All Forum Posts by: Account Closed

Just checking in. I have been active in both markets for 10 or more year. If you want to discuss what it is like lets get a discussion going or trade email.

John Corey

I am curious what has happened since you posted your request.

I have been investing in the UK and UK for a long time now. I could cover some of the things you asked if you still need advice.

John Corey

To all,

How many folks are looking for cash flow positive properties? Something around the 1% rule (12% per year in gross estimated yield)?

There are deals out there. Sometimes more than I can take down. Other times less than I want to buy. What are others seeing?

John Corey

Troy,

What is the URL for your company's website? I want to read up on what services the firm offers.

John Corey

Jim,

I read your post for how you expect to work with partners. Have you done any deals since the post? If so how has it worked out?

John Corey

Most REOs get listed with local agents and will appear on the MLS.

Troy has explained how his firm sees portfolio of REOs before they get listed but the window between when they see the inventory and when the bank moves it to a conventional channel is not that long. There are likely other corporate firms that deal with large REO portfolios and who operate in a similar fashion. Is there a term for the industry sector? I do not know so someone else can confirm the label.

Most 'wholesalers' are just other investors who find deals and are trying to flip them. At least based on how most use the term. They are likely not dealing with REOs as they need the seller to agree to a contract. Banks do not work through this type of wholesaler.

The quality of the deal you find could be a function of the local market. If there are more REOs than can be sold easily expect low prices. If the REOs are not that common then the prices are likely to be closer to full market. More so if the lender takes the time to improve the properties before selling them. You will need to do your own research in your market to see what the norm is and who are the sellers with the bigger volume. Many times there are a select few agents who handle almost all the lender inventory in the your area.

John Corey

1. Always focus on what the property is worth to you. It does not matter what the bank wants. It is what a buyer will pay that will close the deal.

2. Never be the greater fool. If someone else wants to overpay let them do so. Stick to your numbers. Adjust if you find that you are wrong in your understanding of the repairs and the selling prices actually achieved. Otherwise just stick to your model and wait for the deals.

3. Cash is king. Cash shows that you can perform without issues. You can close faster. Use it as a club to motivate the lender. Consider a large earnest money deposit if you are sure of the deal (real sure). That shows you are serious and will certainly put you in front of someone else with cash and the same price.

4. Keep your deals clean. Get them done on time. Build a track record with the lenders in your area who you buy from. When making future offers remind them of prior purchases you have completed on time so they will know that you are one of their best buyers.

5. There are times when a bank needs to get a deal done before a deadline (regulators are coming in to check the books, the bank is closing its financial statement for the period). They have been known to call buyers and offer deals if the deal can close very quickly.

6. Consider setting up lines of credit with local banks so you have more capacity. Also expect that banks who you deal with all the time should be offering you a line of credit on favorable terms.

John Corey

Historically real estate investing does not produce an income to live on until you have built up a lot of equity.

Some buy, fix, sell or other variations. Or they are agents, etc. The point here is these people have a job and it just happens to relate to RE.

So, leaving a good job to be a RE investor is a tough transition. Most that I know have been investor for some time or they had really inexpensive lifestyles prior (under $1,000 a month gross).

Terry Vaughan will say that you need to do deals that provide lump sums of money and deals that are for the long term. The lump sums keep the bills paid and the other deals buy back your time over the years.

One thing that is different is you can work real hard and build up a large portfolio or a lot of equity. In most jobs people do not have that choice.

Note that by having a solid job with a stable income you will have a much easier time getting loans when you are in the 1-10 range. After 10 properties your portfolio starts to matter a lot more to the lender.

John Corey

Minor detail.

Banks legally can not own real estate other than that which is necessary for present operations. That is why REOs have to be liquidated. The rule means a bank can not site on property they take back waiting for an improvement in prices. They can own the property long enough to get it sold but not as an investment or to maximize long term returns.

John Corey

There is no magic. Make the offer you want to make and see what the bank has to say. Some of the time you will have to educate the agent as to any special conditions. Most of the time the REO focused agents are very clued up so they know to just present offers they have received.

I have purchased REOs that were listed at significant discounts. It depends on the bank's motivation. Note that a bank can not sit on the property for ever as there is regulatory pressure to liquidate REOs. A legal requirement from decades ago. The rules still apply so a lender will cut its price when they need to shift the property.