All Forum Posts by: William Donaldson

How do you balance appropriating funds for acquisitions if you're purchasing short sales? It seems like short sales can be relatively quick but usually take months or even a year to get approved and closed. If you're limited as to how many purchases you can make in a year, you could lose out if you wait too long on a short sale or pull the trigger on another property and can't get financing for the now-approved short sale and hurt your reputation with the bank.

& how does the earnest money work in this kind of situation?

In my dealings with FNMA I've realized that many banks (mostly BoA) are too big and that's WHY they failed.

I am in a similar situation. I am a junior in college and found a condo unit where the PITI is almost the same as my current rent. Based on conservative numbers I could live in one bedroom and rent out the other three to friends while I'm still in school and not only cover my payments and other expenses but cash flow several hundred a month. The condos were bought by a lot of out-of-state investors (mostly in Cali) and when the market crashed the price dropped from $120-135k down to about $70k.

Long story short, my grandparents are cosigning because my lack of credit history and short income history - I started a property preservation business at the end of last year and made a good bit of money since then. Because I have no credit history I had to go with a conventional loan. I also out that many large banks (TD/BB&T) won't loan on a condo where less than 70% are owner-occupied.. I found a local bank that is willing to do a conventional loan at 20% down without looking at the possibility of having roommates paying rent.

I honestly think you'd qualify for an FHA or Homepath loan considering it is your first purchase, you have a credit history, and an income history. Also it'd be your primary residence, which helps if it's a FNMA property. If you need to do a conventional loan I'd recommend working with a local bank. Also, the income history requirement that I came across was only two years - and by using a cosigner there are ways to get around that (not just for conventional).

Good luck!

Congratulations on the wedding! I don't think it is unreasonable for you to adjust your offer based on the new damages. Whether it comes out of the purchase price or the seller provides a certain amount at closing to cover these costs is something that can be negotiated.

The seller most likely realizes that with a duplex that is 100% vacant with new damages that he won't be getting a better offer. You should be able to use this to negotiate.

Some people just have an entitlement mentality and think that people better off than them should give them more breaks/free stuff. You're doing nothing wrong if you provide a good place to live at a fair price.

I don't like giving handouts to people that expect handouts now and will expect more later. Don't let this jade your attitude towards tenants - I'm sure you have come across plenty of tenants that are on the positive side of the spectrum.

The items you listed are not that expensive here. Unless you pay everyone in Trident Layers on the trip to China, you will far surpass any savings on material costs. I highly doubt the quality would be anything you'd want in your home as well.

Welcome to BP! You should certainly get into real estate investing if you are wanting to have more control over your financial future!

Netting 5k per month will probably take awhile to get to - investors on here seem to go for CAP rates of 8-20%+. Obviously the higher the CAP rate the harder it probably was to find the deal, but you'll get there.

I am also located in a town with three colleges nearby (Clemson, SC). Rents near campus are much higher than 10-15 miles down the road. It's very common to rent/lease per person (bedroom). More management-intensive, but it can lead to greater returns if done right.

If you have any specific questions, it's easy to use the search feature on this forum. You'll most likely find multiple articles on the subject with helpful information and different perspectives. I'll go ahead and beat the next person to the punch and recommend joining a local REIA.

Good luck!

There's been some solid advice posted here. It's a great opportunity to learn not to speak to someone when they are emotional and threatening - have them call back when they are calm.

Great website Scott! Very interesting to monitor the progress of someone new starting out in real estate investing (like myself). You are obviously motivated, organized, and intelligent - so you have the intangibles!

Changing from an envelope to a postcard will most likely boost responses and cut down on your "prep" time. You could look at adding more out of state owners to your list, expanding probate names, targeting in-state landlords, NODs, etc. I believe you've honed your system enough to the point that you could effectively expand it!

Have you talked to an experienced investor/wholesaler about the content on your mailing? Maybe you could post it here or in a PM to investor(s) you know on the site and have them analyze, in detail, your mailing. Maybe some wording could be added or subtracted to increase the response rate of truly motivated sellers.

This hypothetical situation doesn't relate well to real estate investing. It's easy to see your point, though - is real estate investing ethical and not solely motivated by greed. It always makes for an interesting discussion and I'd like to participate.

Where there is money, there is greed. I won't delve into the philosophical aspects of money - if the concept of money would work in the absence of greed, etc. Back to real estate investing - of course it looks like real estate investing take advantage of people when they are offering ~30% less than what a person's most important financial asset, their home, is worth. Giving someone $70 in change for a $100 bill is very opportunistic and most likely unethical - you're doing hardly any work for an easy payout. But that's just not how it works in real estate.

In most cases flippers are able to get good deals because of either the financial troubles of the owner and/or the condition of the property. Many people sell their properties to investors when their facing foreclosure, major capital repairs that they really can't afford, etc. because it is the best available option for THEM - the seller. Is this greed? Of course not! Is it greed on the part of the investor (assuming the investor acted in an ethical manner) - of course not! Investors offer a valuable service. Investors can help relieve financial pressure and chaos from an individual, turn a dilapidated eye-sore into a valuable home, and make a profit in the process!

Remember: Investors don't make their money by just getting a good deal on a property. Investors make their money by buying at a reasonable price, efficiently and effectively implementing necessary repairs and upgrades, responsibly managing budgets, and marketing their revamped product all in a timely manner. Maybe these hypotheticals are better suited for a payday/title lending forum.

HOA fees are around $200/month, but this includes water, insurance, exterior maintenance, clubhouse and pool maintenance, etc. I will pay no utility fees (assuming I rented out all 4 units) because tenants are responsible for paying electric - they get it turned on at Duke Power.

Taxes will be around $1000-$1200, but while I live there I can file for homestead exemption (blanking out on exact term right now), which could lower them by 40% while I live there.

The insurance costs will be very low because it is insured for hazards/catastrophe (tornado, fire, etc.) by complex. Only thing I would insure is the interior of my unit and liability (even though complex has a liability policy on complex).

My figures were based on a $72,500-$75,000 purchase price at 6% interest for a townhouse. Rents are a little higher for townhouses ($380-$410), but price is higher than a condo and maintenance is higher. The condo I'm looking at will be listed for $65,900 and we will offer $62,000, so P&I will hopefully be a decent amount lower. Unfortunately because of my short credit history I have to go with a conventional loan (20% down), but I can refinance a year down the road if I want to.

David Egger - Thanks for the post! I hadn't really thought about this and I will need to do some research to see if the university has any plans in the coming years. I know that they don't have enough housing for the freshmen, so there really is a shortage of housing. But housing on campus is usually around $600+/month and you can only live there August-May (not good for people with internships/summer classes). The complex is three miles from Clemson University and a few more miles from a large Tech School and private university.