All Forum Posts by: Lance A White

All of the above a re great. I also try and get my realtors involved in deals.

Got a call today from a referral. The gentleman on the phone wants to sell and move the house he is living in off the lot, and build a new house. Does anyone do deals like that? The deal is in Lincoln Nebraska. There is currently a housing shortage here, so there is probably some money to be made on this deal. I have no experience on a deal like this but would like to pass a referral and get a small bird-dog fee at closing.

What spurred him to call me was that he was thinking about an addition, but the cost was high enough that he felt he would rather build new.

Because I have never done a deal like this, I just got the seller's contact information and no specifics on the house itself. I do know that the seller lives in it now and loves the location, but has outgrown the house.

I have a local realtor and other team members that can assist if needed.

I'm thinking it will have to be a "top down" strategy just as you mentioned, but with a much larger volume. Only a small percentage of those will be a high cap rate. In your example maybe one or two of those properties would be in that range and the others would be sold off to get a maximum ROI.

Mostly everyone here is correct. From my understanding, hedge funds buy large groups of properties from say, bank portfolios from the crash in '07. They then keep the prime rental properties that through the volume buy, give them the high return properties they seek. After they remove those from the portfolio, they then rehab a percentage and sell a percentage "as is" to small group and single investors.

This should result in an all around win.

The bank can get rid of a bunch of bad paper. The hedge funds get high ROI properties for their portfolio, they also rehab properties restoring neighborhoods and property values, and the small investors and contract rehabbers get to finish the job by buying and fixing the remainder of the properties and make some good money.

The final piece may be the investor that takes the worst of the worst and working with local municipalities to get tif (tax increment financing) money razes the rest and repurposes the land for new housing, multi-family low income housing or commercial use, which may become a lucrative niche market in the next few years if you have the stomach and expertise to work with local city planners.

We haven't found any deals that high yet and frankly we would have to have a volume of them to pass a return like that on. The closest I have come is we just closed on a property that has a potential for a 15 cap if the rehab goes pretty much as planned.

I work with a cash buyer investor who buys for hedge funds. He wants from my investment group: 3 bed, 2 bath, turn key managed, tenant occupied, single family in nice area of town, 18-20% ROI.

It sounds like a cliche, but I learned that you make your money when you buy and realize a profit when you sell. My first property was a lake house I paid cash for, did most of the rehab myself (it was on a lake after all), and sold it before I finished the rehab. The buyer wanted to buy it as is to add their own personal finishing touches. I was hooked.

Welcome Jessica,

I also live in Lincoln and invest locally as well as nationally.