All Forum Posts by: Robert Smith

Airline crash pads are a great idea, just like a student or visiting doctor crash pad would be. If you are in the business you already may have your prospective tenants in your circle of friends, word of mouth could help you advertise and stay rented as well. If only as a crash pad I would fully furnish it and treat it the same as any other vacation rental property. Management and cleanings are key to success, either can make or break your income. I can see a need for it, great thinking outside the box, you may have given me some ideas for my area. 

You could start by investing in mobile homes that are cheap and need a little work that you can turn and sell quickly. You could also try to wholesale properties after getting them wrapped up with a contract. Another option would be to connect with other investors in your area and partner on a deal, you could pay for the rehab and they could purchase the home, or a similar arrangement. Depending on your area, cheap homes may be hard to find but they are out there. Make sure that whatever you do you are protected, don't let someone take advantage of you because of your cash in hand or age, many investors started out as early as you are, and the rest of us wish we did, so good luck.  

This all depends on you and your strategy. If you are looking to rehab and sell a foreclosure with a lot of work needed may be ideal. If you are looking to buy and hold, a property that has proven cash flow and possibly a long term tenant may be the way to go. One thing I would not do is buy a home you like. If you are buying on emotion or because you like the place you will spend more money then you should and ask too much for it. Like the numbers, not the home, this is a business you are getting into and if the numbers don't work don't try to make them work. If purchasing to rehab and resale your numbers need to work to not only put repairs needed into the home to sell, you must also look at the carrying costs until you sell and the cost to sell so you will need to find a home with more equity then if you are looking at a buy and hold property that you can afford to sit on for years to come and build residual income along with equity. Again, your goals and risk level should define what your buy, but if the numbers work for your niche it doesn't matter if it is from a traditional seller, rental, or foreclosure. Foreclosures usually take all cash, sometimes you can get loans or owner financing with a traditional sell or rental home so keep that in mind if you are limited in funding to start out. 

In my experience they cannot offer you much more then most free sites can give you. If you are looking for good foreclosure leads you can work with a knowledgeable agent in your area or search out zillow or your local court house for foreclosure filings. NC is a great state when it comes to purchasing foreclosures, I did this for many years and they are more open to working with investors then most other states I have worked in. Pre-foreclosures and a home that is in foreclosure is two different things, research them both out and figure out what you would like to go for. Pre-foreclosures is a lot more work however the money is better and competition is less. Once the home hits the MLS generally there is no deal there unless you are in a very slow market and no one else is in your area buying homes. Save your money to pay for marketing and skip the pay websites.

Your offer is more likely to be accepted when offering cash, quick close and no hassles as a loan can many times take 30 days or more and will be contingent on the property being in a certain condition. Most people will choose to use their own cash to purchase the home then refi once the rehab is complete if you are looking to buy and hold. The best of both worlds is hard to have, I always suggest using other funding when you can, however when it comes to getting a deal or not sometimes you have to put your own cash up then get it back out later. If you are planning to rehab to resell and the money will only be tied up a short time, cash is a great idea or you could look into a hard money loan, however those can be extremely expensive. There are many lenders who advertise on here, or do a search for some investment lenders and see who has good ratings and reviews. If you own your own property and have equity in it you could always try for a heloc, most banks can do this with no issue, it is a loan but you would have the cash to purchase and close quick which is what most sellers want. Depending on your market, if it is hot and there are many investors looking to buy up homes cash is the way to go. If your market is slower and not much competition, try the lending route. If you see that you are getting beat out by cash buyers you could always change your strategy. If buying from an individual rather then a bank you could always propose some cash and some loan to keep you liquid for other deals or repairs. Use other peoples money whenever you can, but don't lose a great deal on something if you can buy with cash. 

My suggestion would be to have at least 1, if not more, estimates ready to present to the potential buyers. You could offer to repair the property for an additional cost, this has worked several times for me. For most seasoned investors settlement issues are not something that would scare them away. Disclose, especially being a licensed, and have them sign something stating they are aware that there may be issues and they are purchasing the property as-is and you make no representation as to the condition of the home. 

Not sure if you are asking specifically what points are or in a hard money loan how many are charged, so I will answer both and maybe help you out a little bit. 

A point on a HML (hard money loan) is 1% of your mortgage amount. These are not only in HML but can be in traditional loans as well. Generally a point is used to buy down the interest rate in a loan however with a HML it is more of a cost of getting the loan. Many companies will charge points in addition to a funding/financing fee.

The amount of points each company will charge varies from company to company. Most I have seen are 2%-4% or 2-4 points of the mortgage amount. Credit usually don't matter as much as the value of the property and the amount of time you need the money. I have seen companies that give you an initial loan with 3 points but may allow you to extend the loan term with additional points paid up front. With a HML usually your points are paid up front along with the funding fee. One nice option to a HML is paying interest only so that could help with the up front cost when your carrying cost is a little lower.

With a HML sometimes having money to do a deal is worth the cost, takes money to make money kind of deal, especially compared to having to wait on a traditional loan for 30 days or longer. Many companies will fund not only the purchase but also the repairs needed to the home. When you don't have the 20% down for a conventional loan or cash in hand, a HML can be an option.

As for limited funds, you could use that to market to find deals and wholesale or work out owner financing. If you have good credit and a home you could look for a home equity line or a cash out refi in a personal home. You could always wholesale deals to other investors until your funds build up. 

That is a good question and something that property managers now are dealing with, whether or not to take a SSN. Whether the SSN is made up or not, you should be able to collect enough information about them and have references and information verified before moving them into the home. If you need to take them to court a SSN is not required. I personally like to pull the background along with the criminal record and I still collect all my tenants SSN's. I always collect a copy of their drivers license or ID, you can collect a copy of their SSN card as well if you are worried about it being made up. Anything you collect make sure you keep secure and have the tenant authorize you collecting and using this information to pull their information along with an authorization for you to be able to collect information from their references, such as past rental and employment. 

Scavenger is usually referring to the trash collection. You could call the listing agent to confirm, but I have never heard of anything else being referred to as this. 

Prior to closing is where most investors start. During your due diligence time you have contractors come out and inspect the home and give you quotes to do the work. Once you close get the utilities on and start calling the subs/contractors to do the work. Many times I hire one person who can do most if not all the work needed. This saves time, headache, and phone calls, also less people to pass the buck if something does not get done in time or manner you expect. Plumbing and electrical are first for me usually unless something structural or a roof needs done to the home. Next would be any sheet rock and painting needed in the home. Cabinets and fixtures (electrical and plumbing) are next. Last I work on the floor coverings. I like to work from the top down, saves wear and tear and stains or paint on your coverings. I also like to go outside in, once the house is sound structurally I work on the landscaping then the interior. Get a sign in the yard once the outside looks good to draw interest, this way when you are ready to rent or sell you have a list of people interested in the home before you have to let it sit empty for a long period of time. This obviously isnt all inclusive due to time and space here in the post, however a good list to start from and should give you a general idea. Everyone has what works best for them, after many many rehabs I have what works for me and most other investors I work and associate with.