All Forum Posts by: Lou Castillo

I am a 20 year RE investor, but never licensed as an agent. I have a question for you seasoned Realtor pros out there...Is there any way to gain access to MLS - just for the prospecting feature of non-listed properties - without becoming an agent?

Joshua - if you are wanting to make a business out of investing, then you have to be able to find properties and fund them without banks. Consider using hard money and building a private lender portfolio. As for the properties, you can find great deals from wholesalers to get started, and later, you can develop a marketing campaign to have motivated sellers call you. Eventually you will have so many deals you won't be able to handle them all yourself and you'll expand your business to become a wholesaler.

Good luck to you.

One tip I give all of my clients when they are using comparable sales data: put yourself in the ultimate buyer's shoes. Actually stand back and look at the house like a buyer. After your subject property is fixed up like the comps, would you as a buyer feel that they are the same. For instance...not just are the bed/ba configs the same and square footage similar, but are the neighborhoods the same? Would you be just as comfortable on either street? Is the architecture of the house similar to the others in the neighborhood? Is there anything strange about the lot or the surrounding properties that make it less desirable? I once went to look at a house that sat at the edge of a cemetery. Value dropped way down in my estimation.

The reason I tell you this is that newer investors tend to focus on just the numbers on the paper. A smart investor uses that information, but also looks at the property and the comps like a buyer. Hope that helps.

@Forest Ritchie - don't forget to look for alternative funding sources. For instance using a combination of hard money and private loans. You can literally get 100% of your purchase+rehab+misc costs funded this way and keep your cash as a safety net.

Chris,

I take a different approach. The first thing to determine is what are your current goals and objectives. Are you looking to build cash in the business now...or are you looking to build equity for the future?

You appear to be trying to compare the cash flow of a rental to the cash flow of a wholesale. Two different animals altogether. I advise my Clients to create a steady stream of cash coming into the business first with wholesales. As you do that you'll find properties that meet your rental criteria.

Then it is not about should I WS or hold this property...it is simply does it meet my rental criteria? So be sure you know what your objective is with rentals. Why are you buying them?

For me, it is not about the monthly cash flow today. I don't care about today's cash flow as wholesaling takes care of that. Rentals are about long term wealth. One of my criteria is can I escalate the payments and pay off the house in 10 years?

If so, then this may be a good candidate for a rental even though I May actually generate zero dollars in monthly cash flow for those 10 years, but then I'll have a fully paid off house...100% equity and awesome monthly cash flow.

Hope that helps.

Lou

Thanks Jon for a great answer. I really understand the reverse mortgage much better now.

Thanks. I appreciate the info. Doesn't seem worth the chance to do a ST on this type loan.

Do you think it would make any difference if the house was sold to an owner/occ?

Does anyone have any feedback on buying a property subject to a reverse mortgage lien? Are these lenders more likely to enforce the due-on-sale than lenders on traditional loans?

Be sure to have the Seller sign a isclosure statement that they understand that loan will remain in their name and that the bank has the right to call the loan due. I have the seller sign this Disclosure twice - once when we sign the contract and again a the closing.

Do NOT ask the bank for permissio - they will always say no. But you do not hide the transaction either. Close at a title company or attorney just like any other purchase. Prepare a letter from the borrower notifyin the bank that you will no be handling their loan and to please send all future correspondence to you; and get a new hazard insurance policy in your name listing the mortgage company as the mortgagee on the policy. Send the Decs Page to the lender to fulfill the insurance obligation.

Finally, ask the closing agent toget a "Statement of Account" from the lender as of the date of the closing to ensure the exact amount that you are taking responsibility for.

Let me know if you have any other questions.