Hardmoney lenders are sometimes a necessary evil to get you from point A to point B. You just need to make sure that you have everything, including an exit plan, laid out before delving into that type of financing. Overruns of rehabbing, finding end buyers, etc can be devastating to the bottom line.
Agreed. Given the right deal, they can also be a lifesaver
I don’t do wholesale deals, but I buy all my rental houses with a double close. The cost of each close is different but they tend to total right around $10,000. The cheapest I have done one was $8,000. When evaluating a deal assume I $10,000. You have to get a good deal for it to work, but at the end you have none of you own money in the deal.
if you are the end buyer for your rentals, why are you double closing?
Peter, most Realtors have no investment knowledge whatsoever. I am a Realtor and I have had other agents tell me things (that I have seen done) were impossible, no deals can be found in foreclosures/short sales, etc. They do not have the imagination of an investor. You need to work with your own agent who is also an investor and knows the strategies of working with all the different types of real estate investments. As a buyer it would cost you nothing to work through an agent. If you try and contact the seller’s agent directly they will try and represent you in intermediary (which is somewhat of an oxymoron because “representation” will be extremely limited). Even worse is when you start asking the questions to get your creative investor juices flowing the non-investor agent will not take you seriously or will get annoyed.
Very true stuff. 99% of the “realtors” out there are not experts or even knowledgable about investing. Realtors tend to be a thorn in my side. There are a few out there that really do know their stuff. They are very good to know.
Best way to find them is to go onto your MLS and see which properties are selling in the investment price range for your area. Then see which realtor name keeps popping up. Then call them and see if you are right.
Because after the second close I have none of my own money in the deal.
If you are the end buyer, who’s money are you using on the second transaction? When we double close the seller signs first in a separate room from the buyer and then on a 2nd HUD the buyer ends up signing with us as the seller. At the end of the transaction, the buyer has used their own money. I must not follow what you are saying
I am sorry, we have a definition problem. You may call it a rehab loan. I buy a house that is not habitable and thus can’t be financed. I buy this house with a loan that funds the purchase of the house and fix it up. The bank pays the seller and places the repair funds into an escrow account. When I fix up the house I get a draw from the escrow account to reimburse me. After the house is in habitable condition I do a second close and go into permanent financing. We call it a double close. This is why I don’t like terms like flip, double close, subject to, etc. These mean different things to different people. I like to say instead buy fix up and sell, buy fix up and rent, etc.
I started a new post but wanted to see if I could get an opinion on this:
I am very new to the investment game so please forgive me if my question post is a little naive sounding.
I have a certain geographical area that I am focusing on in my metro area for investment properties to wholesale. What I have found is that a number of them owe delinquent taxes according to the asessors office. Some are under suit and some are not. That to me would be an indicator of someone with financial difficulties that could translate into a motivated seller.
What are the pitfalls of trying to put these types of properties under contract. Are there any tips or pointers in trying to work with these properties?
You are on the right track. The pitfall is when there are more taxes owed than the property is worth. Usually delinquent taxes are a good indicator that there might be other liens lurking. They are good properties to go after but they just take some effort to make sure the amount owed between taxes, liens and mortgage dont exceed the value.
Very good info that I am definitley taking into consideration when evaluating the properties.
I would ask that can the back taxes be rolled into the purchase price so as to satisfy the the tax man. Could it be put into an escrow account or do i have to work with totally separate funds to satisfy the taxes first
What is the best way to find multiplex properties with deals that match the 50% rule?
I have been working with a local real estate agent. I know that agents are not super popular
on this site, but besides the paper and driving around I do not know of any other way.
What methods do you use the most?
Thanks,
Jeremy
JHilshey
Just one item to check that might save you some time.
When I started doing this many years ago in my area, property taxes were just a low income loan for a ton of people. So until penalties etc. were added only 10% of the list was even a maybe.
So review your area and see if this is a possibility.
We have found that finding multi unit properties is the same as single family. This is good for 10 and under. When you get much more than that, finding them is a bit different. We just mail the mixed-use and commercial properties for marketing to those.
Hi how do u get leads from any online service? if yes then how much does it cost? how do u manage money for deals and reinvestment? well that’d be all I guess. all the best. Thank you.
I have a few questions. I have not done any real estate deals yet. I am very new to investing and am doing much of my research on the internet. I’ve also started to attend local REI club meetings. I have a short-term goal of eliminating debt, improving my credit, and creating more disposable income for my family. In the long-term I’d like to generate passive income, secure my retirement and create legacy income for my family. I’d like to start by wholesaling. My questions are: is this possible with limited cash and mediocre credit?; is investing $3000 in an apprentice program worth it?; and what are the best sources of free information for wholesaling?; should I begin building a buyer list before I’ve even secured my first contract?; and what are some tips on finding a mentor? I am based in the DC metropolitan area.
Legacy income? Thats a new one to me. Sounds important .
Yes it can be done with limited cash and mediocre credit. I would NOT spend 3k on an apprentice program personally, but there are some people that could use it. A mentor does not make you succesful, you do. If you had a lot of cash to blow, I would say it’s not a bad idea, but if I had limited funds and was just getting into wholesaling, they would be spent on mailers and bandit signs. For a wholesaling course, Steve Cooks is very good and cost effective. Get the phone ringing!
As far as buyers before sellers, it is kind of the chicken or the egg question, but ideally you will want to have buyers lined up. My suggestion is to find a few GOOD buyers at your local REI Club, find out where they buy and at what numbers. Then market the heck out of that area.
Thanks for the swift reply. I had pretty much the same ideas. As for legacy income, it just means an income stream that my family could continue to profit from in the event that something happens to me, or a business that they could continue.