All Forum Posts by: Tom McGiveron

before this - where are you at with getting a house under contract? have you done some deals before?

the real things you've got to pay attention to are the legal issues, rents in the area (cold hard data), cap rate and cash on cash return, among other things. you've got to KNOW the market, meet the neighbors, talk to investors and realtors. it sucks to an extent, cuz you're new. learn the real market numbers.

know the relationships between real estate terms, such as appraisal and financing, title and financing, survey and financing, underwriting and the process of what can go wrong, know the risks, understand the REALITY of investing in real estate. this is important, not some equation. they help, but that's the small stuff...

also - your PERSONAL FINANCIAL situation is VERY important in addition to your personality and how you approach things in general.

welcome.

you're certainly on the right track. buying owner occupied, living there and fixing - while it can be stressful and messy, is a very sound way to move from one project to another, slowly and methodically. if you do it right with the first project, in two years you could put some nice mula in your pocket and move onto next project.

lots of people are hurting in florida.

so how does your biz work?

what made you move there?

if it's a WINNER, as REI said - for 10 to 12k - you might consider other financing of the deal. CC perhaps with a big limit on it.

that's IF IT'S A WINNER.

first - the number 40k - ARV MUST be a very solid number, meaning, are houses in that area going for this in less than say...120 days?

so it takes you a month to fix and then two months or so to get a buyer and close it. you might shop around before, during and after for a pool of first time home buyers - marketing (cost) - this way you've got a pool of people you KNOW are looking and looking in this price range and area - if it rents well - see investors (rei clubs).

town issues - to avoid - just don't break down too many walls, make structural changes or change plumbing - fix plumbing yes, change plumbing (add a bathroom etc) - no. you want to avoid C/o issues. this requires INSPECTIONS - bad because they cost TIME and TIME equals MONEY (increased cost).

keep it simple. make sure numbers are SOLID. simple simple simple.

talk to a good attorney who's meticulous.

work with a good realtor who does biz w/ investors.

welcome Jay.

I went to school up there (not Syracuse) - Oswego!

I used to work right in the city..for like a year. i think the road was james something or other. but not sure.

that market up there was REALLY depressed when i lived up there.

wheatie, not disagreeing with you but -

i just ran into a company that bought an reo - nice house. they had everything taken care of - title, etc.

however, title and attorney did not do their job correctly - they bought a house REO - for 360kish...

later found out it had a mess of liens on it - up to 410k...hello.

i just talked with the realtor who's got it listed for 439k...(about 20k over priced)...

moral of story - and to add to wheatie -

YOU MUST HAVE a QUALIFIED ATTORNEY that will cross the t's and dot the i's and a TITLE COMPANY that is well known for its business and has a rep for really doing top quality job. AND, when you use the title company MAKE SURE - that YOUR CASE is not passed on to some noob or someone who's transferring in position within the company itself etc...

this is very important. be a mo*%erf*%*$#* pain in the U KNOW WHAT.

ask questions, be a polite pest, and make sure you get them to do their jobs RIGHT. show up at the office, make calls, bring them donuts, get to know everything.

yes, then an REO purchase is pretty cut and dry, bank owned, etc. but don't rely on the bank to do everything right.

it's your a** not theirs that's on the line.

my friend who's a mortgage broker and cpa told me he has clients buy property and transfers deed over to LLC, etc all the time.

would i do that? no because it's too risky for my personal tastes. sure there are ALOT of investors who do this. to some, it's common practice, but it's risky.

if bank finds out they can call your loans due, because you're violating your mortgage agreement. if you want - negotiate with a lender and have them take that clause out - they won't. because it's standard practice and makes sense for banks to not let their borrowers just do whatever they want with ownership of property that has a lien on it (mortgage) of 100's of thousands of dollars.

i mean think about it. if you lent someone 150,000 dollars, would you say, "sure, transfer the title to anyone you want, as long as i get paid..."

if you say yes, well then that's your personal preference. i wouldn't. because i do not trust anyone, especially when my money's on the line.

you sign an agreement, stick to it. otherwise negotiate the clauses and see where you end up. heck, just buy the property in the corp name.

at the end of the day, we each make decisions based on our personal preferences.

a corporation makes decisions based on a group of individuals (board of directors and shareholders, management) that come to a consensus (hopefully)...

you're the guide for your ship. you make the decisions. follow what you are comfortable with. but if anyone tries to convince you that it's "okay" to do this or that WITHOUT EXPLAINING THE RISKS - forget em - move on.

i was a little perturbed at my cpa/broker when he simply blew off this information.

at the end of the day, your broker's a** is not on the line for the loan - you are.

is a bank, in this market, going to bust chops about it? probably not - but at the end of the day - YOU NEVER KNOW.

case in point - my grandfather did all this in the 60's, 70's and 80's - he owned buildings, houses, sold em, built em, rented them - you name it - at one point he had a networth of over 3.5 million...and he was leveraged to about 2.9 million -

loans got called due - all of them - and he was nearly ruined.

now - is it better to go for it - put it on the line or work 40 hours a week for the man - making crap money? hhhmmm hence the delimna...

OR FIND ANOTHER WAY. TAKE THE TIME TO FIGURE IT OUT. SLOW, STEADY AND GROW.

to each his own. you make the decisions...

question - how do you know your home is worth 500k?

this is a VERY important question. how solid is that 500k number? if you've had it professionally appraised and talked with a number of realtors who have given you information that leads you to believe you can get 500k with relative ease (within 90 days of listing), yes then it's probably worth 500k.

second - you owe A LOT OF MONEY on it already. pulling cash out of it without a CLEAR IDEA OF WHAT YOU WANT TO DO is not wise (in my opinion).

third - the term "LLC" means absolutely nothing without a CLEAR CUT idea of what it is you're going to do in order to have the LLC GENERATE REVENUE of some kind.

this is very important. the entity part is relatively easy, but you MUST start with a vision for how you're going to make money FIRST.

vague ideas of owning multi family houses and "maybe" turning houses over for a "decent gain" is not a plan.

starting up the LLC or Corp or whatever is second to a plan. it's part of the plan. but not the beginning of the plan.

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