how do u get started

Question

Got a questions Thanks every one for the post I am learning so much My question is how do you get started I plan to buy a house and rehab and sell but I do not have alot of money is there a way to do this with no money. Someone said in a post buying on contracts what is that? Any advice will be helpful this is a dream for me to own my own business and grow it slowly but I do not have the money to go out a buy a property  Thank in advance for you help

Tom McGiveron · Answer

r2d2 - nice.  where do you live?  do you have partners?  who does your rehab work?

i'd just like to add that there are ALOT of steps - and probably the most difficult for the beginner investor - between numbers 5 and 7.

great post, but for my two sense - 5, 6, and 7 is where you will need to do the most preperation for your investing.  if you buy RIGHT - (below market) - the rehabbing can be done on-the-go.  but between number one and three, i would add this:
make contact lists with contractors, realtors - with the flat fee - very good, title companies, re attorney - they usually can just refer you to a good title company they do business with, insurance companies - you'll need at the very least HOA and price out all your expenses.    this last one is BIG.

i think you should do this before you do number 3.  Additionally, of course, you would make up, or just get from an rei book, a questionaire to have ready to interview potential sellers and buyers.  a good, easy to follow, interview sheet is AWESOME.  it makes communicating so much easier.  get one and go through it 4 times a day, while you do all this other stuff.  it will take you 15 minutes a day to go over it.  do it with a parent or someone you don't feel corny with.  you will develop a flow.  you want to sound professional on the phone.

i have one that i will be publishing in the future that works for me.  it will just take pressure off you.

take a month - make the time to sit down and prepare.  depending on where you live in the country - you could have your first investment prop fairly soon.  weigh the risks first...

N/A N/A · Answer

If you drive through a new neighborhood and buy an almost completed house then relist it for more, isn't it a tough sale with a bunch of newer houses all over the neighborhood, as bottom prices because the developer wants to fill the houses?

N/A N/A · Answer

Very interesting, I'm going to have to do some more research on this topic.  Thank you!

N/A N/A · Answer

noobdog1, so what you are saying is if you buy a house, during the construction stage, you can purchase it for less than the "post" construction stage? (great website btw, and please excuse this question, I'm still learning the biz.)

Tom McGiveron · Answer

well that is what r2 is saying and that's what i've heard before.  i just never really considered it as an option, especially where i live.  i know that there is alot of "stuff" you have to follow up on, like permits, codes, plans, and inspection follow up - the thing has to be built to code.  new construction doesn't always mean good construction.

but if a builder is doing a bunch of houses or just a few, if the owner(s) can get money NOW, it's better than waiting to get money later.  again, i'm not entirely familiar, but it definitely interests me.  and my numbers in previous post are totally arbitrary.

Tom McGiveron · Answer

my guess is that the advantage is you're buying it before it is completed.  so if upon completion - they're selling for 399,990...you buy it for 325,000 or whatever before it's done.  the developer gets his money and you do the finishing touches.  again, i don't know the details.  you then turn around, put a little "extra" into the property and sell it for 410,000...cuz you put that "extra" into it.

but r2, with this investment strategy, what are the issues that the investor has to watch out for?  i would imagine you have to check up on permits, get them inspected, find out about any violations...make sure the unit you buy is squared away...right?

so you need an inspector and you need copies of the permits and c/o's...or the c/o's come later closer to completion?

Tom McGiveron · Answer

r2,

i actually looked at a house recently - a 6 year old reo for 76,500.  it needed about $2500 AT THE MOST in some fixin.  comped at 104,000 - the only problem was the driveway - which was ridiculously graded - like bottom-out grade.  the house from sidewalk to front door must have been a 40foot walk with a 25 foot elevation.

so we decided to pass, but i was so drawn by the neighborhood and the condition of the structure - i was thinking of offering 64,000 to the bank...even though the prop was only listed 30 days ago. could possibly have been sold already.

i just want your opinion.  your response could be as brief as, "are you kidding me?"    :goofy:

Matt H · Answer

I don't usually do any rehabs. That's rediculous if you ask me. Far better to just drive through newer neighborhood where new construction is going on. Any house that's half done that has a for sale sign on it write down the info. Then call them all up and find out how much they want for the house and what's to be done on the indside (ie: carpet? hardword? Granite? etc...) Then if you find a house that appears to be selling below market value buy it. Make sure it's something that is in the finishing stages. Like at least the framing is done. Then supervise the rest of the construction. Making sure it's done up to the standards. Then once you buy it immediately relist it for more. In the mean time start finishing it off. Like put in the blinds, buy cheap but nice ones. Put in a lawn, do it yourself if you can which is also dirt cheap. No need to spend hundreds on trees. For srubs and trees just go into a forest near by. Preferably where no one will care if a few small trees go missing. Dig out some small pine and spruce trees. Bag the ends. Put them in your car or truck and bring them back and plant them. I've never actually done that but I've been tempted too.  :lol: Then you relist it as a brand new finished home. It's amazing what you can charge as a premium for "finishing it off". Like bring it from that "finished construction look" to that point where it's "all done" and has that homey look and feel. it's easy to do and you can make as much or more than having to renovate some old dump that nobody wants renovated or not. The other benefit to doing what I'm suggesting is that people also will pay a premium to not only buy a new house buy to find a finished house in a new neighborhood. Most people buy in new neighborhoods to live in themselves, not to flip. And so if someone can find a nice home in a new neighborhood which has all been finished, like the grass is put in, the blinds are in, the appliances are in...they don't mind forking out another 50 to 100k or something astronomical for expenses that to you were minimal. Like if you go and find enough shrubs from the forest, and plant them all nicely, they might think you spent $25k on the landscaping. And like for example my last house that I did this on, had a walk out basement. So I purchased all the materials to finsih the basement. Costed about $5k and said that they're included as one feature that comes with the home. So they're probably figured they're getting $25k worth of materials right there. So anyway you get the picture. That's how I do flips. But I'd say regardless of what you flip just be sure you find a house in a good neighborhood.

Matt H · Answer

Try this, maybe this sounds crazy but I know it works:

Step 1) Buy a map of your city or town
Step 2) map out where all the "Big Box" stores are, or shopping malls.
Step 3) Make up some weatherproof cardboard signs saying "I buy houses" and include your phone number and or website. 
Step 4) Post them anywhere you can get away with it near the main entry points and exits to the big box centers. Here in my city those get about 100,000 cars going through per day. 
Step 5) When you start getting calls have a questionaire ready to qualify the house. Especially the reason for selling, and to find out if they're willing to sell below market value or with exceptionally favorable terms. EI they'll lend you the mortgage because they own the house free and clear. Or theirs a death, divorce, bankruptcy, or other urgent need to sell below market value.
Step 6) Go to the bank and tell them you just bought a home and that you need a line of credit to do the rehab. If that doesn't work then maybe you don't need to spend a ton of money on the rehab anyway. Just buy some paint from walmart for cheap paint the inside and outside. Go to an "end of the roll" discount carpet center and sign up for one of their "store credit cards" so that payment is deferred for 6 months. Buy the carpet on the CC which you'll pay for later from the proceeds after you sell it. 
Step 7) New paint inside and out, perhaps new fixtures and new carpet and lino. That will make about 90% of the house look brand new and your out of pocket expense was $100 worth of walmart paint. 
Step 8) Now list it with a "flat fee realestate company" on the mls. Be sure that they are one "flat fee" for listing it. Also post signs directing people from the major arteries to your home for sale. Have a website for the house with photos so that people can do a virtual tour. Put that on a nicely made brochure which you can make with your computer printer. 
Step 8) Sell the home, use part of the proceeds to payback the bank and the instore credit card for your materials for the rehab. And then do it all over again. Do that just 4 times a year and if you only made a sliver of a profit of say $25k you'd be making $100,000k per year. But infact you can usually do much better than that. I just made $140k net net on my last flip. 
Step 9) Get started!

Tom McGiveron · Answer

jerry, that is a common starting post.  just be cautious how you approach rei.  don't get ahead of yourself.  slow and steady wins the race!

the whole no money down thing really, i think, depends on where you live or where you plan to invest.

and really, "no money down", the term is very relative.  it can relate to different things.

and there is a huge difference between BUYING houses with no money down and making no money down OFFERS.

anyone can do both, but actually doing one successfully, where you find a buyer who is willing to do it, takes time and alot of effort.

i would just go out on a limb here, but i'll guess that you're not even close to doing this.  it takes networking, marketing, number crunching and learning how to do all that stuff and more, before you can actually do it.

reading back posts will help.  buying (or borrowing from a friend) carleton sheets will help you sort of.  no matter what book you buy (or take out of the library for FREE!), if you're totally new to investing, start slow, pick a topic a week and study the heck out of it.  topics such as title insurance, HOA, Investor Loans, Hard Money, bird dogging, and focus on your personal finances and much more.  systematically doing things will get you places you never thought you could reach.

what i'm saying is, it's up to YOU!  no book holds your hand.