Does anyone ever buy and flip (after appropriate cleanup and such, whatever is necessary) through their own auction?
This, to me, seems fairly smooth from the outside looking in on a house that might not need alot of work. One closes on the property, cleans it up, posts an ad in the paper that says it can be viewed on a Sunday from noon to 4 and the auction takes place at 4 pm.
So, if you find a house worth $80k and get it for $50k, put $8k into it (actual deal I’m looking at now) and then hold the auction with a minimum bid of say $75k (comps are $80k-$95k).
Your not missing anything. If you can afford to keep that much cash or credit line money tied up from purchase to sale then you should do it. Wholesaling or auctions are not done as much when one has the money to go all the way themselves. And the auction angle will just confuse the general public reading the ad on Sunday morning. You’ll end up attracting the wrong buyers with that approach from my experience. Just go FSBO in the paper instead. It’s your own private auction so to speak, otherwise known as the retail real estate market.
But the trick is in finding the properties. That is the key to the golden gate. What are your techniques going to be for doing that?
Contacts with EVERY Real Estate office in my three key counties. They will all be called on personally at least once each quarter to know I’m the guy to call when they have a below market opportunity.
Contacts to as many mortgage bankers as I possibly can. I would start with the top 5-10 mortgage offices in my area and make sure they all knew me.
The Web. I have a matrix developed of the different suburbs that I focus on and where a house would need to be priced for me to make an offer. I would not vary from this matrix. My goal is a 30% profit per purchase after everything is said and done.
I only have one suggestion on the mortgage brokers. Most mortgage brokers have no idea what you need. They deal with single family owner occupied purchases and refinances. If you can find a mortgage broker that deals with investors, he is worth dealing with. I have found that the ones that present at your local real estate investors club understand your issues really well. You don’t have to join, just go to their website and they will advertise Joe Blow Mortgage broker will be speaking at next months meeting. Then you call Joe Blow.
This is not a mortgage broker, but I had a real estate agent I was talking to this weekend. I tried to tell her how to find a house on the MLS that would cash flow. It took me an hour to get her to see, and I still don’t know if she got it. Some of these agents are great on finding a cute house that you would be happy to raise a family in. They are great with getting you financed, but when trying to understand the economics of real estate, they are sometimes really lost. Most mortgage brokers are the same, some concepts that they may not get is retail versus wholesale prices of houses, purchase price versus market value of a house, holding costs (time value of money). These are things that will make or break a deal and this guy may not even be aware of them.
Sorry, but you won’t get any deals from agents with that technique.
Once the agents know that you are working with other agents (especially in the same office!) then you are hosed. You can only have one per office max. !!! And if it’s a small town one per office may be pushing it. And if you don’t have the right agent in said office then your out of luck again.
To find which agent in an office, call the office manager and ask which agent in the office is good at locating disterssed properties, works fsbo’s and expireds, and finds investment opportunities.
Then once you have that agent’s name call them every monday morning and send an e-mail every friday. Once every quarter does not do it.
Mortgage brokers?? They never find deals sorry.
Other ideas…get out the newspaper and call fsbo’s. Get a speal together. Now that works best.
as far as brokers not being able to bring you deals i have a feeling if reo constultants saw that he would laugh because he has brokers that bring him deals every day you just have to know how to train them. and i will give a hint one of the deals they can bring to you is people that want to be 100% financed but dont qualify why not hold a note at 10% for watever they didnt qualify for.
quick example
hold a 40,000 not at 10%
each month you would get a payment for 333.33
set it up so that a baloon payment is needed to pay off the note in 2 years aka they refinance and pay you off the balance would still be around 39,000 now how is that not a deal???
I was asking Lodger a question on how he planned to locate the properties. Lodger said he was putting 8 down to buy cosmetic fixer. He’d needs 40,000 for your idea. I think the lenders your refering to would want more than 8.
Also, most REO purchases need lots O’ cash unless they are on the retail market, in which case they are, uh…retail. We better see if Lodger wants to plunk down 100 g’s all cash to dabble in REO land.
Also, Lodgere was talking about using mortgage brokers to find properties and your talking about putting up 40K secured with a 2nd TD. The big lender will get the 1st so that means poor Lodger is holding a 2nd or 3rd.
Do you loan on seconds at 10? Seems pretty risky. A good friend of mine lost a $114 grand loaning on a second TD. He never went back to that niche again and he’s worth mega bank.
Hey Lodger, can you afford to invest 40K cash on a 2nd?? Maybe he should just put an ad in the paper for hard money loans and offer it out there at 12+ and meet the borrower and walk the collateral.
Reo consultant? Interesting, do you have a referral? I’ll pay you a $1,000 fee if your REO consultant can land me a decent property. I buy often. Please let me know.
Here in Oregon all bank owned listings are given to agents to list at market prices. They sell at retail so the banks love it. So all REO’s are listed with an agent, accessed through MLS, and on the retail market.
Robb is an investor in Denver and I suppose he does some REOs but he does buy and hold, wholesale, flips, etc…he started his company REO Consultants before he knew what an “REO” property was…he’s also an author (“Take A Mentor to Lunch”): www.mentortolunch.com
I’m a Loan Officer for Nationwide Mortgage that is looking for investors to work with nationwide. I constantly come across potential borrowers who cannot qualify for a refi because of their foreclosure or NOD. Most of them want a way to be able to stay in the house. I figure an investor willing to do lease options can benefit from hearing about my prospects. Normally, I would put their file in the “forget it” bin, because they really have no chance at refinancing when they are behind on mortgage payments and have FICOs below 500. Now that I want to learn REI, I am have made an offer to an investor to teach me the ropes, and I bird dog for him.