All Forum Posts by: William Carson

Thank you all for your recommendations. I will be networking tomorrow. I'm sure I will get it done! 

am looking for recommendations for insuring my first project. Plan to be a flip, 2-3 weeks to rehab. Contractors are all licensed and insured. Business is an LLC in PA. I was checking out National Real Estate Insurance Group.

Property is in rural NEPA, and surprisingly, my current insurer, who I thought I was "In Good Hands" with, who I've been with for auto and homeowners for almost 20 years, absolutely 100% refused any type of coverage and actually wished me luck in finding insurance. no referrals, no pitch or recommendations. It was a very bizarre conversation.

I'm going to a networking event tomorrow night and I'm going to ask around, but in the meantime, any recommendations or referrals would be appreciated. Thank you.

Try to switch your FHA buyer to your mortgage broker. if you do not have a mortgage broker on your team, get one. they come in handy for just this purpose, when you have an FHA buyer. they probably went through FHA because FHA only requires 3% down. Try to get them screened through a mortgage specialist and flip them to conventional financing that may only require 5% down, and if they don't have the extra 1 1/2%, work with them. It may seem like your giving a little away, but think of all the hard money and holding costs you can save by getting the deal done in half the time it would take to go through FHA. Just my 2 cents. Good luck!

Is the subject property part of a bank program such as Freddie Mac, HomeSteps or FHLMC? If so, it's tough for investors to get a fair shot at these as they usually offer the bidding for the first 10-20 days to owner-occupied bidders only. After that, investors get a crack, then non-profits, charities, churches etc. I've offered on several properties under these programs and haven't gotten one yet. In fact, I offered 10k over asking on one of them, close within 20 days, all cash, stated I visited the property, only to find out later it sold at list price to an owner-occupier. I was understandably upset (even 10k over list was still a fantastic deal), and decided to only watch anything new that pops up. If it's been listed for 30 days or more, then I might take a crack at it.

Banks will take their sweet time to come to a decision, then usually want immediate responses from you, the buyer. Find a realtor that knows how to play the game on their level, it makes your life a lot easier! If they're asking for your final and best, they probably already have multiple offers and are close to making their decision. Good luck!

Agreed John. I have my septic guy and the sewage officer tentatively planning a perc tomorrow. Keeping the fingers crossed. Going to do the test, review alternatives, if any, and proceed from there.

Don't use the banks price as your guide. Use your numbers. Some REOs are priced way over value, while others, like those in the HomePath program, are sometimes priced 50% below market. As an investor, use your numbers. If it's not near your number, there is a reason it's not priced right. Sometimes they do it to control inventory. Other times it's enlisted in a program like HomePath, where owner-occupied bidders get first crack and we get to bid 20 days after it hits the market. In that instance, you need to make an incredibly strong offer with short inspections & closing times, all cash, state you've visited the property etc. I've bid on several HomePath properties with my highest and best right off the bat, one was 10k over the $34,900 list, was still a sweet deal for me and I still didn't get it. On the flip side, I have one under contract that I absolutely crushed. My net worth will go up 15k the day I sign the papers.

 It just depends on the bank and the deal, and having a kick *** agent represent you.

Good Luck. 

This is my first contracted deal. Welcome to the game Bill!

The following story involves a bank owned, 3 bed, 1 1/2 bath 1 car SFR ranch with full basement, 1200 sq. in the beautiful Poconos. Bank has held for well over a year, been listed for 7 months and had been listed from $58,300-$34,900. The plan is to finish the basement, make it 2 full baths, add a bedroom turning it into a 4, potentially 5 bedroom, 2 bath, 2200 sq.

ARV assumption is 125K

Rehab assumption is 40k

Purchase: 33,200, contingent on a septic inspection. We had seen something suspicious on our initial walk-around.

In-ground septic failed a hydro/pressure test. Badly. Summation is that a new, $20,000 mound will need to be installed. Good news is my stepson works for a septic guy, with whom I've set up a relationship that I'll send him business by not being afraid to purchase properties everyone else is afraid of with septic issues if he helps me out.

Upon learning the septic failed, I told the realtor to cancel the sale. She shot off an email and we were done. Or so I thought.

Bank shoots back: Would your client be interested in proceeding with the transaction if we were to offer financial concessions? If so, please state expected terms.

So now I'm thinking...they want to get rid of it, this could still happen. Bank has a copy of the invoice with the prognosis and the $20,000 estimate. Here's what I've thought of. Please feel free to make a suggestion or bring up something I may not have thought of.

The roof will cost about 1/2 what I initially budgeted, so I'll be saving about $4000 there. It's not as bad as we had initially thought.

There is a $5000 overage factor in the rehab budget. It's there, but I really would rather save that for "inside" surprises.  That puts 9k back into play. I'm halfway there.

Do you think it's possible that they will go with a 10k credit? That would be me saying "I'll pay for half". If they do, I would then ask my septic guy to do it, working on dropping the bill 3-5k, as I have another I'm looking at that will also need some minor septic work done. I have no idea what the contractors cost is for a mound, so I hope I'm not expecting too much help without insulting him.

That would pretty much pay for it, without completely draining the 5k reserve. (10k from bank plus the 4k from the roof)

That would be a lot quicker that asking them to do it. That's not what they offered anyway.

I think I can move on relatively unscathed and this becomes a minor setback rather than a deal killer, if I can pull this part of the art off.

Ideas, suggestions, comments? Thanks for reading.

Learn as much as you can before you get started, find someone to mentor you or at least bounce ideas off of, and most importantly....network, network, network! It's also very important to have your team in place before you go out and start working deals. Make sure you have at least 1 investor friendly realtor, a title agent and/or real estate attorney, a list of contractors you can call, a list of wholesalers or rehabbers (depending on if you want to rehab and flip/hold or wholesale respectively), and an accountant that specializes in real estate. 

Practice. I probably scratched out 100 deals on paper just to practice and familiarize myself with the numbers, formulas, and equations before I went out and made my first offer.

Another important thing to have in place is your funding. I made the mistake on my first attempt at a deal to get it under contract and then worry about the funding. Big mistake! First time investor in a rural area, the institutions wanted nothing to do with me. That deal fell through. Subsequently, I had to turn to local private money, which is actually much easier to work through as there aren't nearly as many stipulations as there are with hard money and YOU get to dictate the terms. If you are going to use private money, get a business prospectus and presentation put together, write down names of people you know that may have money to invest and sell the benefits that investing with you offer such as aggressive earnings, secure collateral, potential annual earnings, they become the bank etc, attend any real estate meet-ups in your area, and sell yourself. It happens fast. If you can find one or two people that will invest in you, you will be well on your way to financial independence. If you will be using private money, it is absolutely vital that you and your investor work with attorneys to avoid any possible lending or banking violations when drafting your contracts.

Treat your real estate investing like a business, not a hobby. Make business cards, flyers, make a Facebook page, get a business phone number and start from there. You'll be surprised how quickly your business will grow if you have everything and everyone in place before you start, and network, network, network!

Hope this helps.

Hello All,

I am taking the final plunge in the set up of the team and am meeting attorneys over the next several days to basically interview them. I started the business as an LLC in PA and will be using private investor funds. I have a whole page of questions to ask from how the money comes and goes to looking over the proposals, contracts and disclosures I've drawn up. I'm focusing my search on attorneys that specialize in real estate law and transactions.

Any advice on questions I should ask or any other actions I should take to complete my due diligence? Let it be known my search resulted from asking other people involved in real estate and getting referrals. No internet required...lol

Thank you.

I am new to real estate investing. It has been something that I've wanted to do for years, back to the Carlton Sheets days of infomercials. If I knew then what I know now...

When I was in the networking phase of starting up the business, I learned quite a bit about hard money lending. I jumped into a deal a little too early, I hadn't found any private investors at that point. So there I am, contract in, no funding. I scrambled and called every institutional lender I could find for a single family home in rural PA. Shocking. I had a little money, enough to cover 6 months interest. No one would lend. I have horrible personal credit, mortgage victim. The figures worked. The deal fell through, as I couldn't fund it. What doesn't kill us makes us stronger.

I sat down one night after work and wrote down the name of every person I could think of that was within 10 years of retirement, or people I knew had money. The list included people I work with, My parents friends, former work associates, people I went to high school and college with, and people within the community. I came up with about 20 names. I wrote up what I call an investor packet, which is a brief synopsis of the business model, what private funding is, how it works, what they can expect, how their funds are secured and paid back, their responsibilities, sample deals and contracts. I contacted as many as I could find on my list and gave them a brief pitch. Those that were interested got a packet via email or snail mail. A couple of them got offended. How dare I ask them for money? Hey, sucks for them, I was giving them an opportunity to get in on the ground floor of something big.

But here is the kicker: Not ONE person on my original list chose to invest. Not one. A bit of a blow to the ego. These people know me, know my background, worked side by side with me. Now what was I going to do? I wasn't going to give up.

One night at my "day job", I'm in the employee dining room talking to one of my associates about a house I was going to look at the next day. She had expressed an interest in buying a house in the area that I am working, so I was telling her about the house with the thought that I may have a back end buyer here. Rehab it to her specs.  There were two other people sitting at the table and they are Polish, so they were speaking to each other in their Mother tongue.

The conversation took a sudden turn when I noticed the folks next to me were paying attention to our conversation. I had been talking about funding the house that I was going to look at. By the time our break was over, I had secured TWO verbal agreements from private money lenders totaling $100,000. Yup. It was that easy, and very unexpected.

As if that wasn't enough, one night, at the end of the shift, we are all getting ready to go home and I just happened to blurt out to a friend of mine: "Hey Catherine, you don't know anyone with an extra 50k in their pocket that wants to earn 10% real quick do ya?" The gentleman behind me said "How is my money secured?". Two days later, I had a promise of $50,000

I am making offers on 2 properties tomorrow with plans of winning them both. Fairly light jobs so hopefully I'm not getting in too deep too soon. If I get both, I have a friend with a construction background that said he'd be a P.M./mentor on the bigger job to get me started.  Here we go. The dream is going to come true.

My point is this. Don't give up. These lenders are not the people I expected them to be. They work in the trenches like me. You will find lenders in the most unexpected places. It only takes two or three to really get things moving.  Keep networking and coming up with ideas. 3 weeks ago, I had no funding. Today, I have access to $150,000. In 3 days I'm meeting a gentleman who heard about my company through one of my contacts from the original 20.

Oh, and that original deal, the one I couldn't fund? That deal had gotten outbid while I was scrambling to provide proof of funding. Well, the deal that outbid me fell through and I am re-submitting an offer tomorrow for $13,000 less with proof of funding and my realtor feels strongly I will get the deal. Why? Because it's cash, this will be the forth time its been listed and they just want to dump it according to her sources. How's that for the stars lining up?