All Forum Posts by: John Stevenson

Do you have profit and loss statements that you used to file your taxes? These will show the actual expenses and not just the ones to reduce your taxes. You can use these to "explain" your tax returns.

Another option is to incorporate your business and pay yourself a salary. This creates a W-2 and simplifies your personal return. But... this is a down the road strategy and does not solve the problem right now.

Another way to finance your deal is to try to get the property owner to sell the property on a land contract. You can make this appealing by offering a high down payment (10 - 20%). There would be a balloon after 3 - 5 years which gives you time to qualify for a loan.

Chris, I am sure you are not the only one with honorable intentions that got lost in the shuffle. If you are looking for a mentor, well you found a whole lot of them right here on this forum. Experienced advisers that are willing to share their advice and experience.

I am curious, as a future REI, where do you stand financially right now? Do you have any cash to invest? Would you be in a position to take on a bank loan on a cash flow property? Or are you looking more at a commission type income?

Have you arranged for financing? If you are going to purchase the property on foreclosure than you will most likely have to pay the full purchase price within 24 hours.

If you are not buying at an auction, you should still get a pre-approval letter from your lender. This will speed up the closing process. Nothing is worse than losing a great deal because you cannot get financing in time.

A question that need to be answered before you decide on a route:

Are the couples in a position to buy a property themselves?

If yes then there are two choices you can make. Pass on the referral and try to get a bird dog fee or find a property to quickly purchase and flip over to them. You can look at some of the threads and blogs on wholesaling to figure out how to do that.

If they cannot purchase a home then there is an option: You purchase a home and lease it to them (lease to own, land contract, standard lease etc).

Have you considered buying a duplex?

To those who visit this post and are looking for an answer to this question, you can pick up the answer on this thread:

http://www.biggerpockets.com/forums/93/topics/77683-is-bird-dogging-illegal

The summary: If you are acting as a realtor - then yes it is illegal. If you are simply handing over leads - then no. It is a fine line that is defined by your state's licensing requirements.

An easy solution may be to hire a licensed home inspector from the area. Yes they maybe a little more expensive than a mentor, Craig's list or newspaper ad responder, but you will be assured of a quality inspection, good photographic evidence and the security to know that if them miss something ... they have insurance to cover it.

Real estate investing without good credit and/or cash means that you need to take it slow and steady to build equity. The worst thing you can do is overextend yourself and trash your credit. Here are several ideas that have helped some get started:

Find a house that you can either rent, rent to own or by on a land contract. Now you have to make sure that you find a good quality house with either two or three bedrooms. Why? You want to buy a house that others would want to live in and one that is not going to turn into a money pit.

If you rent or rent to own, make sure that the rental contract will allow you to sub-rent. This means that you can turn around and re-rent it out for more. Finding cheap rent helps. For example, you rent a house for $600. You then find someone to rent it for $675. Every month you make $75. Of course, if they do not pay the rent then you have to cough up the $600. So find a good tenant. Now, do not spend this money. Save it to invest again.

The other method is to buy on land contract. Because mortgage rates are so low, this is not always the cheaper option but it keeps you from going to get a bank loan. In a land contract, the owner plays the role of the bank but he will charge you a rate higher than the bank, especially if your credit is poor. You put a little money down, let’s say $1,000 - $5,000, then you make monthly payments to the property owner for generally a period of 3 to 5 years. At the end of the payment period, you have to pay the remaining amount in one lump sum. That is when you get a loan. By then, you have equity and hopefully a higher credit rating. Meanwhile, you rent out the property for at least what you are paying.

Let me know how it works out for you.

Jim M. Great job! Congratulations. Sounds like you picked a good property to rehab. If you know your business and the market, you can make some serious cash in the rehab business.

I see a lot of investors picking up REOs, auctioned properties and sheriff sale properties really cheap. It is sad to see how little some people care for their homes, but good for contractors and investors that know what they are doing.

Best of luck on your next project.

Looks like this is a good deal. If you run the numbers on a very conservative side (10% vacancy, $1,500 taxes & insurance each, 5% cap reserve, 2.5% utilities, 10% repairs) you are looking at a NOI of $16,157.

At a purchase price of $119,000, you are looking at a cap rate of 7.37. This is good for a purchase. These figures can support a mortgage with 20% down, 4.0% interest, 15 year amortization and still have almost $400 per month left over.

Brian Burke and Jon Holdman hit the nail on the head. A lot of the process should be predetermined in your corporate agreement.

As to the value of his share, just because he has a right to a 50/50 split, that right is guaranteed when there is a mutual agreement to sell. If a partner wants to cash in his share, his value is no longer 50%.

Why? Because he wants to cash out, he is infringing on your bundle of rights as his other partner. Since the intent was to hold the properties to realize the largest gain and now you are forced to sell, you will be taking a loss on the yield you would have received had you waited until the property matured.

You need to have either a Certified General Real Estate Appraiser or a Real Estate Accountant determine the value of your partner's share. These people are trained to determine the value of the shares.