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Originally posted by "all_cash":

I've only been buying for cash for the past 18 years or so, and I wouldn't do it any other way. HOWEVER, it's not for everyone.

I don't care about "tax advantages", paying the bank a dollar to prevent paying the government a quarter makes no sense. Depleting all of your cash is not a good idea though.

There definitley "junk" fees associated with getting a mortgage. Obviously the smaller the mortgage, the more onerous the fees, on a percentage basis.

Good luck

all cash

Never buy cash if it leaves you broke - there's a level and different people are comfortable in different places. Me, I'd rather have $200,000 in the bank and owe $200,000 on a house than have $10,000 in the bank but only owe $10,000 on the house. Liquidity is also important, and you have to find your balance.

Originally posted by "FSJR9":

which closing costs are eliminated by paying in cash?

Origination fee, some filing fees, lenders' title insurance policy, processing and administrative fees.

I am in the mortgage business - 8 years running. Ohio from 2001 to April '07, Maryland since then. The company I worked for in Ohio used to provide leads...from which I developed a heck of a referral base and I got to a point that in 2005, when leads were done away with, I pretty much maintained the same level of business, and in fact increased it a bit.

My specialty is really two main areas: First-time FHA buyers, and investors. I also do some vanilla refinances and purchases, and used to be relatively competent with subprime back in "the day" but never messed with the shady stuff that some people did.

Now, I'm with a company that provides very little leads aside from general advertising. Through cold-calling of realtors, financial advisors, etc. I've managed to do enough business to get by, and make enough money to not want to bolt the business, but I need to do a lot better to be successful long-term. My goal is to end up doing 12-14 transactions a month and let's just say I'm doing under half that at the moment.

For a guy who is still relatively new to the area, what is the best way to get out there? I've found that buying leads is normally worthless - half the names/numbers/addresses are bogus. Realtors are OK but so many of them aren't doing any business themselves, so there's only so much blood you can squeeze out of a turnip.

Mailers? Insert ads in Gold Clipper, Value Pak, etc?

What do you guys do? I feel that what I do works but I need to do something to do a lot more of it more efficiently, as right now the ratios of calls to business are VERY low and there are only so many hours in a day!

Originally posted by "NogginBoink":

Originally posted by "FtMyersMike":

Originally posted by "NogginBoink":

What would be your motivation to keep a money-losing property?

This is my only place, and it's where I live. I have no roommate or anything, so the only cashflow is the mortgage I pay (I have no other properties at the moment). Is that 'losing' money? I mean, it does go to the bank, but when I sell the place, I get it back. Is it 'just' an opportunity cost?

And Mike - you're right, I don't fully understand cashflow yet, which is why I'm asking the stuff that I'll probably laugh at down the road. But I'd rather do it this way than by just buying something and finding out that I screwed up real bad.

I've been reading on here for some time now, and the thing that opened up my eyes the most was just how much it 'costs' to rent. Seeing how the expenses pile up was like a smack in the head - I NEVER thought that you'd be able to get a place for a price low enough to provide positive cash flow after expenses. And I guess that's one of the tricks to making this work.

OK, you're trying to treat your primary residence as an investment property in this thread. It's not! We all need a place to live, and we all expect 'negative cash flow' to pay for our primary residence.

You can't use investment property metrics on your primary residence! :)

True, but you CAN use them when BUYING a primary residence, at least using equity metrics instead of rental cashflow. In fact I advocate it.

Originally posted by "FSJR9":

Great point Mike, I never looked at it that way. It's essentially always cheaper to buy, when buying RIGHT. This notion changes, however, when people buy WRONG, ie - pay too much.

I laugh when I see a "money making" two family house for sale in my market, for 500K+, where the total rents are around 2k.

I don't know what's worse - that situation, or when you see an MLS saying "instant equity" on a house that has an ARV of $300k, listed for $250k, but needing $60k of work. :lol:

Originally posted by "seattlegogetter":

Loan Payoff is Est. $282,201.33 Total all fee's

Seller wants 350k for the property (still not executed)

Repairs & Rehab is 90-110k guesstimates

The Home is 800sqft on a 5000 Sq ft lot.

If I can provide anything else let me know, Thanks for all your advice everyone

First - get REAL estimates.

Second - it's too tight if those estimates are correct or close. You'll lose money unless you can purchase for closer to 300k.

I owned a few properties a few years ago in Ohio. I found them basically by luck, right place right time, and did rather well with them but they've long been sold. Probably should have kept the one I sold most recently, but I digress.

I've tried looking the old fashioned way here in Maryland and am not having much luck. I'm a mortgage loan officer so I know financing like the back of my hand, and I do have investor clients I do financing for, but haven't had much luck getting any REAL advice on where to find real estate that's investment worthy from those clients, mainly because if they knew of them, THEY are the ones buying them. :lol: Realtors I know think that a $300,000 house for $290,000 is a "deal" which, as we know, it is NOT from an investor's point of view.

I also don't want to do "ghetto" properties in Baltimore, as I am not too confident of what the market will do in those areas, even aside from the current downturn. My wife and I would like to buy something that's investment-worthy but also something we could live in to start with since we don't even own a primary residence, and my wife said until we have a place of our own to live in, no dice on investing. :roll: However, we both agree that something with a little rehab needs are fine as long as it's liveable and insurable in it's current condition. We've tried looking at REO foreclosures, and it seems that either they need so much work you can't finance them, and if you can, you end up putting so much money in them to fix them that you've paid full price, and end up with a property that you can't rent out later and have a positive cash flow on, and also can't sell for any real profit. Or - they have it basically priced at market.

Where do I need to look to find actual deals in central Maryland, Howard, Carroll, and Anne Arundel counties preferably.

Originally posted by "reflex":

I found this article today, which basically sums up all that is mentioned here:

http://www.johntreed.com/positive.html

This guy basically says you can't cash flow.

Originally posted by "MikeOH":

Scott,

The 2% rule for residential properties will almost always result in a positive cash flow. However, BSM asked for a general rule for rental properties and that is what I gave him - a general rule. I use the 2% formula as a screening tool, but as I've posted hundreds of times, I also do a cash flow anlaysis and consider the equity. I won't buy a property unless I get a minimum of 30% equity at closing (50% in the present market in my area) and a positive cash flow of $100 per unit per month.

30% is a good start, I usually recommend more as well - since if you ever plan to cash-out refi the property, the max LTV you'll get on an invesment property these days is often 70% in the first place, sometimes 80%.

Originally posted by "MikeOH":

That's funny! You said that you ignore my doom and gloom and straight talk and then you said almost exactly what I'm said. I agree with you!

Mike

Mike, it wasn't your statement, it was the presentation of it. Two people can say the same thing, but one can say it in a "we're all screwed" sort of way, which you did, or a "well...yes there are problems and we must prepare, so do THIS" fashion as I did.