New Member from San Diego, CA

[James Davis]

Hello BP!

I'm James Davis from San Diego, California. Actually I live in Chula Vista, CA which is a neighboring city of San Diego.  I have no experience in real estate except owning my own house which I rented out for 2 years when I relocated to San Diego from Victorville, CA. I am now selling that house so that I could have about $20k cash to start flipping houses with. It should close escrow in a week. 

Facing my fear of failure I now want to jump both feet into real estate investing. However, I'm overcoming this fear with lots and lots of knowledge. I've read two books on buying and flipping houses (Buy it, Fix It, Sell It Profit by Kevin C. Myers & The Pre-Foreclosure Property Investor's Kit by Thomas J Lucier) and the 3rd book I'm currently reading is The Book on Flipping Houses by J Scott (I'm on chapter 11). That is how I found BP! I'm starting to network with local REI clubs to get some connections. Gratefully, they have some networking before their meeting because I usually have to run out immediately after the meeting because it ends at 9pm and I work at 4am the following day. I'll be spending a lot of time on BP and various podcasts because they meet only once per month. To make sure I jump in and don't just research forever, I've given myself a deadline of mid-September to start by sending out letters to my farm area. I'm interested in flipping pre-foreclosures and, due to a recent podcast I watched on another website, houses in probate.

So my plan is to first try and get financing. San Diego is expensive with the average sold price for houses around $400k and from looking at some hard money lender websites  some of them have mentioned that they want to see that I have "skin-in-the-game" and have a down payment requirement. So I'm going to have about $20k from selling my house. I've applied for a line of credit at my bank for $40k yesterday and I've been conditionally approved with 9% interest rate. I have great credit and "good" income at my current job which is a huge plus! So that brings it to $60k cash that I will have access to...hopefully. I'll still be short of my goal of having $80k which is 20% of $400k so I may try and apply for lines of credit at other banks to get the rest or try to use my 401k account which I think I can take out up to $15k within 2 week period. Afterwards, I will start getting pre-approved with the hard money lenders so when I get a deal I'll have the money to do it. With all that said I'm going to favor other types of deals such as seller financing, and subject to (assume the loan) deals. Even when a mortgage has a due on sale clause I've heard that very few lenders have actually used it, I hope this is true. One thing that I'm having problems finding are the portfolio/investor loans mentioned in the BP book. Anybody know of any in my area? 

Next I plan on putting all the business details together like getting the business incorporated, liability insurance, finding contractor/builder's insurance providers, finding a real estate attorney, probate attorney, contractors, real estate agents (buyers and sellers), sample letters to send out to my farm area, sample purchase contract, etc. Even though one my first deal I will be a noob, I don't want to come off as one. So any advice and suggestions on starting off I really appreciate.

[Bruce May]

@James Davis welcome to BP. You have a good plan. Being a local flipper I'll tell you that the foreclosures in the area almost all but gone. You might find one hear or there but they are not as readily available as they were two years ago.

Probate will take some leg work. You will have to go to the court yourself and pull the files for your mailing list. There are some people who will do it for you but that will cost you some money and can eat up your capital quickly.

If you need a resource for a few hard money lenders let me know. I'm friends with the local money guys.

As for your properties, you may already have enough money. Remember that $400k is the resale value and you don't want to purchase the home for that much or you will never make any money. Use the guides in the books you've read to determine your purchase price. If they recommend a formula you will probably find that the numbers won't work in San Diego so you will have to adjust.

Property Radar is a great resource for more than foreclosures. @Sean O'toole, the owner, is a regular speaker at our local clubs and I recommend you go and listen to his presentation. It's always informative and not a sales pitch for his product. Best of luck.