LMAO! That is the best description I’ve seen yet with regards to what happened to our industry over the past 7 years.
Yep, it does seem that what I need to do is to get out there.
When I first started investing (1999) I’d read all the guides and home study courses, etc, and read about ‘flipping’ and hard money, (70% of value they said back then… but it was more like 65% of ARV minus repairs and closing costs, by the time I actually figured stuff out.)
I tried to flip a few but never found any buyers.
Finally started going to the meetings, and got hooked up with a hard money broker who had the terms:
65% of ARV full loan amount… anything price amount less than the 65% of ARV, repairs, and closing costs was given to us as ‘loan proceeds’
No Doc - no credit check, no income verification.
Once I learned that those were the prices I needed to have for getting this hard money, it was easy to figure out that if I got the houses for less than that, that I could flip them to another investor for the difference between what I was getting it at, and how much they could fund with hard money.
Then in 2007 you needed credit scores, and skin in the game, and you couldn’t even flip because lenders wouldn’t roll those assignment fees into the buyers’ loans.
In 05 I got pregnant and it was a realllllly tough pregnancy (high risk) and I was on total bed rest for 7 months. Not being able to work I depleted my own cash reserves, and even with great medical coverage, between the ‘excessive’ costs and what wasn’t covered and deductibles, without having worked for 7 months when those bills came due, I couldn’t pay them and my credit got destroyed.
I figured ‘no big deal. My industry isn’t credit driven, I’ll just flip a few houses and make the money to pay them and restore then restore my credit.’
But it was not to be. It took about another year for both the baby and I to be healthy enough for me to get back to work, and by then…
The HML market started demanding credit scores and skin in the game.
And with no cash for marketing I couldn’t even market for the subject to’s and L/O’s.
Within months I lost everything. I didn’t have money to repair rentals that tenants had trashed, I didn’t have money to evict tenants that weren’t paying their rent, and even with 35% equity in them when I bought them, the values were tanking and the hard money lender pool was a barren desert. Especially when they would only lend 50% of the purchase price, with 40% down and only to 650 and better credit scores.
I remember thinking, “with those terms I can go conventional at 7%-8% instead of 15%!”
And that’s when I also found out that these lenders wouldn’t loan the buyer the ‘assignment fee’ either.
But I didn’t have the cash down or the credit score, or the money to market for the subject-to’s and the L/O’s, RTO’s, etc.
And just as it all came crashing down, to the point where I had NO money left at all, I found out I was pregnant with my second child.
I pretty much couldn’t do anything at all anymore and I just abandoned the entire business.
Of course, the 8 years I spent being ‘self-employed’ made me ‘unemployable’ at a time when there were no ‘jobs’ anyway… so I did online freelance work to support my family.
But I am ‘pulled’ by real estate investing. I was good at it, I liked it, and I loved the big fat checks. My husband has been gently pushing me to go back to it because he thinks I will be ‘happy’ if I do because I’ll be back in ‘my element.’
That’s why I’m trying to get some information to have at least some knowledge before I go out there writing up offers and contracts.
I’m planning to go to the SREIA general meeting Tuesday night, and hopefully get some more info there.
Thanks for all the advice. I think you’re right. The only way I’m going to find the current state of affairs in the business is to get out there and netowrk with the people who are in the business.