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Get this; several months ago I was working on a very nice rehab deal I had come across. As is my luck another deal fell into my lap at the same time (came to me by way of referal from one of my regular subcontractors I use). At the time I had all of my resources tied up with my first project and didn't really want to take on another but the deal was too good to pass on altogether.

When I work on a rehab my subs come in and do work in various stages. They might come in one week and do some work then not return to finish until another sub does his thing. In those cases I put the funds into an account that the sub can draw on at the completion of that particular phase. Let me tell you, by not paying the job in advance I don't have any problems with subs not showing up when they are supposed to. I got burned once paying all in advance; the delays I experienced set me back 5 weeks on the deal.

Anyway, I figured that after purchase price, just shy of 20k in rehab, and reasonable holding costs, the profit would come in at 34-38K so I put the property under contract and proceeded to look for a buyer.

I was given the name of an experienced rehab and holder and contacted him about the deal. I explained what I had and that what I wanted for my trouble was 7k (I knew 7k would float me until the first deal was complete and would give me a fast turn-over). This so called experienced guy offered me 4K for my trouble. I told him I'll tell you what I'll take 10K now. He went ballistic #$@%& and other explitives I won't repeat here. I hung up the phone.

I heard that a friend of mine had just closed on his last project and was looking for something new so I called him and offered it to him for my original price and he snagged it without batting an eye.

The next day Mr. Experience called me back and wanted to know if I still wanted to sell the deal for 10K (he went to see the property). I told him it was gone. Although I think he knew the answer already, he asked me "for how much". Naturally I told him.

Can you imagine blowing off what to him would have been 27-31K in profit for a lousy 3K? (Sheepishly) can you imagine me being so impatient I couldn't wait one more day for an extra 3K? (Something told me he would call back but now it was a matter of principle.)

So we both lost out on some. But as for me I can't imagine being so stupid as to not jump on a deal that had a potential of 30K profit; subject to my own inspection and assessment of course. If you happen to be reading this right now, yes I am talking about you!

My friend made out real well on the transaction. He rehabbed it for less than I had figured and got some extra profit.

I would contact the Mortgage Co. again and ask them when and where the auction will take place. If they don't know ask them who will conduct the auction and contact the auction house and ask them.

As a general rule you are required to have funding to even take part in the auction. Some places require you to have a certified cashier check to participate. Your best bet is to ask whoever will conduct the auction what payment method is required by the winning bidder.

Watch your P's & Q's on this one, something about the whole deal smells a little fishy. Why was the property in foreclosure and not under BK protection? It is possible the previous owner could not uphold the BK conditions and the BK was dismissed. But why would the mortgage co. insist the auction take place rather than entertain an offer to buy.

This area is a little uncharted for me. When I deal in the arena of foreclosures it is always pre-forclosure. In other words the property is only in the default 30-60 days behind. Sometimes in the default stage after the owner has fallen out of BK protection. If a person fails to live up to the BK terms the court will toss the BK out. When that happens the lender must start at square 1 with the foreclosure process so there is a new window of opportunity to negotiate for the property before the public notices run and all the world knows about the foreclosure.

Hope that helps some, wish I could be more precise.

RE FINDIT

Howdy:

Are you still looking for very specific and detailed reources? If so e-mail me and I will send you a report to evaluate. The report is some excerts from the most detailed and specific how to course I have ever taken. Its a book (actually a 700+ page monstrocity with some audios) that is broken down in step by step modules that are designed to get you started from day one.

I guarantee it will answer all of your "numbers crunching" questions and questions that you don't even know that you have yet.

The course gives very detailed information on rehabbing properties. Rehabs can be an excellent source for +cash flow since in the end you will have a property valued for much more than you have invested. The course author likes a minimum 25k profit from a property after purchase, rehab, and all resale costs. Imagine the cash flow a 225k home would produce if you have less than 200k into it.

Well if you would like to evaluate the free report and see what this guy has to say drop me an email and I'll send it.

Hi there;

It seems a little strange to me that the mortgage debt was not placed into the brankruptcy; or was it. If it was I don't know if there is much you can do at this point. You could possibly negotiate with all parties and see if it can be removed from the BK.

If the home is not under BK protection and I was interested I would go to the mortgage company and see what it would take to get it out of default and if they might take less for it than what is owed (you did say it was running down for about a year) unless it is already a good deal. Then I would negotiate with the current owner about taking over. Even though she is in financial straights, as the owner of record I believe she will need to be a part of any agreement.

If you strike an agreement with all parties you can get it before all the world knows.

The advantage of talking with the owner in this case is, she would have no motivation to hide any defects that you don't want to be suprised with.

Hi There and Welcome to the Bigger Pockets forum.

Yeah me too, I love RE investing also. Sounds like you have a lot of the same ?'s I had when I was bitten by the bug a number of years ago. I floundered a lot until I got some good direction on what to do. "You choose wisely grasshopper" in seeking guidance before taking the plunge.

I personally like SFH including duplex to fourplex for my purposes. I do know many that have done very well in any of the categories that you listed. So, pick one and learn all you can about it; there will be plenty of time to expand into other areas after you get started. They are all very different.

100-125k should be a good cushion to have; but the object is not to use it.

The old addage is you make money when you purchase the home not when you sell it. So the question arrises why would lock up your looking time doing the rehab work yourself? There are other considerations such as doing the job right i.e. up to code, necessary permits etc.etc.etc. There is another benefit to using contractors it is the relationships you develope. These people can be a wealth of seller referals. They hear about good deals all of the time. Do you think they might point some in your direction if they know they will get some work out of it?

Unless I flip a property, I use an agent to sell. You get the greater exposure for your property; you're not being taken from the task for which you make your money at (buying) by answering the phone and showing the property to look-e-loos. And again you're developing a relationship with another wealth of referals. Do you think an agent might toss you a pocket listing (this is a good deal he puts in his pocket for special friends) if he knows he will get another commission on the property when you sell?

Courthouse foreclosure auctions-nice place to visit (for the experience) wouldn't want to try to make a living there. Chances are if it made it to the courthouse steps its not a great deal, the competition will be tough, you don't know who you are bidding against (is it the lender trying to drive the price up), and they usually require all cash.

Banks can be a good place. Again another relationship for good deal referals. Banks know what goes into default before the public notice. If you have a track record the bank might put you onto the deal before having to go through all of the expenses they will incur in foreclosure; banks don't want to own houses.

Normal market, obviously but you will have to sift through a lot of properties to get one at a real good price. Most places on the market are simply priced too high with very little flexability; hey aren't we selling the Tajh Majhal (or however you spell it)?

I prefer to look where other investors aren't; less competition and more good deals. For me flips and rehabs are the properties du joir. I don't intend to hold on to anymore until I see where the market will end up.

As I said I floundered a lot in the begining but once I found a mentor my success got on track.

My mentor was a RE investment course that I took and learned all of the strategies I just mentioned. E-mail me and I'll send you a free report with excerpts from the course. You can evaluate it and see if it might answer all of your questions and more.

To Your Success

RE FINDIT

CONGRATULATIONS!

I don't have any advice it sounds like you covered your bases well. I do have some food for thought.

Assuming the inspection does not turn up any unforseen suprises, is the deal sweet enough after rehab that you might be able to fatten your war chest 5k, by flipping the property to a rehabber without doing any rehab yourself? If your budget is tight it will earn you some money and save you some holding costs.

Just a thought. Again congratulations on your FIRST!

RE FINDIT

Howdy:

I agree with BiggerPro, I have seen homes appreciate that much in two years. Much depends on the location and kind of property.

There is however another possibility. When the property was purchased in 2004, it was purchased significantly under market. The renovations that you mentioned, depending on how extensive they were, would add to the value bringing it close to, or at market value, possibly the high 200's. From that point to 390k over two years is but a modest appreciation, say 45k give or take per year.

Sounds to me like an investor purchased and rehabed, then kept the home for a couple years to maximize profit and now wants to sell to an owner occupant.

There is room to make a little money depending what you are looking for and how much you can negotiate the price down i.e. depending on what the seller is looking for. That of course is assuming you can determine the value to be equal to, or greater than the asking price.

When I do a comp on a property I like to use a title company. They will usually do one for free. Don't abuse their graciousness, flip them some business. The reason I prefer a title company, the only motivation they have for giving this service is to gain some future business from you. A real estate agent on the other hand could give you a comp that is more favorable to the property he represents. No disrespect to RE agents intended, its just human nature mingled with good business sense; the agent represents another party not you.

Good Luck but be careful with this one. Why is it being sold after only two years?

RE FINDIT

Hello:
You asked for a book recommendation on making "Fast Cash". Well not to take a page out of Bill Clinton's script but that depends on what your definition of "Fast Cash" is.

I agree with the other responses to your post. There is really no such thing as "Fast Cash" in this business without paying some kind of price such as learning as much as you can about the business. I do happen to know a book that will allow you to make cash as fast as is possible doing this type of investing. It will teach you and get you started marketing yourself and your business from the very first day you pick it up. It’s a 700 page monstrosity with 12 audio tape instructions too. E-mail me and ask for the free report which is basically excerpts from the book. You can check it out and see if it will meet your needs; it did mine.

I think I understand where you might have gotten the wrong idea about "Fast Cash" and this business. I recall from one of your posts that you took a seminar on investing, is that right? As I remember you made reference to the difficulty you were having with finding and assigning properties and staying focused and motivated. Well you sound an awful lot like me years ago when my interest was first peaked in this business. I bought into those quick cash theories too. They made it sound so easy like the day after the seminar you would get a property under contract and the day after that someone would give you 5k for the rights to the contract; WOW!

Let me just say this about getting a property under contract with the intent to assign it. Do not do this as the only option you have, be ready to pull the trigger and follow through on the deal even if you can’t find a buyer. Why? I’ll tell you why. If you do find a good deal on a property and try this, a savvy, unscrupulous investor will know what you are up to and figure if he sits around until you exercise your “weasel” clause, then he can jump in and get the property without paying you. Yeah, they did teach you about “weasel” clauses right? Investors that have been around the block know that they did too. That is the first way you lose. The second way you lose, and possibly the most important way is by loosing your credibility. Exercise a weasel clause for some ridiculous reason once or twice and word gets around with real estate agents and they will not even present your offers to their sellers. They don’t want their clients properties tied up for 90 days to have you walk away for some petty reason. I buy “as is” and will only walk away after my inspection reveals a serious defect that I was not made aware of, that would make rehabbing cost prohibitive at the agreed purchase price. Even that however can open the door to new negotiations and an amended lower purchase price. If you still want to pursue assignment of contract might I suggest finding an investor, or several for that matter, who want to buy good properties and contract with them to be their bird dog.

Concerning your focus and motivation problem I know exactly what you’re talking about; I had the same problem for a long time. The problem was I didn’t know where to start. I had read a lot of books and attended a lot of seminars and learned a lot of profit making theory but where they all fell short is where and how to find the real good deals, what neighborhoods to look to buy in etc. I bounced all over the place for many years with only spotty success. It was not until I got the book that I mentioned above and implemented its instruction that I started having consistent results. Like the responders said there is a price to be paid to succeed in this business. Like BiggerPro said in his subtle manner, in this business knowledge is power.

Sheet"s stuff is ok but doesn't give real good marketing your business info. His idea, or at least it was when I went through his material, was to drive the neighborhoods looking for "For Sale By Owner" (FSBO). This is not a cost effective and efficient way to market, the goal is to have most don't wanters coming to you. Market your business right and build your rep. and that will happen.

Hope that helps out. E-mail me and I’ll get you the free report so you can evaluate the information.

To Your Success

Gary

Hi Marks:

I am honored to be the object of another Fanatical Post. It seems
that my optimism has you a bit perplexed; let me try to briefly
respond.

In short I do believe the housing prices will come down all over
the country. They have to. As the Fed eeks up the interest rates
¼ point at a time it creates fewer buyers that sellers must compete
for. I’m thinking we’re about 1/3 of the way into the proverbial
“boiling the frog alive” ritual. You know, put a frog in a pot of
cold water and very gradually turn up the heat; it just sits there
unaware its being boiled alive.

My personal opinion is the Fed is making the interest on bonds
more attractive. That way they can sell them on the market
reducing their reserves and contracting the money supply. They
have been pumping so much money into the economy to prop it
up, its time to slow the expansion down before all that cash comes
back on shore and haunts us in the form of outrageous inflation.
Of course I believe the whole idea behind NAFTA, GATT, CAFTA
FTAA, massive trade deficits, and this foreign outsourcing is to keep
all that cash offshore so as not to tank our economy A revealing
discussion on the expansion and contraction of the monetary system
can be found in a publication called “Modern Money Mechanics” put
out by the Federal Reserve Bank of Chicago. Unfortunately it is
no longer available from them, I think they found out it gave up too
much information. To find it you have to do an internet search.
Knowledge of that topic has helped me immensely; its even use-
full in certain negotiations.

My optimism stems from my knowledge that no matter what the
market does there will be profit for the savvy investor. I hope that
no one takes that wrong and thinks I’m just sitting around waiting
to take advantage of those who find themselves in harms way; I’m
not; I believe the most fulfilling profit of all comes through
helping others. Unfortunately the cliché “Win,Win” has become
an empty shell of form without substance. Learn the true meaning
of that and you can’t go wrong! I’m not big on raw-raw motivation
but it was Zig Ziglar that said if you help enough other people get
what they out of life you will get what you want out of life.

Are prices coming down in my area? Not real noticeable yet.
What I have observed is, properties staying on the market for
longer periods of time. Depending on the seller’s reason for selling
this can obviously create a certain amount of anxiety. As the
competition for buyers becomes more fierce, and concern begins to
peak, prices will start to come down. My biggest fear is that a lot
of people are going to get hurt as a result of the government sanctioned
creative financing known as the ARM.

Some didn't know what they were getting into with the ARM's; all they
saw was a lower mortgage payment with their CC debt consolidated.
Those who were knowledgeable enough to see what COULD happen,
had a plan to avoid it only to see those plans fail to come to fruition.

Hey there Marks, sorry about the diatribe but hey you ask what my take was and there you have it in a pistachio shell.

Nuff Said! RE FINDIT signing off for now.

Hi Miles:

Prohabber is absolutely right, motivation is the ex-lax of RE investing; it can move mountains.

I have found that FSBO's or properties listed through an agent are poor candidates for owner financing. A good place to look for don't wanters is the for rent listings. Often times these owners are in the mood to sell and will entertain seller financing possibilities.

First, they probably didnt want to be landlords in the first place, but got stuck as such because they could not sell there home and had already purchased a new one, what else could they do? Now they are faced once again with getting the property into renting condition, carpeting, painting, etc. and if they had their druthers, they'd druther not.

Another potential source for owner financing is cruise the neighbohood you want to buy in and look for vacant/abandond properties. Check the public records at the courthouse or county recorders and find the owners. Write them a letter.

Hope that helps some. E-mail me at [email protected] and I'll send you a report that might expand on these ideas.