All Forum Posts by: Julio Cesar Lopez

@Julio Cesar Lopez great to see that you are still working in this Covid environment.  My phone is ringing off the hook right now with these types of deals. Let's see if I can give you some advise.

1.  Take advantage of the situation.

2.  I would not even offer her anything for the property, other than maybe pick up a couple of the mortgage payments.

3.  I am not familiar with Texas laws, but I would use two instruments here in California to accomplish your goals.

     a.  AITD All Inclusive Trust Deed works well.

     b.  Place the property into a trust (in her name) and then have her assign the trust to you.

4.  When all that is done market the property as a "little to no money down" deal.  I would sell the property for $180 and require a $10K deposit.  I would then create a new 2nd TD for the buyer in the amount of $37K at 5% interest only with a 5 year due date.  This creates an immediate $10K profit for you and a monthly income for 5 years and $37K out of thin air.

Good luck on your appointment.

Good investing... 

Hi @Julio Cesar Lopez and welcome to BiggerPockets! Also, congratulations on getting in front of a real live seller and looking for ways to creatively solve their problem.

However, you're asking the wrong question here.

If your plan is to wholesale this deal, your only question should be this: How would an investor buying this deal from me actually make money?

And, if you want to be a professional in this business, you need to know the answer. It's not something you can crowdsource.

Fortunately, it's not hard to get an answer. (It's just math.)

There are two primary ways investors make money from situations like this:

1. Fix-and-Flip
2. Buy-and-Hold

A Flipper is generally looking for deals they can resell to an owner-occupant by buying at 70% ARV less Repairs. With an underlying mortgage balance of $143K, we can see that even at an ARV of $200K, a Flipper would be buying the property at more than 70% ($140K), putting them in the red before they performed a single repair.

The mortgage balance is too high: This doesn't work as a fix-and-flip!

A Holder is generally looking for deals they can rent over the long term to earn a great return on their money. We look for a cash-on-cash return of 10% or more. If the monthly PITI mortgage payment is $1410, and assuming property management fees are just 9% of rents, then even at $1500/mo rent you're already looking at hugely negative monthly cash flow. And that's not even mentioning maintenance or vacancy.

The monthly loan payment is too high: This doesn't work as a buy-and-hold!

So, here's the sad truth: This seller really has NO equity to speak of, much less $18K; I wouldn't pay them a penny. Even if the seller gave you the house for free, there's little here to interest most serious investors. And, there's no hope of you earning a fee on any wholesale transaction.

I just don't see a deal here.

Buying subject-to is an insanely powerful acquisition strategy, but it doesn't automatically guarantee you are creating a viable and worthwhile deal.

You've still got to run your numbers from the perspective of an investor.

Hope this helps!

Hey man... congrats on taking that step to go further in life, and for dreaming of bigger and better opportunities.

I'm in a similar situation (sort of). I come from a Hispanic background, from Southern California. Also 19 years old. I joined the Army out of high school, learned about Real Estate, and instantly became obsessed. I love every aspect of it. Wife is currently starting the process of getting her RE License. I always had the mentality of wanting to get ahead. My mother and family sacrificed much for me to even be in the place I'm at right now... I owe them the world. That's one of my biggest motivators to even succeed in the first place. 

Education is never a bad idea... but ultimately it comes down to what works best FOR YOU in your scenario. There are hardly any 19 year-olds out there looking to get ahead financially and invest in their future. You have a good mindset from what I can gather, so you're already that much further ahead of the game.

I can't offer you much in the name of value, as I'm just getting started as well. Currently, I'm partnering up with family to utilize a HELOC, and my goal is to BRRRR my first property successfully and regain most of the capital we put in. We shall see! It will be a slow, educated process. I'm actually working with @Michael Glaspie's realty group to do this in NC! However, back to my point, I want to move to Texas after my time in the Military, and as we both grow our knowledge and portfolios, perhaps we could do business one day. Doesn't hurt to have a fellow ambitious young dude where I hope to live. So reach out! Let's stay in touch... looking forward to your success!

@Julio Cesar Lopez

I give you a lot of credit for starting early! I think you're on the right path. 

I suggest you read "the richest man in Babylon" to understand how to handle your finances. Definitely do the licence. Aside from that decide how much time you can allocate to working while in college. If you have at least 20-30 hours, let me know, I may be able to connect you with a commercial broker in TX. PM me if you're truly committed. 

Hey Julio,

First, congrats on getting started in your RE journey. I commend you for finding this at a young age. Although I am a firm believer that institutional education is failing us, I want to preface this conversation with the facts that I do have my undergraduate in Business Administration and I am currently working on an MBA at UNC Chappel Hill. I do think there is some value to education, as long as you are not breaking your wallet. So, your decision to back out and focus on making money now is valid in my personal opinion. 

As far as RE license...DO IT! I have preached extensively to investors about the value of getting a license. I have rapidly expanded my portfolio due to my RE license. There are some wonderful agent hacks me and my team have found over the years. If you are looking for a firm or a mentor as a licensed agent, reach out to me via DM and we can talk about different options. 

From the sound of it, your first objective is to build capital and network. Work with your grandpa, get licensed and sell homes, go to investor meetups, and save save save. The networking will expose you to private capital as well. In no time at all, you will be ready. If you raise enough capital quickly you won't need to worry about credit score, you can buy a small home all cash. Down the road, you can then revisit HELOCs or Cash out refi. 

I hope this helps. Let me know if I can be of any assistance in the future.