All Forum Posts by: Raj Gandhi

Welcome from a fellow Minnesotan!

Regards,

Raj

@Brian Risi even if $1k will generate one good lead, I'm skeptical that you could close a deal in that budget. Could you get a $10k home equity line of credit (HELOC)? Borrow from your 401k? I feel like you'll need more than $1k for closing costs, documentation fees or lawyer expenses.

Stamps are $0.49, printed signs are about $20/ea. On that budget, I'd skip the extra phone line, website and probably signs. (Disclaimer, I'm not a wholesaler.) Here's part of a plan... Develop a relationship with a real estate agent in order to gain access to MLS listings. Use Zillow and MLS searches, over the course of several weeks, to refine your search to a particular target neighborhood (100-250 homes).

Some of the podcasts say it takes ~8 contacts with an individual in order to make a good connection.  With a target neighborhood, judiciously use your budget to send mail, make phone calls and go door-to-door.  Maybe put your signs (legally and unobtrusively) at the entrances to this neighborhood or nearby.  Structure your budget to meet the number of contacts per home. 

Fwiw, there's some guidance on finding a seller.  Finding a buyer is a different challenge.

In my area, I'd work with my local title company.  My particular title company has a relationship with an attorney and can offer those services as necessary.  I'd have the title company draw-up the offer, do title search, lien search.  I don't think a survey has been required for any of my properties.

Really roughly, my title company would charge $500 plus $500 for every $100k of purchase price.

By law, you can probably do all the title work on your own.  I've only heard of one person do that and they didn't recommend it.

I try to work with a local mortgage broker.  My test of the mortgage broker is their responsiveness (email, phone).  They should be able to get you the best price and streamline the process for you.

To test for mortgage rates, I sometimes use bankratemonitor.com.

Agree with @Joe Villeneuve .  Specifically, the interest rate you locked-in is probably near 5%.  That's historically very low and for a long term.  Thirty years ago, that rate was inconceivable.

Use your cash flow to earn more than 5%.  If you want to do something different than real estate then put it in an S&P 500 Index fund.

$1000 isn't realistic.  The other suggestions of learning and education are good.

If you're trying to become a wholesaler, then you could possibly start a marketing campaign as practice.  Create the website, phone lines, direct mail.  After that, your $1000 will probably be exhausted.  At that point, you may or may not be getting leads.  If not, then no additional loss.  If you are getting leads then you learned how to do a portion of the business well.  Either commit more money or walk-away satisfied.

@Kendell Wolfe did you calculate (estimate) your rate of return?  Decide to buy another soon?

On your first rental, after paying expenses and mortgage, are you happy with the rate of return with respect to the down payment? (Cash-on-Cash rate of return)  Is it in the 5-10% range?  If you're happy with that return then replicate it with a second one.

Keep in mind, last year the stock market returned something more than 20%.

Other considerations are that you could borrow at a fixed rate (5%?) for 30 years.  Your rate of return will go up with inflation but your mortgage rate will remain fixed.  That's a good thing but a bit of an assumption on the future.

I swear by erentpayment.com which uses ACH.  $3 flat fee per transaction.  I register the property with erentpayment.com, the tenant registers their bank info with erentpayment.com.  Everything is nice and professional.  Monthly reports can be generated for all properties.

Erentpayment seems like a small outfit but their customer service has been responsive and pleasant.  There have been various failures over the last three years, all tenants fault.  In some cases, the money will go into my account and then back out.  However, no extra fees on my end related to their failures.

@Chris Salveson you're basically on the right path.  As I recall, the sheriff's auction marks the half-way point in the foreclosure process.  That means that the owner is 6 months behind in payments (and fees) but there is also 6 months to go before title changes.  To be profitable, you're going to need to include the missing payments and fees.

By the way, I went to a sheriff's auction once.  It was three bank lawyers, a deputy and me sitting around a tiny table.  Everyone there knew the dance except me.  #Uncomfortable

I examined this general route (pre-foreclosures & auction) for acquiring properties but never found a viable deal.  First, Zillow's data is old news.  You're better-off searching notices in small, local online papers.  For some reason, banks like to post their listings in strange, out of the way places.  Second, few of the foreclosures have any equity.  The only one I found was an antique farm house.  I spoke with the little old lady there and learned more than I wanted.  Ultimately, she was waiting to hear back from her bank about "reversing her mortgage".  A reverse mortgage was actually a good idea for her.  

Perhaps consider adding reverse mortgage to your wholesaling plans.