWAYS keep the best deals for themselves. A deal passed on is a deal they passed on
Originally posted by @Dottie W.:
They are asking $19,000 for this deal. I got the sellers agent to run comps for six months but I don't know how to read it.
This house will not be ready for a tenant to move in by Dec 4, 2015. Kindly stating if you don't know how to ready comps you are not ready to buy. That goes for wholesaling, rehabbing or landlording. How can a so-called mentor even allow such a thing? You need to slow down and hit the books before you lose your shirt here. Buying this at $19K may be a discount or it may be overpriced. I need to see the comps for rentals / houses sold. It needs a ton of work, full rehab. You need to know if it will flip fast at retail or will you have to do a lease-option or hold it for longer as a rental. It may even be a teardown! Sit this one out, learn how to do a Comparative Marketing Analysis (CMA aka comps) before you make any offers. Otherwise you will be up $hits creek without a paddle in no time flat. My coin.
Kudos,
Mary
I'm a Realtor myself and just getting ready to have my first flip of my own. I'm using HML and they look more in detail on the transaction than you. I can help you to read the comps if you need me, but my question is : who pull the comps? I can play with comps depending if I'm representing a buyer or a seller.
That property needs a tons of rehab.
That house looks like a ton of work. For your first investment I would shy away unless you are very versed in all phases of construction. I can see using hard money and this spiraling both with spending and timeline. Best of luck
That house looks like it needs a lot of work I would suggest to triple check your rehab numbers, hold time till completion and taxes. My first deal was very similar I paid considerably less but had I better assessed my number I would have offer $4,000 less.... not much on your first it all adds up.
Looks like a gut job. My view is your "mentor" got a hard money loan to get this property. They probably found out how much headache it's going to be and are trying to pawn it off to the 1st sucker to say yes because their loan is due.
Run the other way from this deal and "mentor".
Since you are in the learning stage of investing, when you go to view the house this weekend take an inspector or a reputable contractor with you to access the amount of work that will be needed. It may cost you to have them come out, but they will point out things you need to look at. That is an invaluable learning curve. Building codes have changed over years so the type of heating may have to change, electrical may have to be redone, etc. It may be worth it to spend a few dollars now then be stuck with a money pit. Hope this helps.
I know your eager to get your first deal done, I've been there. Don't do that deal. Your going to be sad you did. Tell them your not ready for it and find something better.
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#1 Personal Finance Contributor
- Rental Property Investor
- East Wenatchee, WA
At first view of the exterior pic I flinched hard, but then later read that you will be adding shutters, so it should be all good!
Seriously though, I would take a contractor with me to the inspection as @Lori Thorpe suggests. Then I would tell my 'mentor' I like it but can't close until March. That should give you their timeline and motivation for selling. "I can't wait that long. My HML is due next month" or whatever.
They are probably trying to pass the buck to you big time. My guess is there are easier ways to make $20k.
Sell the fancy car payment either way and drive your beater to your next rental. Only obtain payments on things that rise in value and put cash in your pocket. Not the other way around. Cheers!
I'm still new to this as well, but after seeing those pictures and hearing the story so far....I would run from that deal and take a little more time to learn. I think you have gotten some good advice from others in this thread.