All Forum Posts by: N/A N/A

HML terms are very high. However they do help you get into a proporty if the numbers work. It is like leveraging your position. Make sure you take into account all holding costs, up front out back and in between. As for a team, get them NOW. Find contractors and Subs that are recommended by other investors and get them in your contact list. Not just one for each job but multiple contacts. Never fails you are relying on a Sub to get a job done and he cant get to you for 5 weeks. That cost you money for every day you ont have that property ready to go to market. I would worry less about the attorney and accountant at this time and more on the carpet layer and painter. I dont have a problem with family members being a partner but I make sure we are all on the same page. I do this with my father. I got him to be my money man and as far as I am concerned I dont mind doing everything since it helps both of us. I am not doing this full time yet but will eventually. My plan is to continue doing deals with them and then using my own funds venture off on my own for some deals. You just have to make sure you keep the communication open and everyone knows exactly what is expected. True you have to split the cash but if that is waht it take to get you started then do it. Key is to get going.

One last thing and I cannot figure out why someone didnt say this. Join a local REI club. They can be beneficial. Dont have one then start one. Doesnt have to be elobrate, just find some real estate guys and get together. Share ideas and experience. It is like money in the bank.

Regarding the first post. If it has been on the market for awhile and no one has bought it it is more than likely NOT going to work out. Investors swoop up good deals like candy. I would STRONGLY suggest you get an APOD and do an analysis. Dont have an APOD, do a search for one or I can send a copy. It is an excel tool that ask lots of questions and then does an analysis to show if a property will actually be a cash flow property. Also, make sure to get a GOOD inspector to look at the property. They can give you all kinds of details about the property that will help you decide if the thing is going to fall apart the first month. That will help with your analysis. The KEY here is to imagine every posible contingency and take that into consideration BEFORE you jump in. If after you have done all that and the numbers still work then go for it. The more often you do these analysis, the quicker you will get at locating a cash cow or a dead dog, and the faster you will be able to get your deal before an experienced investor swoops in and grabs your diamond in the rough. Dont forget to verify rental rates for the area and dont be optimistic. You will be in the market with all the rest of us who have done our homework and will have our property listed for an accurate rental price.

To add to the tax statement. If the property has been a rental before you can certainly ask to see the tax statements, income statements, rental rolls (for multiple unit properties) etc. They will help you make an informed decision. However, if the property was just someones home then you are going to have to revert back to doing your own analysis.

Biggest key here is make sure you think of everything and take it into account BEFORE you spend your grocery money on a property. YOu dont want to be eating macaroni because you made a poor choice.

Gate

I agree with most of these people and there ideas.
Unless you have some really substantial assets you arent going to be a big target for litigation. If you are just starting out then that is probably not the case. My thoughts are, go down and get you a DBA. They are usually very cheap (about 10 bucks here) and give the IRS a better idea that you are actually a working business. What that does is help you look more legitimate in the eyes of the IRS when you start deducting your business expenses. The DBA will offer you absolutly no asset protection but unless you have any type of assets to protect then it is a moot point. Here is the key to getting sued. Lawyers want to know if you have money, if you dont then they dont have a lot of incentive to sue you since it is highly unlikely they will get anything. So, after you have become successful and have grown your business, then you should get a GOOD attorney to help advise you and set up an entity. They can be very complicated and each of them have their own advantages and disadvantages.

So it seems we are in the same area. I am on the west side.

Anyway, here goes. First, I would look into it further. If they are willing to take 50% off the price to get rid of this and it hasnt moved I would be looking alot closer to why. Yes the price is a consideration but half off and in good condition, it should move. Are there structural problems, are they going to widen Richmond road to 3 feet from the front door, is it sitting on toxic waste land. Usually when good property isnt selling at that big of a discount there are other issues. It is hard to tell from your post exactly what it is, so it is a little harder to give ideas. Now, if it is a SFH and it is truly in great shape, I would start calling some agents that I know that like to deal in high end properties. If you know them personally then even better. They can give you a better idea of the marketablitly of the property after you do the rehab on it. They may tell you it could move in 90 days or they may tell you due to some issue it will take 12 months. It is a little like seeing if you can find a buyer before you move on it. You might be able to find Hard money for the deal since there is so much spread. They might even allow you to roll the holding costs into the principal but you better be comfortable that you can move it within the loan period. Personally, it is to much money for my comfort level unless it was a sure thing. The problem with that is if it was a sure thing it would have already moved by the big players.

Much care you must take with this or you may learn a lesson that stays with you for a long time.

Jezmund, Christy is right. You need to research the daylights out of this before you get into it. I spent about 6 months gather info and "learning" the business before I made my first offer. I can give you a quick answer to your question. The local real estate guides are probably the absolute worst place to start looking. Those people that put those publications together are typically selling the pretty homes to people that want to pay full price for the pretty home. That isnt or shouldnt be your target. Look for the rough looking place in a decent neighborhood. That is the house you want. Hopefully it is only cosmetics that need attention. Try to contact the owner and see what there situation is with the house. Here you want to be a problem solver not just an investor trying to steal a property. Most people will equate you with used car salesman if all you do is go in with low ball offers. Be the one that is trying to help them out with their home. Offer solutions to help them. Now you are gaining their trust and when there isnt a simple solution you are the one that can offer the lower price.
So these are the general ideas and now you need to research, study , learn how to implement them. There are books galore out there to help. Personally I am research nut and can just about find anything I need on the net for free. Search for real estate ebooks. there are tons that are freely given. Read, read, read read and read some more and decide just exactly what part of the real estate career you want to get into first. What floats your boat. After success there, you can add another segment of the business. There is just to much info to convey in a post like this so, off you go. You have been shown the begining of the Yellow brick Road and you just need to follow it. There will be forks in the road that you will have to make a choice at. Pick the direction that most interests you and seems the most fun and you can be successful. For me it is rehab and resell. I like the idea of bringing a home back to life. For others it is strictly wholesaling. Others it is rentals. Everyone has their niche and you need to find yours.

Best of luck.

Here in Tx it is a little more difficult than what I have heard in other states. Here you have to either communicate with the current owner to find out what he/she owes or you need to have a friend at a title company that can possibly give you that info. In TX the loan information isnt public knowledge. I have heard that other states the loan is public access so you could look it up at your locality. Once you have the amount of debt on the property (dont forget there may be tax leins and other subordinate leins on the property)you need to get accurate comps for the house if it were in good shape (ARV- After repair value). ARV less the amount in debt is the equity in the home that you as an investor will work off of.

My 2 cents is stay away from Condos. Here we have condos that have a monthy mainenance fee that is sometimes double the mortgage payment. YOu are at the mercy of the association and can be hit with unexpected assessments and you have to pay them. Lets say the condo needs a new roof. Well you get to share the cost of replacing that roof. Condos here are usually cheaper to get into but more expensive once you sign at closing.
My personal favorite if you can find them is a 4 plex(or a duplex, my second choice). Get it, rent it. The beauty of a 4 plex is it is small enough to manage yet it has more than one tenant. More than one tenant means if one apartment is vacant you still have 3 rented and sending you cash. Therefore it doesnt kill you if you have a vacancy for a bit.

Chris, alot depends on what your investment ideas are. Are you planning straight flips, rehabs for resale, rehabs for rental properties etc. Different houses work for different things. You may find a house that wont resell at all but it will rent with very little needed to be done to bring it back to rentable condition. There are areas that are better for rentals and other areas that are better for resales. The house and the price going in dictates everything. Finding the right place that has the right amount of equity in it to rehab and resale is a bigger challenge. Especially if you need to go the hard money route. Personnaly I think getting properties to rent out is an easier task. There are places out there that will give you a 100% loan plus the rehab cost and closing costs. After it is rehabbed they will then do a Refi and the home is yours on a fairly conventional mortgage. Get yourself a renter and boom your rolling. Like I said, everything rolls around the initial deal. Find the place with enough equity and you will have no problems finding the funds to make it happen. My advice right now is for you to start researching EVERYTHING you can about the process. Get comfortable with all of the costs to make a deal work so you arent surprised to death by the little stuff. Closing costs on the buy and the sale, insurance costs, interest costs etc. All have to be accounted for BEFORE you buy.

Everything is negotiable. I have gone 2 days negotiating the dollar amount and number of days for the option contract. My current offerI am working on is for a $1, 7 day option period, not a dollar a day. I am paying cash for it so they probably wont balk at it as I only want to run an inspector through it to verify my own inspection. It is going to be a 30-40K rehab so I am being a little more careful.

Christy, do you think I am stalking you? Hope not. I have some time on my hands today and youseem to ask all the questions I can throw some input to.

Are you focusing on REOs? If so then you will need a realtor to submit the offer.(at least here, TX you do) (I have a buyers agent I use to submit all my offers. She doesnt have to do much as I tend to do alot of the legwork myself. But she helps at closings finding MLS info, submitting my crazy offers etc and I dont pay her, the seller does) They will always want proof of funds. usually a copy of a bank statement with your name on it will do. If you are borrowing the cash just get a preapproval letter form your lender of choice. You can use that until that loan funds.

Now if you are direct wholesaling to an owner you dont need any of this. Get an assigment contract signed and then find a buyer. Your not buying the place only working to sell it for them. I dont see the need for deposits or any out of pocket cash on your part. Just make sure they arent with a real estate agent already as that can get sticky.
If you are in a place that you feel you need to exchange money to hold an option there is nothing that I know of that says you cant execute that option for a dollar. I put options on all my offers for a $1 here and most are ok with it. Some want more but I never go over $50.00 to hold an option contract.