Thank you for your answer. I am waiting for some one who sell distressed houses in PA. I told him am looking for a house will worth 100k ARV. It will be 3 bedroom 1 bath but I have to analyze this property after I see it. Also I will have to contact/find a property management to ask for how much can it be rented.
Hi Amalfi,
Not sure if you are saying you are already working with someone who sells distressed houses and waiting on something from them. or if you are saying you are waiting to find a good property. If it is the latter, here is a list of great ways to find and invest in good deals. I post it often here on BP. But here it is again:
Best Ways to Find and Invest in Good Deals:
* Create a Huge Birddog Team: Drive neighborhoods looking for distressed, vacant, for-sale-by-owner and for rent properties. Train everyone you know and meet how to spot a distressed or vacant property (ask me if you need tips on how to spot a distressed or vacant property). Tell them all that you'll give them $100 if you buy a property that they referred to you. Tell them to tell their friends too. Delivery workers, property workers, landscapers, contractors, your mailman, your garbage man, your meter readers, etc., are great for this because they are driving neighborhoods everyday anyway.
* Put out ads, signs and mailers to attract motivated sellers and pre-foreclosures (get Notice of Default list at county, A.K.A. Lis Pendens or Sheriff's Sale, Tax Sale, etc.).
* Text or email for-sale-by-owners and rental properties on Craigslist and Zillow (this sometimes works better than a phone call).
* Get a realtor to put you on daily auto-emails of properties listed at Price/sq ft 60% or less than area average price/sq ft and/or with motivated sellers keywords like motivated, TLC, invest, potential, opportunity, bring all offers, short sale, as-is, seller financing, owner carry, desperate, must sell, fixer upper, handyman, rehab, repairs, problems, issues, foreclosure, REO, bank owned, distressed, probate, death, estate, etc.
* REO lists (BP has one, HUD has one). Bank-owned properties can be wholesaled using disposable LLC's where you create LLC's for the purpose of making offers, when offer is accepted, you sell the LLC to another investor so they now own the contract. Banks often demand proof of funds. Transactional Funding letter can be used for proof-of-funds. Ask me if you need more details about these strategies.
* Connect with wholesalers. I know wholesalers get a bad wrap but there are some good ones out there. Find them. We've gotten some really great deals through wholesalers.
* Narrow down many potential deals with a quick elimination process: Find the initial estimated ARV online by averaging all of the instant home value estimators like Zillow (confirm this later with the actual ARV from realtor comps). Find mortgage balance by asking the seller if possible (usually they will tell you if they are highly motivated). This tells you how much bargaining room they have. Confirm later with county records (deeds/liens) or do this now if you can't talk to the seller yet. Figure $20/sq ft for typical cosmetic rehab (confirm later with homeadvisor.com estimates). Now use the 70% rule: If the asking price and/or balance owed plus the renovation costs is 70% or less than the ARV, add this deal to your favorites list.
* Narrow your favorites with further due diligence: Get comps from a realtor, interview the seller to find motivations and needs, go see the property, get repair estimates from homeadvisor.com, look up liens/deeds, title issues, code violations, zoning issues, etc. at the county.
* Continue to narrow your favorites by the info you find. The best deals will reveal themselves with this process.
* Choose your most favorite.
* Get an inspection done to reveal all repairs.
* If you are flipping or buying yourself to hold and rent, present your deal and all of your fabulous homework to your lender.
* For funding you can try Private Money Partners (people with money who don't lend as a profession, our favorite, ask if you want to know how), Hard Money, Seller Financing, HELOC, Cash-Out Refi, 401K/IRA, Conventional Loan, Multiple High Limit Credit Cards.
* If bird-dogging, present it to another wholesaler or investor for a fee (give them all details except the address and seller name and contact info until you have a signed agreement with them).
* If wholesaling, make your offer. Once offer is accepted, present the deal to other investors in BP Market Place, at local REIA meet-ups, at local auctions and on your lists of Cash Buyers. For a great presentation, create a PDF with property details, photos, comps used to support your ARV, description of what needs to be done on rehab/repairs, numbers breakdown showing how you arrived at the profit number for the investor, etc. Then send the PDF to all of your investor contacts by email, BP direct message, in person or tell them about it by text or phone call if necessary.
Ask me questions about any of this.
Thanks @Lori Greene I will take all of that into consideration. Appreciate your time!
Sure Amelia. And ask for help when you need it.
@Lori Greene That is a great idea. Thank you!
My pleasure Ashley. Let us know how it works out and ask questions along the way.
@Michael Ablan you should read the book big potential , discusses this very scenario ;) good read
Thanks for that suggestion Kata. I'll check it out too. So, it's about team building?
Interesting posts guys. I'm slowed down right now because the past four years have been a massive load of work and progress. We've purchased multi-families in poor condition and done huge remodels that took every penny of spending money we had. This year I did multiple refinances and rather than purchase yet another property, we chose to upgrade our personal residence. We have children just starting to hit their teenage years and quality of life became a major factor.
We have plenty of chess moves left, but the thought of diving into another project is just exhausting. Right now I'm selling through personal and business items for the down payment on 4-plex in very little need of repair. I could just sell my former primary or get creative with financing, but it's really time for an adjustment. When we get aggressively back into the game, it'll be for larger projects with less manual labor required and my home lifestyle will be very minimalist and peaceful.
I'm not sure if I've hit a roadblock or just the need for a nice long vacation. Once you have a good rental income coming in, it seems there is some need to step back and evaluate your future course of action.
Well Mary, it sounds like your problem is a good problem to have. And it also looks like you have a good plan to streamline your systems to be more time efficient for you. I too love a minimalist and peaceful lifestyle, which I have for the most part, except for my husband being a bit of a hoarder. I'm always getting rid of stuff when he's not looking. LOL. He buys stuff, doesn't use it and then forgets about it.
So, it sounds like you were doing some of the renovation work on investment properties yourselves?
Funny I see this thread first.
I just got done cancelling a portfolio refi loan at the last second because the underwriting requirements were getting out of hand. I'm probably going to lose a significant portion of my expense deposit because of it, but I felt it was the right move.
In the mean time I'm researching new lenders, and trying to find someone who will tell me everything needed to close up front. I'm going to start making calls tomorrow after I wake up.
Maybe I'll start a new lending company from scratch that specializes in transparency. In the mean time I just keep chugging along.
Drew, it's a bummer that your loan didn't work out. But it sounds like you learned a lot from it and you'll get it the next time. In the mean time, read up on creative financing strategies like:
1. Private Money Partners (people with money who don't lend as a profession, our favorite, ask if you want to know how to find them)
2. Hard Money
3. Seller Financing
4. HELOC
5.Cash-Out Refi
6. 401K/IRA
7. Conventional Loan
8. Multiple High Limit Credit Cards
Here’s another thread on BP where members are talking about the creative funding strategies they use: https://www.biggerpockets.com/...
Have you tried any of these?
What is keeping me from progress is trying to turn the ship around at mid-course. I'm 45, have a great career that I really do like and have a wife and 2 teenage kids. We sold one house in town last year (stupid) when we realized that we wanted to live somewhere rural and bought a larger property in a rural community and couldn't find anything, we just stuck the money in the bank for a year while we rented. Then we finally found a house we would eventually buy this summer and had some room in the deal to build in the repair costs, but not quite enough. So we ended up putting about 8K on credit cards. This was also stupid, but necessary I suppose. Anyway after moving, I started listening to the BP Podcasts on my longer commutes and saw the error of my ways. I'm slowly trying to get my wife and kids to understand how we could have still had the same things and started building wealth instead of wasting it. I go through my regrets... If only I had kept the house in town, rented it out and got a Refi to fund the new place...If only we bought a new place that was better set up for multi-family or AirBnB.. But NO! I have to stop all that because we are where we find ourselves. What I am doing to move forward - found a local meetup, continue to listen to BP and read books. My wife is crazy for The 4 Disciplines of Execution now. We are talking about Financial Independence, Starting Businesses, etc. But I think my wife still thinks I'm crazy about my real estate ideas. I still comb stuff that is publicly listed. I'm interested in small multi-family at this point. My goal is to be able to buy my first investment property in 1 year.
Corey, I'm happy to hear that you are learning from that story. I feel like we learn more from our mistakes than from any education. Education is great for expanding your knowledge but the real learning comes from experiences. It's a lesson you'll never forget and will probably make you a much better investor than if it never happened because it caused you to really analyze and evaluate your decisions. And now you are using what you learned to create something much better for your family and even teaching your kids these lessons. It takes wisdom to turn challenges into valuable lessons.
So maybe change your narrative to give yourself credit for what you are creating out of it. And maybe stop telling yourself the story of "stupid" and "regrets". Let go of your own self-judgements for the past, which doesn't even exist anymore, and start telling yourself your new story of wisdom and success. You receive what you believe. So stay focused on the good that came out of it and you will soon find success.
FYI, you don't need to wait a year to be a real estate investor. Keep going to the meet-ups and local auctions to network with other investors, build your team on BP, keep finding and analyzing properties, learn the creative ways for using other people's money to invest and partner with other investors in any ways that you can. Read through more of this thread to find tips on how to find good deals, how to analyze them, how to fund them and how to partner with others to make money even before you buy your first property. Pages 1 - 5 of this thread will teach you a lot of short-cuts.
I’ve cash, I’ve want ,i spent hours looking at zillow, realtor.com and few other sites, reading posts in BP forums and came to realize that unless you have access to mls, there is no deal good enough for you since “all” good deals are already gone bye the time it reaches the market.. wholesalers? No idea how to contact them? Real estate agents— idk i feel like mls properties which are going for lower prices never show up in my search :’(
Knowing that no property is good enough when it reaches these websites and Hearing contractors take 45% of the profits , 4% closing cost, 4- 5% selling costs .. has demotivated me.. losing home if investment is my thing at all..
Nida, I'm sorry you are feeling so hopeless about investing. You may find some inspiration if you read through this whole thread. There are great tips and stories from a lot of us on BP about how to connect with other investors for help, how to run numbers so they work, how to find good deals and more. Don't give up.
One thing that stood out for me about your post is that you said there are no good deals to find. You may be having a hard time because you are only looking for properties on websites. The problem with that is that website info is often outdated and that every other investor out there also knows about those properties. The best deals are not from website lists. Below are some tips to find great deals and plenty of them.
Best Ways to Find Good Deals:
* Create a Huge Birddog Team: Drive neighborhoods looking for distressed, vacant, for-sale-by-owner and for rent properties. Train everyone you know and meet how to spot a distressed or vacant property (ask me if you need tips on how to spot a distressed or vacant property). Tell them all that you'll give them $100 if you buy a property that they referred to you. Tell them to tell their friends too. Delivery workers, property workers, landscapers, contractors, your mailman, your garbage man, your meter readers, etc., are great for this because they are driving neighborhoods everyday anyway.
* Put out ads, signs and mailers to attract motivated sellers and pre-foreclosures (get Notice of Default list at county, A.K.A. Lis Pendens or Sheriff's Sale, Tax Sale, etc.).
* Text or email for-sale-by-owners and rental properties on Craigslist and Zillow (this sometimes works better than a phone call).
* Get a realtor to put you on daily auto-emails of properties listed at Price/sq ft 60% or less than area average price/sq ft and/or with motivated sellers keywords like motivated, TLC, invest, potential, opportunity, bring all offers, short sale, as-is, seller financing, owner carry, desperate, must sell, fixer upper, handyman, rehab, repairs, problems, issues, foreclosure, REO, bank owned, distressed, probate, death, estate, etc.
* REO lists (BP has one, HUD has one). Bank-owned properties can be wholesaled using disposable LLC's where you create LLC's for the purpose of making offers, when offer is accepted, you sell the LLC to another investor so they now own the contract. Banks often demand proof of funds. Transactional Funding letter can be used for proof-of-funds. Ask me if you need more details about these strategies.
* Connect with wholesalers. I know wholesalers get a bad wrap but there are some good ones out there. Find them. We've gotten some really great deals through wholesalers.
* Narrow down many potential deals with a quick elimination process: Find the initial estimated ARV online by averaging all of the instant home value estimators like Zillow (confirm this later with the actual ARV from realtor comps). Find mortgage balance by asking the seller if possible (usually they will tell you if they are highly motivated). This tells you how much bargaining room they have. Confirm later with county records (deeds/liens) or do this now if you can't talk to the seller yet. Figure $20/sq ft for typical cosmetic rehab (confirm later with homeadvisor.com estimates). Now use the 70% rule: If the asking price and/or balance owed plus the renovation costs is 70% or less than the ARV, add this deal to your favorites list.
* Narrow your favorites with further due diligence: Get comps from a realtor, interview the seller to find motivations and needs, go see the property, get repair estimates from homeadvisor.com, look up liens/deeds, title issues, code violations, zoning issues, etc. at the county.
* Continue to narrow your favorites by the info you find. The best deals will reveal themselves with this process.
* Choose your most favorite.
* Get an inspection done to reveal all repairs.
* If you are flipping or buying yourself to hold and rent, present your deal and all of your fabulous homework to your lender.
* For funding you can try Private Money Partners (people with money who don't lend as a profession, our favorite, ask if you want to know how), Hard Money, Seller Financing, HELOC, Cash-Out Refi, 401K/IRA, Conventional Loan, Multiple High Limit Credit Cards.
* If bird-dogging, present it to another wholesaler or investor for a fee (give them all details except the address and seller name and contact info until you have a signed agreement with them).
* If wholesaling, make your offer. Once offer is accepted, present the deal to other investors in BP Market Place, at local REIA meet-ups, at local auctions and on your lists of Cash Buyers. For a great presentation, create a PDF with property details, photos, comps used to support your ARV, description of what needs to be done on rehab/repairs, numbers breakdown showing how you arrived at the profit number for the investor, etc. Then send the PDF to all of your investor contacts by email, BP direct message, in person or tell them about it by text or phone call if necessary.
Ask me questions about any of this.
For me it's been finding deals that numbers make sense.
I have funding
I have time
I have some experience
I have flipped 3 and held 1 in the last 2 years. We are constantly searching, like everyday. I have goals and am ready to pull the trigger on multiple properties but numbers are just too tight.
To overcome this we have been working on setting up a marketing system to hopefully bring in our own off market deals.
Erik, yes off market can be easier to get at a lower price because not as many people know about it and off market motivated sellers may be willing to sell FSBO or seller finance which also saves on costs. You also have to be very creative to run numbers in various ways to see what works out best. We are very good at this. Reply with the details of a property, including the situation of the seller, the loan (current or delinquent) and your numbers analysis. Maybe I can give a few pointers.
One recent example...
cape style house legal 2 family by CO. 2br 1 bath over 2 br 1 bath plus. Basement access.
House was offered to me as a wholesale for $350k
$50k rehab
ARV $455k
Taxes $13k
Rental income $4300+/-
My plan was to hold this as a rental but I will always flip if needed. I originally offered $300k was willing to go to $315k.
I would have used HML to fund this. 10% interest only, 2 points, lenders atty fee of $2500.
other closing costs about $15k
Would refi out 4.5% over 30 years. Keep 25% equity pull out remaining (if any) in cash.
I now know wholesaler got contract for $281k. They never assigned it, wound up flipping it themselves. Spent 35k in repairs (absolute bare mimimum) and sold for 455k.
Most of the deals I come across are very similar to this. The numbers are close to working but just not there. ESPECIALLY with HML costs. There is little meat on the bone even with any value add.
The flips I analyze are also very tight w numbers. Profit is generally $20-$30k on $450k ARV.
Lots to think about here Erik. The first thing that comes to mind is deeper research. Usually when a wholesaler is involved, they have the property under contract. Did you ask to see the contract? If you knew the wholesaler got it for $281k from the get go, you may have been able to negotiate them down quite bit from $350k to improve your numbers. A $70k wholesaling fee is unheard of in an assignment situation. I could maybe see that happening in a double close, where you don't get to see the contract. Did you research this property at the county to find the mortgage deed and any liens so you could estimate what was owed on it to determine how much bargaining room there is?
The point is that the asking price isn't necessarily how much you can get it for. Once you know the wholesalers profit margin or the motivated sellers pay-off, that's when you know how much bargaining room there is. Also think about it like this: Just the fact that this wholesaler got this property for $281k, means that it is possible in your market to find motivated sellers with equity. So keep that in mind and stop telling yourself the story that all deals are too tight. This one wasn't.
And have you thought about building a team of private money partners who you may be able to pay 5% interest to rather than 10% to hard money? I can teach you how. I've mentioned it a few times in this thread. It's easy. It's how we fund all of our deals.
I did not know at first what they contracted for it. I have since become acquaintances w them and we attend the same REIA. And they disclosed what all the numbers were.
I try not to concern myself with what others make on a deal as long as I get numbers that work for me. But I will admit when the wholesaler is trying to make a significant amount more then the flipper on an assignment it does leave a bad taste in mouth. It did however open my eyes to the possibilities or what a lil marketing can do.
I am interested in learning how to raise private money although I always thought I'd cross that bridge later on in my investment years. Maybe now is the time...
Now is always the time to build private money partners and a bird-dog team. And you can do them both at the same time with the same strategy. Just get in the habit of starting conversations with everyone you know and meet. Start by asking how their job is going and what they do for a living. Tell them you are a real estate investor and what you're into. Then say two simple things:
1. Keep your eyes out for vacant or distressed properties or motivated sellers. (teach them what to look for). If you tell me about it and I buy it, I'll give you $100.
2. And if you know anyone who wants to make a high return on their money on a short-term note backed by real estate, let me know. I'll help them invest their money into real estate.
You'll be surprised at how many people will start looking for properties for you or offer to invest with you. That's how you start building a bird-dog team and a private money team right now. Easy.
@Lori Greene for me is that I dont have a system yet. I don't know any good contractors and fear of if doing BRRR and maybe contractors don't do what I need on time and well done. Also not sure if I'm supposed to have a deal before using hard money or if I am supposed to have hard money before finding the deal. It is hard when you are trying to figure out things alone. I wish I could have a mentor but that also cost money and the capital I have I need to use it to get my next property....
Amalfi, you bring up several good points. The system will develop itself along the way so don't worry about that too much. There are 2 main things that will help you so much.
1. Start building a team by connecting with and engaging with as many people as possible on BP. Ask lots of questions and ask who they use for contractors, lenders, etc. Read through this thread more for tips on building your team. Going it alone is what is keeping most investors from success.
2. Just start finding and analyzing properties. When you find a good one, shop it around to everyone and see where you get a bite. Shop it to lenders and other investors. You can get a bird-dog fee or get it under contract for a bigger wholesale fee or get the hard money and flip it yourself. If it's an FSBO motivated seller, you may be able to talk them into seller financing, hold it as a rental and refi in a few years.
The point is, don't wait for a plan and a team to get started. Just get started and the rest will follow. Let us BP members guide you through the process as you go.
Do you know how to find and analyze potential properties for investment? Do you need any pointers for building a team?