hello everybody
does it really work to invest in real estate using your good credit only
with companys that advertize we could partner up using good credit
they do the rest ,purchasing properties using investors good credit and splitting up profits after 5 years no expenses out of investors pockets
The key is control. You have to control the property. I basically do the same thing. I finance the houses, rehab and pay all the costs that I need to pay. After I get the house rehabbed, I refinance and get my cash back and buy another one. The key is that I control the house and the rehab. I don’t use a partner or company to do it for me. Then they have control of my credit. If they have control of your good credit I guarantee it will still be your credit but it won’t be good very long.
Without leverage real estate is no better than stocks or bonds. The more you leverage the more money you can make. Talk to your local mortgage broker (the one that hangs out at the local real estate investors club not the one that advertises on TV). Odds are that he has a program which will allow you to invest in properties if they are sufficiently discounted to allow you to get your cash back out and basically invest using only your good credit.
Bluemoon…
Point well made.
Care to elaborate on this a little more.
Ways in which to get money back…as long as you’ve purchased at a steep enough discount.
Thanks,
-Mike
I am doing a double close. If I find a property that is trashed out the bank will treat this property very much like vacant land. They will do a rehab load (like a construction loan) that will allow me to purchase the property and fix it up. After I have completed the fix up I do a final close on the property. The total of purchase fix up and expenses have to be less than 90% of the after repair value or retail cost of the property. I can’t take money out at closing but I am reimbursed what it costs me to fix it up. For example if I buy a house valued at $100,000. I buy it for $70,000 and fix it up for $10,000. I can’t borrow $90,000 and pocket the $10,000. I can only get out what I put into it. But it does conserve my cash for the next deal. It has speeded up my acquisition greatly. My plan is to have 20 houses each valued at $100,000 cash flowing at least $200/month each in the next 2 years. That will give me $2million worth of property that yields me $4000/month. That will be my base to work from. I am over halfway there. The first 5 I bought the old fashion way 10% down. They cash flow better but I was running out of money fast.
I’m a little confused…
You’re saying that after fix-up retail value is approximately $100,000.
These are in rough shape…so you’re getting for something like $70,000.
You’re also putting approximately $10,000 of materials costs into these? Just straight materials or materials and labor.
Anyways…here’s some add’l questions, if you don’t mind.
When you do the initial purchase at $70,000…do you still put 10% or $7,000 down?
Then an outlay of an add’l $10,000 for materials?
Thus, $17,000 outlayed…
If so…how much of this do you recoup?
Thanks for the consideration.
-Mike
they give this example
do u think its possible to get this numbers???
Credit Partners don’t have any down payment requirements when buying the property (but have the choice to add cash or retirement plan funds), and are strictly using their good credit. They buy and then resell the home to a buyer that we provide in a double escrow transaction.
1st example assumptions:
$200,000 property financed at 100% LTV for 5 years (ARM), valued at 105% at sale.
Credit Partner pays a blended rate of 8.5% for a Non-owner occupied (investor) loan.
Credit Partner get’s 4% per year at 105% value ($210,000) = $8,400 per year x 5 years= $42,000 plus 5% resale profit ($10,000) = $52,000 profit.
2nd example assumptions:
$200,000 property financed at 95% LTV for 5 years (ARM) with 5% cash down ($10,000), valued at 105% at sale.
Credit Partner pays a blended rate of 8.5% for a Non-owner occupied (investor) loan.
Credit Partner get’s 4% per year at 105% value ($210,000) = $8,400 per year x 5 years= $42,000 plus 8.5% on the cash down = $850 per year x 5 years = $4,250, plus 5% resale profit ($10,000) = $56,250 profit.
That’s an average return of 112.5% per year cash-on-cash invested (non-compounded), secured by real estate!
I'm a little confused....That was an example to show that you can’t get a bunch of money and then walk away.You’re saying that after fix-up retail value is approximately $100,000.
These are in rough shape…so you’re getting for something like $70,000.
You’re also putting approximately $10,000 of materials costs into these? Just straight materials or materials and labor.
Anyways…here’s some add’l questions, if you don’t mind.
When you do the initial purchase at $70,000…do you still put 10% or $7,000 down?
Then an outlay of an add’l $10,000 for materials?
Thus, $17,000 outlayed…
If so…how much of this do you recoup?
Thanks for the consideration.
-Mike
These are in rough shape....so you're getting for something like $70,000.You’re also putting approximately $10,000 of materials costs into these? Just straight materials or materials and labor.
The typical deal takes about $10,000 to $15,000 that is total cost materials and labor. When I get the first loan the house is appraised with my fix up list. The appraiser looks at the house and what I am going to do to it and appraises it at that point. That is where the value we take the 90% from.
When you do the initial purchase at $70,000....do you still put 10% or $7,000 down?Then an outlay of an add’l $10,000 for materials?
No I don’t put anything down. I do pay up front for the appraisal and inspection and give the mortgage company a 2% deposit to make sure I don’t stop in the middle of fixing up the house and go and buy a boat instead.
Then an outlay of an add'l $10,000 for materials?
I have to pay to fix up the house, but after the first close the fix up funds are placed in an escrow account with the mortgage company and I get the contractor to do a weeks worth of work and I then get a draw to pay him for his efforts. Repeat until the job is done or funds are depeated.
Thus, $17,000 outlayed....I have not really outlayed on our $100,000 house more that $2,000 deposit and $1000 for appraisal and inspections. Total about $3000 which if the rehab comes in on budget I can roll into the second loan and recoup that also.
rezer, Is this some kind of speculation play. You buy it appraise it more than it is worth and hope it goes up and then you get paid out after 5 years? Where is the money coming from. Are you renting it out in the 5 years until you cash out? If so how are the rental comps. Does it have positive cash flow?
The typical deal takes about $10,000 to $15,000 that is total cost materials and labor. When I get the first loan the house is appraised with my fix up list. The appraiser looks at the house and what I am going to do to it and appraises it at that point. That is where the value we take the 90% from.
Are we still talking about a $70,000 purchase price?
If so…then another $15,000 in fix-up, (labor and materials).
That totals $85,000.
Is this a house that appraises, (with potential fix-up list), for $100,000?
Thus, $15,000 over and above the $85,000? What is this…the value-added?
Then only $90,000 of the $100,000 qualifies for being loanable?
Sorry to beat up the issue…but I think your cash-conserving double-close is worth investigating more.
Thanks…
-Mike
TO BLUE MOON
NO THEY PARTNER YOU UP WITH SOMEONE WHO DOESNOT HAVE CASH OR
CREDIT TO BUY A HOUSE
YOU ( INVESTOR) PROVIDES CREDIT TO GET A MORGAGE
THE The property is placed into an EHT (Equity Holding Trust) when it is purchased, with a 2 to 5 year or 15 year term. The “Credit Partner” becomes the grantor of the trust. Buyers (trust beneficiaries) must pay a minimum of 2-3 months payments up-front (first payment and reserves). BUER WILL PAY RENT TO COVER INVESTORS MOTGAGE
Closing costs paid by the Buyers . The “Credit Partner” receives an estimated 3-5% annual fee for using their credit and get 105% of the amount financed at termination.
Are we still talking about a $70,000 purchase price?If so…then another $15,000 in fix-up, (labor and materials).
That totals $85,000.
Is this a house that appraises, (with potential fix-up list), for $100,000?
Thus, $15,000 over and above the $85,000? What is this…the value-added?
Then only $90,000 of the $100,000 qualifies for being loanable?
Sorry to beat up the issue…but I think your cash-conserving double-close is worth investigating more.
You still pick the house to invest in. You don’t pick a house that you can buy fix up and roll in the costs etc. If a house had a retail value of $100k and it takes $15k to fis it up I can’t pay more than about $65k.
rezer, You make money in real estate when somebody buys your hosue or pays you rent. This is my question. Where is the money coming from? That 20% has to come from somebody.