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Updated over 10 years ago on . Most recent reply

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Joseph Canini
  • San Antonio, TX
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Buy and Hold Properties

Joseph Canini
  • San Antonio, TX
Posted

I am a partner in Canini Properties LLC in San Antonio, TX and have a quick question. For my flips i usually use hard money to secure my properties, however if i was going to secure a buy and hold, what other way could i go about securing the finances for that property? Could I get a loan from the bank to purchase a house that I plan on renting out for a few years, and then sell it? To me using hard money to get a buy and hold would not allow for any ROI...Any suggestions?

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Brian Gibbons#5 Guru, Book, & Course Reviews Contributor
  • Investor
  • Sherman Oaks, CA
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Brian Gibbons#5 Guru, Book, & Course Reviews Contributor
  • Investor
  • Sherman Oaks, CA
Replied

@Brandon Turner

 just wrote a book on creative financing. I haven't seen it yet but he probably goes through some or all of these ideas:

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Seller financing means talking to the seller and having them do some kind of creative financing solution. Subject to and land trusts, sandwich lease options and lease option assignments, wraparound mortgages, and installment sales are all ways to have the seller contribute to some kind of seller financing.  There are issues to deal with, such as due on sale clauses.
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Private lending has to do with buying a property, and having an IRA retiree fund the deal. You work with an IRS approved custodian (eg Equity Trust, Pensco Trust, et al.) and create a brand-new IRA; these are called self-directed IRAs.

Self-directed IRAs have stiff penalties if you would to do not do them right. The best book in my opinion on self-directed IRAs is "IRA Wealth" by Patrick Rice, who has 30 years experience with Pensco Trust, a respected custodian out of Florida.

See Private Banker Concept here http://equity-university.trustetc.com/library/gene...
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Joint venture partners are in my opinion one of the best ways to get started in real estate. Here are a few examples.

Let's say find a  real estate deal and you have no money.  You find a doctor that has some lazy money around. This money of the doctor's is liquid. You see the doctor, and say:

"Hey Doc if I find a deal, would you consider partnering with me, this is how the numbers would work.

Let's say I find something that  we repair it, it can be sold for $100,000.

Our partnership will buy it for $40K, fix it up for $20K, it'll cost about $10,000 to sell with sales commissions and closing costs, so we'll net $70,000.

You'll be my funding partner, pay the $40K+ the $20K for fix up, then an agent will sell the property, and at closing, we will both split the $30,000 net.

I'll do all the work, you make 15,000 in 90 days or less. And I'll make $15,000.

If you have $60K out in an investment, and make the $60K back plus $15,000 profit, that's a pretty good rate of return in 90 days or less."

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Another JV could be with a home seller has a light rehab.

Let's say the ARV is $100,000, and it takes $10,000 in order to fix it up.

Many probate houses are very old on the interiors; I like to call them "grandma houses".

These grandma houses can't be sold very easily because the kitchens and bathrooms are dates, 1970s style.

So, maybe you could be a "probate turnaround expert", and go to the executor or the probate attorney and let them know that you can get the house ready for resale and update the kitchen and the bathrooms. You use your private lender money for the rehab and have the house resold within 90 days.

So you have a joint venture agreement with the seller, fix the property up, resell it, get a JV Fee of say $10,000, and the heirs get the balance. You have to be careful and protect your interests. An attorney should prepare the JV agreement.

My friend @Rick H. knows alot about probate investing.
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Bottom line, using creativity is important as a real estate investor. If you only use conventional financing, you are severely limited.

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