All Forum Posts by: John M.

I'm working with my mortgage broker on financing for my first rental property. I'm looking to get a 2-4 unit, and I will be an owner occupant in one of the units.

We got into the discussion about what I'd be able to afford to put down, and how I should not put myself in a position where I would be " house rich and cash poor". While I agree with this, I'm intimidated by the 1% PMI for the life of the loan.

So my questions are:

1. Is it normal as a residential multi family investor to put 3.5-5% down and still make a good deal out of it, even with PMI? This makes for a weaker investment, but allows for a larger portfolio, I'd assume.

2. When I hear discussions about 50% & 2% rules, are these assuming 20% down and no PMI?

3. I've heard Piggyback loans mentioned where you finance 80% with the bank via your home mortgage, 10% via a private loan, and bring 10% cash + closing costs to the table. This would eliminate PMI, but I'd be stuck with the higher interest rate on the 10% private loan.

@Jonathan C., what kind of agreement did you have in place with the wholesaler who brought you the buyer? Could you post or link to that document?

@Kenneth Z. response. It's the harsh reality.

When you sit down with your pen, paper and phone, just remember that you are not making that call just for yourself. You're making that call to help support your family. You're making that call because the person who called you first needs help. They need to sell their house for one of many reasons, and you're the person who they found at the right time. They are responding to your mailer for a reason. Help them solve their problem the way you have been taught how. 

Carlos,

I'm looking forward to your notes and perspective. I am also interested in REO's in my market, but I am not armed with the knowledge to wholesale them as an exit strategy. I just recently wrote a post about this over on the REO board. Maybe you'll be educated enough after this session to help with that!

John

About a year ago, I found a boarded up house in not the best of neighborhoods, and I nailed a "we buy houses" sign to the boarded window. I've done this a few times and they generally lead to calls from retail buyers looking to purchase the property. Not much help there.

But today, I got a call from a realtor saying they were taking my sign down, asked politely that I not put signs on Fannie Mae homes, and then she said its a foreclosure and if I'd like to buy it I should contact her.

The home is not listed yet, so what does this process look like? The realtor said there would be an appraisal & they would likely ask for as is value, but she said she'd put me in a file and email me as soon as she gets the go ahead and we'd negotiate from there. For perspective this is a dump with a caved in roof and a tree growing through the middle of it. Fun stuff.

For Fannie Mae homes, does it have to be available to the public before sending it to one investor like myself who gets in early? Or do I have the opportunity to have an offer accepted before it hits MLS, home path, etc?

Can these deals be wholesaled, or is there generally no inspection / due diligence time? Can that be negotiated with Fannie & would there be a (refundable) security deposit required? 

I am planning to do a redesign of my current landing page for seller leads. I want to convert to more of a branded style rather than unbranded. Therefore I don't really want one of the typical squeeze page type layouts, but rather something more professional. Does anyone have a suggestion for an easy to configure (preferably free) Wordpress theme that works well for this kind of a site? Or do you have referrals for designers you've used in the past?

Thanks guys. This was my first experience talking to a motivated seller who used the key words I mentioned in my initial post. For this reason, it seems like I've gotten ahead of myself. Thanks for your analysis @John Horner.

Originally posted by Tim G.:

Do you have anyone who is more experienced who can help you with this deal?

A mentor is so crucial to the success of a newbie, helps you avoid mistakes and chasing your tail.

If you want to go seller finance you need to know all the details on the mortgage. Rate, term etc... To the point where you want to call their lender with the seller and have them send the forms needed to give you permission to view those files.

Hi Tim,

I do not have a mentor here in Orlando. I've seen a couple different experienced wholesalers offer programs, however I'm not sure how beneficial that would be as I currently have a 7-4 day job. This doesn't leave me with much time for hands-on experience or communication, assuming the mentor wants their nights and weekends to themselves. How would you handle this situation if you were in my shoes?

I see what you are saying about the mortgage information. Would it be best to wait until after I've evaluated the situation and determined that it is a good deal based on the information the seller provides, and then request that these forms be sent to me? Based on my initial post and assuming a low interest rate, do you have enough information to analyze the deal and see if it is worth pursuing?

I didn't necessarily mean "rent to own buyer", in my last paragraph, I meant more or less any buyer who is willing to go the route of seller financing.

Hi everyone. Long time reader, first time poster here. Introduction will follow.

I'm new to real estate investing, and I'm working on my first potential wholesale deal where a local seller saw my sign and wants to sell a house she & her mother own about 1 hour away. This seller threw out SO MANY of the motivation key words! "Over it", "Divorce", "Get rid of it", "get out of it", "tired of being a landlord".

Even if this isn't a deal, I'm going to use it as a learning experience (so here I am!). First, here are the stats on the deal:

3/1 property (Jim Walter home). Seller wants the loan of $48,000 paid off, and to "walk away with $10,000", which is very unreasonable for the below numbers, so I'm thinking I could easily talk her down. Seller is ok with leaving existing financing in place "if that's what it takes", however I wasn't thinking on my feet, and forgot to ask what the interest rate was.

Using zillow/realquest/eappraisal/trulia/redfin to identify estimates for the target property, ARV averaged out to $48,134.

Using nearby comparable sales (there weren't many), ARV estimated at $39,916 (which method should I use for ARV, typically they are pretty close but this one is way off?)

I'm assuming $10 repairs per sqft @ 1152 sqft as the house was built in 1972 and the seller said the only thing she would replace if she lived in it was windows. (is this reasonable?)

If the house is located in another city, do I need to find a title company in that city to work the transaction, or can that be done where I and the seller live?

Finally, I'm thinking I would have to take a seller financing approach on this, because the house is worth less than what is owed. Even if I did take a seller financing approach, would it be reasonable to assume that a rent-to-own buyer would agree to the loan of 48k, plus a down payment as my assignment fee?