Can you believe it! after ten years finally went to a course!
I am not going to mention any Names of the Course. I just was going to say I was not impressed! This major company sells houses to investors that they find! Below market! They rent them they finance them! All you got to do is click to buy them via online (oh boy)
So basically they bulk buy them R.E.O. style at say 70% LTV then sell them at about 85-90% LTV. and make 15 to 20 cents on the dollar!
This is a great deal for some people on the other hand why not do it yourself?
So my questions are people really having trouble finding deals?
And also why is that?
Are they not looking in the right place?
is there any other problems Like courage, understanding how to put a deal together?
To many people in the mix realtors, loan officers, appraisers, title companies, Business partners?
You seem to be one of the few real estate guys in this forum that actually practices what you have read and learned. I would be interested in knowing about books that you could recommend. At the very least could you give some specific pointers to someone who is ready to make his first real estate deal.
At this moment I am trying to educate myself as much as possible and in a month or so I plan to purchase my first realestate investment house. My first impresion is to buy a town home or single family home, 3 bedrooms, 2 baths. not older than 5 years. Possibly a townhome with a price range of 150K-250K. My calcualtions is that I can finance this house for $1000/m and hire a property manager to rent it. My prediction is that in two years this house should at least double in value.
If this works, I plan to acquire 3 more houses within a year.
What do you think of this strategy?
Thanks
I think alot of experienced REIs would say never invest in property if you ae depending or expecting the value of the house to appreciate merely due to time, unless you are looking at 10+ years down the road. It is speculative/gambling and therefore you are taking a real risk. Maybe this is the type of investing you are wnating, not sure.
Another thing you may look at is to find an older property that you can fix up and then rent out. The reason I say this is that you can purchase an older home from a motivated seller at a deep discount then with a lil more money you can fix it up and make the value of the home increase two fold of what you spent fixing it up. Because youhave bought right and added your own value/appreciation your rent will be much higher than your mortgage payment.
Example:
Rent in the area - $1200
Newer home - 200k and no equity
Payment @ 5.5% - $1136
Older home - 100k at a discount from a motivated seller
Fixup/Repairs - 25k
Payment on 100k @ 5.5% - $568
Payment on 25k @ 12% for 15 years - $301
(a second mortgage or line of credit or something)
Total Payments - $869
After Repair Value (ARV) - 175k-180k
Older home now has you at 50k-55k equity to borrow against later
What about taxes, insurance, HOA, maintenance??
Maybe you didn’t want to bother with this for your example but in case newbies are reading…
Also, why not use interest only loan. I would recommend this for an investment property.
First off let me say hello. I have lurked for a little while now and thought it was time to register and make it official!
Your post really jumped out at me because this will probably be the only time I will be able to help answer a question YOU have! ;D
The program you describe sounds somewhat appealing to me because there is someone there to “hold your hand” in a matter of speaking (if you feel they are a legit/reputable company) . Of course this would only apply to people new to the market and RE investing. As I am! It seems like a good way to get your feet wet.
As far as finding good deals…I dont know. I recently moved from San Diego to Ft. Lauderdale/Boca Raton area. Both of these areas have fairly high housing costs (especially San Diego) and it seems like a “good deal” is difficult to find. Granted, I have not looked for anything at the courthouse yet. Maybe foreclosure stuff is there?
Concerning “putting a deal together”. I am fine with buying directly from a person or bank, but when we start talking about leasing options and adding price to the purchase amount to get money back at closing…that is where I get a little lost.
And therein lies the slight lack of courage that may keep someone (like me) from stepping over the line and finally pursuing REI.
On the same note I do realize that my lack of knowledge is directly proportional to my insecurities concerning REI.
So,I am trying to learn more and I have a lot of questions, but I will try to post them in the appropriate forum.
Older home - 100k at a discount from a motivated seller
Fixup/Repairs - 25k
Payment on 100k @ 5.5% - $568
Payment on 25k @ 12% for 15 years - $301
(a second mortgage or line of credit or something)
Total Payments - $869
After Repair Value (ARV) - 175k-180k
Older home now has you at 50k-55k equity to borrow against later
Let Me Show you the REO Consultants way I think you will love it!
I look for the same deals the only thing different I do Is! $704.00 per month
55,000 cash back at the time of closing!
as we all know the banks don’t pay enough intrest (so forget about it)
now due to the fact I pulled out the extra 55k my payment is $1056.00
now divide that payment by 55k this will make the payment for the first five years after intrest! AND THE RENT IS YOUR INCOME!!!
My market increses by 5% per year so at the end of five years I have 25% equity in the property and GREAT CREDIT!
So REFI the house at 80% LTV WITH NO M.I. payment drops the payment by $250.00 a month almost! and hopefully rent will go up in 5 years if not sell it carry back a 20% note at 10% for 45k so that is $394.91 per month over 30 years (if they dont pay you off before then) That 45,000.00 =$142,167.60
So that is $97167.60 in just intrest
So now lets say that you own 30 houses like this that equals 11,847.00 per month as a income! The cool thing is YOU DONT HAVE TO WORRY ABOUT THE PAYMENTS!!!
The other cool thing is That money is LIQUID if you ever need it to put down on another house you can go pull it out of your account NO NEED TO WAIT FOR A LOAN!!! So lets say in your example you got a 95% loan on that property I would need almost $8,000 to close so I would walk in with 8k and walk out with $55,000.00 profit of $47,000.00!!
Or lets say I want a 80% LTV on the next house for no M.I. and lower payment using the same example
$155,000.00 appraised value
$100,000.00 sell price
So I put 31,000 down and walk away with $24,000.00 So almost enough to rehab! so then the payment on $124,000.00 is $704.06 now in that example your rent was coming in at 1,200.00 per month so now that property cash flows at $495.94 per month
So explain again how it is you are able to take cash out at closing. Were you saying that the bank does not pay attention to the fact they are lending you cash for the purchase of a house that the sale price is less than what they fund?
My knowledge led me to believe banks don’t do this knowingly. How is it you are able to do this and pull the wool over their eyes? And if you do do this are there truly any legal issues with it if found later or just a black X on your name with that particular lender in the future???
What method did you use to find say…your last 4 properties?
Can you walk us thru it a bit as specific as possible.
You don’t have to tell us what time you took a shower just what method you used and how you put the resources together to fund it is what I am curious about.
What method did you use to find say…your last 4 properties?
I have been Bulk buying REO property I know everyone says this can not be done I am living proof it can!
Can you walk us thru it a bit as specific as possible.
I kinda have a jumpstart on this… Meaning I have built relationships with the right people at the bank! So basicaly I buy 10-15 at a time keep the best wholesale the rest!
You don’t have to tell us what time you took a shower!!
I do not Shower till at least 10am LOL (that is a conservative estimate)
If I was not doing this and was on a smaller level I would focus on FSBOs and/or foreclosures!And work directly with seller!
It’s all possible, This much I am sure of. The real trick that I have found to investing in real estate is you will get out of it what you put into it.
I’m not Trump by no means, I try to live and breath real estate investing. If you do this you will find out that you come into contact with alot of people that are selling, buying, investing or want to give you money to invest etc. It’s all relative to the ammount of effort that you put in.
As for REO I seem to be rather impressed with his desire to share his knowledge with others.
Which is a form of giving back which I’m sure is one of the reasons he has done so well.
Also and I’m sure that some don’t want to hear this you have to be born with a certain amount of intellegence to really take it to the next level. So I would have to dispel the Carlton Sheets rumor that anyone can do this, and anyone can make a million etc. You can be fairly successful on learned knowlege, but you have to be able to combine that with given intellegence before you can really be successfull at this.
And sacrifice, there is no get rich quick scheme. You have got to be willing to choose to give up alot of your time, and your energy. It can’t be a process of I’ll watch Football all day Sunday and put in 20 min cruising the classifieds and then be pissed if I can’t make million dollar deals. I lost alot of friends when I first started out, friends that once you started to move up you came to realize that 20 years down the road they will still be doing the same old sh#t.
Hang out with people of a similiar interest, other investors.
Well that concludes my rambling.
REO, I am sure you knew I would reply. I work with a company that does something very similar to what you are mentioning and I will tell you from personal experience I think its a great thing! I am sure you would agree with me that many people get all the education in the world but still never take action. This program allows people that are a little bit scared to jump in an opportunity to buy a good property, walk into an equity stance (making money on the buy), cashflow the property right off the bat and there is a mangement co in place so they have no headaches! Thats GREAT for most people. All they do is collect the check every month. I can’t tell you the countless number of people I have meet that tried to get into investing and did not know how to buy and then they were upside down and it was a horrible experience and now they are missing out on possibly the best investing for the next 40 years. Do you agree? I have literally seen lots of people that knew nothing about investing build million dollar portfolios in less that 6 months because they gained confidence by getting started this way.
Now, you say why would you do this if you can go get the deals yourself. This I agree with; however, you and I say that because we’ve been doing this for awhile and it comes easier to us. For those just trying to get in and have a successful (not to mention cashflowing) first deal, I think its a great alternative. So what if someone wholesales it to them and makes a couple of bucks…its making their initial deal successful and that will keep them going. This also works great for my doctor and lawyer clienst who want to be in control, but don’t have time to be out there rehabbing and flipping etc. Its point and click buying and the numbers work! Anyway, I thought I’d offer my perspective to see what you think. I wished I had thought of the idea. Its a good deal for some.
By the way, you owe me a ticket. Keep the good advice coming partner. I might be headed up your way soon. If I come I’ll let you know.