APPRAISER TURNED INVESTOR

Financing, Hard Money Lenders, Private Money
1

OK, HERE’S MY STORY

I AM A LICENSED REAL ESTATE APPRAISER AND HAVE BEEN FOR 7 YEARS…I AM NOT NEW TO THE GAME, BUT I AM NEW TO INVESTING.

IN OCTOBER 2005, I DECIDED TO REFI MY HOME AND GIVE ONE HOME THAT FELL IN MY LAP A TRY. I PURCHASED IT FOR 135,000, PUT 35K IN REHABBING IT (HARD MONEY) AND RESOLD IT FOR 280,000 IN DECEMBER 2005. I LEFT 60 THOUSAND IN EQUITY FOR THE INVESTOR AND WALKED AWAY WITH A TIDY 105,000 PROFIT. NEEDLESS TO SAY THAT FELT PRETTY GOOD!!! SO I SAID LET MY TRY THIS AGAIN. MY 2ND AND 3RD HOUSES WERE DONE THE EXACT SAME WAY. CURRENTLY I AM WORKING ON MY 4TH HOUSE. BUT HERE IS THE PROBLEM I’M FACING.

MOST OF MY HOMES I BUY AT 60% OR LESS AFTER REPAIR LTV. I AM ABLE TO ACCOMPLISH THIS SIMPLY BECAUSE I AM AN APPRAISER AND WHEN I’M NOT OUT AT THE CURRENT JOB SITE, I’M SCOURING MLS, FMLS, WHOLESALER WEB SITES ETC., TRYING TO FIND THE NEXT PROJECT. IN OTHER WORDS FINDING HOMES WITH SIGNIFICANT AFTER REPAIR VALUE IS NOT AN ISSUE FOR AN APPRAISER. WHAT I AM HAVING TROUBLE WITH IS FINDING INVESTORS THAT ARE TRUE INVESTORS. IN THIS MARKET IT IS NOT UNCOMMON THAT PEOPLE WILL SELL HOMES FOR THE APPRAISED VALUE (NOT INFLATED) AND GREASE THE PALMS OF THE INVESTOR AFTER THE SALE IS COMPLETED.

MY ATTORNEY TELLS ME THAT THIS IS NOT ILLEGAL AS LONG AS YOU 1099 THE INVESTOR. BUT I KNOW THAT THIS IS HIGHLY FROWNED UPON AND I DON’T REALLY WANT TO DO THAT. I NEED TO FIND INVESTORS THAT JUST WANT A REALLY GOOD REHABBED HOUSE WITH EQUITY IN IT. USUALLY MY HOUSES HAVE 25 TO 60K LEFT IN THEM FOR THE INVESTOR.

THE OTHER THING THAT I MAKE SURE OF IS THAT THE HOMES ARE IN APPRECIATING AREAS, THE HOMES HAVE LESS THAN TWO SALES IN THE LAST 3 YEARS AND THEY REHAB IS DONE WITH PROFESSIONAL WORKMANSHIP. BECAUSE I’M AN APPRAISER, I KNOW WHAT RED FLAGS TO AVOID AND I KNOW THAT THESE 3 THINGS ARE BIG ISSUES FOR LENDERS.

IS THIS AN UNREALISTIC SCENARIO? HOW DOES ONE FIND TRUE INVESTORS THAT JUST WANT TO BUY THIS TYPE OF HOME?

ONE OTHER ISSUE IS THE BUYER’S LENDER. MANY LENDERS WANT TO SEE 3-6 MONTHS IN SEASONING. THAT OF COURSE IS AN ISSUE FOR ME SINCE MY REHABS GENERALLY TAKE LESS THAN 2 MONTHS (I’M A SLAVE DRIVER ON MY CONTRACTORS!!! ;D

ANY ADVICE?

2

i am always interest. where are the properties?

3

I buy properties in the Metro Atlanta Area. As I stated earlier they are in the more accepted up and coming zip codes (many zip codes are redlined). But more importantly, how can I get a “stable” of real investors and how do we get around the seasoning issues. I have subscription to lender lab and i was only able to find 2 lenders for noo purchases with less than 3-6 months seasoning.

4

delli,

There are other Lender’s out there that can help you with your issues.

You may want to look for a Broker/lender that has experience w/ N/O/O property financing.