Newbie question about process

[Gary Tsai]

Hi BP community,

I am new to real estate investing and I have a question that I haven't been able to find an answer to.

I am working out of Pittsburgh, PA and I found a property that I'd like to purchase, keep, and make money by renting it out. I can't qualify for financing through conventional means (ie. FHA or conventional mortgages), so I was looking to acquire the capital through private lenders.

My question is this: Do I make the offer first and secure the financing for it after the property's under contract, or do I secure the financing first and then make the offer?

Thanks in advance,

Gary

[Darrell Shepherd]

I gotta throw in my $.02, you really need to analyze that deal if you are just getting in the game. If you can't get the loan then buy and hold is probably not where you should start.

If you go secondary market the costs are going to wreck your ROI unless you borrow from a friend or relative, which is ripe for trouble if things dont go right (ask me how I know this).

I'd hate to discourage anyone from getting started, but you do need to have an investment strategy that fits your resources. What happens if you put a tenant in the house that does $5k in damage and you lose a few months rent in kicking them out and repairing the house? If you cant shoulder that you shouldn't be buying rentals IMO. It does NOT work out in real life the way it does on paper.

Also, 10% under market isn't all that great. If you network with other investors you can find way better deals than looking in the MLS if that's what you're after.

If you really like the deal, my suggestion is to partner with someone with money, do all the work, they put up the money and you split the profits. Contrary to what someone else put on here, I'm a big believer that if the deal is right that the money is always there. Sometimes not being able to find the money is a good indicator that the deal just isn't that great. Its pretty easy to find financing on something for half what its worth. 90%? Not so much.