getting started

I am still trying to get started in this business, i just dont know where or how. what i need to know is how to actually approach a banker about a property that i’m interested in. and how do i actually go about buying the property? can any newbies tell me how they started in buying distressed properties and the what procedures they went through to get the property (with no money down)? :banghead

I would suggest getting some books at the library or buying them. Your questions are too broad for someone to adequately answer. Also, it implies you’ve not spent any time looking yourself and are hoping to be spoonfed. I’m not saying that’s true, but that’s the appearance.

This biz, contrary to some courses, does take effort and it’s a long-term gig, not a quick fix. The best way to start is to with your educational process. There will soon come a time when it makes sense to balance the education with the street, but I’d say you’re not there yet.

hope it helps…


Glad to meet you.

There are many ways to start in this business, the first thing I would look at is do you want to start Conventionally where you use your money or a lending institutions money or creatively where you use the sellers financing already in place.

First of all you should look at your current finanacial situation do you have the money and credit score to look for deals and pay cash or are you in the position where you would rather start using financing already in place.

If you tell us which way you are comfortable with, then we can advise you of what methods of investing are available.

John $Cash$ Locke

About 25 years ago I paid $350 for an attorney’s course on buying real estate foreclosures…It was actually quite informative, and she passed out a listing every week of the new REO’s…I used to go to the houses, open the lockboxes, and take a look inside…Unfortunately, i didn’t have the money at the time to buy in Los Angeles, but the looking was great to see what was out there…

One thing she mentioned, is that when you approach a banker, don’t say “Do you have some properties that I can flip and make a profit on?” or anything like that…Approach them with the concept that you don’t have a lot of money, but you know how to rehab houses, and you’re looking for a fixer upper that you can afford, and turn into a nice house for your family to live in…

Remember that banks NEVER like to have the public know about the NPA’s (non-performing assets), but they all have them and need to get rid of them…If you approach the banker in a personal way, not as a flipper, they may give you some leads on their REO’s for the size, type of neighborhood, etc. that you’re looking for…

Once you build this relationship, down the road it can turn into a steady referral (hey, after all, once you fixed up that first house and somebody wanted desperately to buy it from you, you need another house now!)…

There’s also a publication you can get at the public library that shows all banks’ financial statements, and their % of NPA’s…Can’t remember the name of it, but the librarian can direct you to it…Look through a few banks in your area to see which banks have the highest % of them, and approach them first since they’ll need to dump their more than the banks with lower percentages of NPA’s…

hope this helps…

good info, didn’t know they had that at the library…

 Welcome to the site.  It's frustrating starting out in real estate investing.
 You should only buy real estate if you have sufficeint reserve capital.  You will need at least 5% down, and 6 months principal interest taxes and insurance.  There are exeptions to that statement, but they are VERY rare in the current market.  I was once told that only 2-3% of mortgage brokers can actually access investment loans; most people on this site cannot say enough about the importance of building close realtionships with a bank or banker for funding deals.  I would try to find successful investors in your area, and ask them where they get their financing and why they use that source.
 The biggest mistake that investors make is not buying properties low enough.  I like the idea that buffinvestor had, and it seem to me that the bank itself should know who you need to talk to when you are interested in one of their forclosures.
 This is a marathon, not a sprint.  I studied real estate for years before I hammered my first FOR RENT sign in the lawn.

do you guys tend to work with bigger banks (like BofA, Wachovia, SunTrust, etc.) or small, local area banks? would the banking relationship differ?

For doing what I mentioned above, you’ll probably have a better success rate contacting the smaller neighborhood banks/credit unions…Each one of their NPA’s automatically make up a bigger % of their financials (Federal law dictates how high this % can go before they’re shut down!) and they’re usually more approachable anyway than a BofA or Wachovia for the “small guy” like you or me…But actually, probably wouldn’t hurt you to do the library research I mentioned so you’ll have some kind of idea of their % of NPA’s, but then go ahead and hit ALL the banks/lending institutions…You’ll probably need a little bit of practice anyway before you get a sales pitch down to where it works…

If they tell you they have no NPA’s/foreclosures (I’ve heard this before from some banks, believe it or not), don’t laugh at them, but tell them that your significant other works in Finance and did some research for you…Tell them that obviously every lender these days has foreclosures on their books, and your significant other told you the % of their NPA’s so you thought you and that bank might be a good match for each other…Once they hear you quote the % of NPA’s, they’ll know you know a little something and hopefully won’t try to BS you too much after that…

And don’t be surprised or disappointed if they tell you to come back in a couple of days or the next week…they might want to go through their database to see what properties you might be interested in (for the size/price range/neighborhoods that you told them you’re looking for) and might have to run a few propeties past their manager/boss before divulging specific properties to the public (i.e., you)…

Let me know if this works out for you…

I’ve been involved with rei about 2 years. I follow propertymanager’s criteria and suggestions.

I started by connecting with a realtor that also invests. I buy and hold the properties as rentals. He showed me lots of houses and also introduced me to a small local bank and a the vice president of this bank. The relationship that I’ve developed with this banker has been critical.

To date, I’ve bought 4 investment properties with this bank loaning me 100% of the purchase price plus repair costs. In other words–no money has come out of my pocket on these 4 deals.

In addition, I’ve purchased my 5th rental property with seller financing. I paid $1,000 down on this deal. So, I own 5 properties and only $1,000 has come out of my pocket.

The bank has been willing to loan me the purchase price plus repair cost due to my buyning them below assessed value. I’ve found that this is not easy to do and has taken me a lot longer than I originally thought it would. I look at lots of houses and have connected with lots of realtors and investors in my area. The town I live in has a pop. of 30K so the good deals get picked up fast.

I just closed yesterday on a deal. It’s a smaller 3/1 sfh and the county assessed it for 32K for tax purposes. I bought it for 15K. It has the WORST cat odor you have ever smelled!!! The bank is also loaning me an additional 10K for repairs at 8% over a 20 year term. My PI payment will be $209. It’s not a great deal but I will do the management and most of the maintenance. It will rent for $550 and the ARV would be $50K.

Hope this helps and I wish you well.


the same bank loaned you 100% financing on four separate properties? could you give a little more detail on that? was it a combination of the structure of the deal and your relationship with the vice president?

Yes, the same bank provided 100% financing for each deal. The VP looked at each deal individually. He looked at the current assessed value the county placed on the properties for tax purposes and what the ARV would be after repairs. The ARV was simply a number that we both thought the property would be worth after the repairs. He never had an appraiser go the properties. We came up with the ARV simply based on each of our understandings of the market. The ARV was really the number that determined the amount of my loan. He wanted to keep the loan at 75% of the ARV.

Hope that helps.