All Forum Posts by: Rick Stein

You seem to be paying full retail for the property ($450K) and borrowing the down payment ($90K). Where are you getting the $90K? That investor would be at a very tenuous second position with a 100% LTV. If you can get someone to do it, why would you pay him 50% of the profits for 20% of the investment. You can pay him/her a nice interest rate, say 7 or 8%, keep the profits for yourself and be much better off.

Is there a current mortgage on the property? if not or if there is a small mortgage, is there the possibility of owner financing? 

I echo what Jim said. I would ad, it would be advantageous to join your local REIA (real estate investment association). For what is usually a minimal fee you get education from people who have "been there and done that" and, equally as important, the opportunity to network. I have been in the real estate business for thirty one years as an agent, office manager, REO agent and investor. When I Joined my local REIA about six or seven years ago, it changed my investing life. I have formed invaluable relationships with wholesalers (who actually know what they are doing) and investors who have financed some of my properties and to whom I have wholesaled some of mine.

Getting your real estate license is an advantage only in that it gives you access to the MLS. It teaches you nothing, though about investing. The vast majority of agents know precious little , if anything about investing. It is not their fault as they are not taught that discipline. Investing is as much about creative financing as it is about the brick and mortar.

 However, you do have a wonderful advantage in being in construction because you can look at a rehab and know, not only what it needs, but also the cost. Just get more education, network with people who can help you and go for it.

I wish you the best of luck,

Rick

$300per year? That's amazing. That would be monthly here in NJ. ,

nice going on the purchase price. Maybe I am missing something, but, if your taxes are about $300mo, your insurance is about $ 20/ mo and your HOA is $200/ mo.= $520 ( not including reserves )! rent $725-$520= $205/ mo positive cash flow. Where are you getting $300/😝Mo

This private lender was originally a seller who responded to one of my " yellow" letters. I bought his moms place with seller financing ( him) at an 80% LTV. The down payment and rehab costs came from a friends self- directed IRA. This was another deal which required nothing out of my own pocket. I sold the property and , of course, cashed him out. I am also a real estate broker and he gave me his new wife's home to sell. He and his wife got about $ 150k equity. I asked him if he would be willing to invest in another project which was the property for which he lent me $ 90k. He also lent me $70k for another property. He is in a first position lien in that property which has an estimated fair market value of $170k.i borrowed the rest of the $35k purchase price and rehab costs from up unsecured business line of credit. The have it rented at about a $350/ month positive cash flow. Another property with none of my Ken money. Do you see a pattern here? Yes, you need money to buy property, it just does not have to be yours. I am not telling you this to impress you, but to impress upon you that there are many possibilities.

Hi, Jose,

Welcome to the wonderful and challenging world of real estate investing. You are doing well by getting as much education as possible. You can never have too much. Here are just a few tips on wholesaling:

1. Know your numbers. Most "wannabee" wholesalers make the mistake of over estimating the ARV (after repaired value) and underestimating the rehab costs. You are quite fortunate to have a fiance who is a licensed real estate agent to help you with comps and a dad experienced in rehabbing.

2. If your contract is going to read "and/or assigns" you may wish to have a due diligence period in the contract which would give you time to double check your rehab costs and find an assignee. A very good strategy would be to find out what your assignee want FIRST and then look for a property to fit those needs as opposed to finding getting a property under contract and then scrambling to find an assignee. Attend those REIA meetings and ask the members what they are looking for.

3. I personally do nit like "weasel" clauses that allow you to back out of a contract for an insignificant reason when the real reason is you can't find an assignee. It is not fair to the seller. Therefore, I would have some private lenders who might want to finance the project for you so you can buy it. For example, I just closed on a property which I purchased for $75K. It needed $12K in rehab. I borrowed $90K from a private lender at 5.5% for three years. In other words, I was able to borrow the acquisition cost, rehab cost and closing cost (nothing out of pocket) for a property I will rehab and rent with a positive cash flow.

Of course, I do not know your financial situation, but many folks get started in real estate investing as wholesalers because they don't have the cash to do it themselves. Having your own cash is wonderful, but having ACCESS to cash in the form of a private lender or a partner is just as good. Even if you have the cash, why use it if you don't have to?

There are many more points to cover, but these are just a few as I sit here in my "jammies" on a Sunday morning.

I wish you the best of luck!

No, you don't "need" an attorney to prepare a contract, but you may want one to make sure your interests are protected.

Has she identified a new property that she is pressed to close on?If this deal goes south, will she lose the deal? What if you increased the EMD to $1,ooo.Will that pacify her attorney? Of course, as I said before, if she really wants the deal she can thank her attorney for their concern and simply tell them she wants to proceed as is

Whole sailing is possible on any deal.If you explain to the seller what you are doing and he has the ability to vet the assignee so he is comfortable he will get paid, I suppose that works. My question is, why would a seller agree to wait indefinitely for you to find a buyer? If you have a such a contingency for a week or two, it might work. Every situation is different and every seller has a different "story". You have to answer the following question for the seller" WIIFM? "What's in it for me?" If you can give him a good reason, it can work for you. 

Are you financing the deal through an institutional lender? If so, the lender will determine the down payment especially on an investment property. Is it seller financing? If it is the latter and the seller and you are good with the terms, tell him to get a new attorney. What is the purchase price of the home? 10% of what? How fast is the closing? If it is a fast closing, it makes less difference than if the closing is 60 days away or longer. Yes, the attorney is trying to protect his client but, he/she may be ding the seller a disservice. How long has the seller have the house on the market? If the deal dies, can he get another buyer quickly or will he be "sucking wind"? Is the property occupied or vacant? If he is very anxious to sell, he might tell his attorney he is willing to take the risk? The answer to these questions are very important. Don't be intimidated!

I hope that helps!