I am just starting out and would like to get my feet wet with rehabbing some junkers to rent out the sell as cash-flow properties.
However, my credit is <515 and I have no cash or credit…
I have a friend that has done home building for years.
How can I get into the game?
P.S. some of the properties I would like to keep.
The first thing you should focus on is improving your credit. I believe that you need at least 670 and above to get any decent terms on financing. It is not that hard to improve your credit. You need to make sure that you pay all your bills on time and pay off whatever debt you have. I think that in general on credit cards your utilization should be below or around 10% of your credit limit. Above this in utilization and your credit score will hurt.
In terms of real estate, you should start networking with landlords and rehabbers in your area, find out what their buying criteria are and if they are still buying. If they do, go out and find distressed homes and desperate home owners, put the property under contract and sell (assignment of contract) to other investors. You should be able to make 2-5K per successful transaction and pay down your debts. This is referred to as “Bird dogging” and can be a great way in to real estate investing. Do a search on this forum (Bird Dogs and Wholesaling) you will be able to find all the information you need to get started.
In today’s economy it is really hard to get started without money or credit.
I don’t want to discourage you but rather paint a realistic picture.
Get 3 jobs and save as much money as you can! Improve your credit as indicated. That will make things much easier on you.
First off - credit to you for reaching out! I am a fellow newbie and in the same point in time as you. You need to reach out to myFico.com - read through the whole report - detest - detest - detest - every possible thing you can. After going through the three report companies and getting your updated scores (detesting usually brings up scores - it will never hurt you) - then if it is still below 750 - hire professional help. This step is your first step. You do not want to purchase anything until these scores come up. This is worth the money.
Get online and find your local REIs (Real Estate Investment Groups). Meeting locals with similar interests can catapult your goals in volumes you can not imagine. Listening to and learning from people in your field of interest can save you from hours of research or seminars who sell you on their programs. Real life experience is always 101. You will really enjoy this.
Lastly, be open to “bird - dogging” at this point in time. You do alot of leg work and get alot of closed doors. This being said, as you learn, this is the fastest way to put your knowledge to the test and make some money for yourself. Either this or find some fellow investors who are as passionate as you are to take the risk. Bring up that credit - meet local like-minded people - do your homework on “local” deals.
On a side note; I know cheap looks like a way in but get the knowledge first. I have learned through my fellow friends that the biggest mistake was finding a “deal” that was in repair beyond their scope and they took two steps back before being able to buy something that truly cash-flowed. I am not discouraging you - I am telling you - knowledge on these deals first… you do not want to make a mistake of your first deal finally happening and it becomes your last possible deal. Being here is step one of due diligence.
I look forward to hearing about your future success:)
Why is your score <515? Do you have a recent bankruptcy, auto repossession, etc? Have you been late on multiple accounts? Those companies that charge to bring your score up aren’t going to be able to make everything just magically go away. A long history of being financially trustworthy to pay all your accounts on time will help you.
It’s rough out there right now. Banks are scared enough of loaning for investment properties to people with good credit. If you want to partner with your friend, you need to figure out what you can bring to the table for the partnership.
HI again everybody :smile
I appreciate all of your input and I have honestly taken them all to heart to continue working on my credit.
I am sorry it has taken me sooo long to reply. I am new at trying to use the forum features and quite frankly do not know what I’m doing…
Does anyone know how I could get a general copy of a land trust agreement form specific to GA so that I may try to wholesale some REO’s?
I currently have a contract on a 2BR/1BA house, corner lot, CHA, screened-in porch, with detached shed. It is in need of some minor repairs: carpeting in the living room, up-grade of the kitchen, screens on some of the windows.
Selling for: 29,000
Profit to Investor: 24,000
Anyone willing to critique this contract please do…
I am working on building my confidence in wholesaling.
Thank you all :biggrin
Work hard on the credit.
In the mean time, wholesale property using assignments rather than double closings.
Buy junkers Subject 2 and roll it into a trust and have the owner assign the trust to you.
Thank you Hooch:
I am starting out with the wholesaling idea.
However, how do you place junkers in a sub 2 deal than land trust it?
Owner financing is hard for me the way that I understand it…I have bad credit and no money right now…and no one seems to be interested in allowing me to place a property in a land contract (installment for deed) then, immediately refinance the LC and payoff the owner.
What am I missing Hooch?
Subject 2 is the missing key that you are not understanding.
An abbreviated conversation goes something like this to a person who is in serious financial hardship (preforclosure situation that you may know about from we buy houses ads or legal notices).
I will buy your property from you subject to the loan and start making payments on it. We can put it in a trust which is perfectly legal and will prevent the bank from enacting the due on sale clause. (They don’t do this when interest rates are so low like today anyways. They may consider when rates are up in the 10% or higher range). As far as the bank knows, this is their trust. Then with your lawyer, the trust will be ASSIGNED to you so you are basically controlling their trust. You are not paying off the trust. You are the only one who has this assignment piece of paper. You can now sell it, lease option it, rent it, etc.
Full disclosure is very important. You explain to them how you realize that they have already tarnished their credit and that if for some reason you are not able to do something with the house the burden will come back on them.
Basically say in a nice way that if you stop making the payments they are back to square one and it is their credit that will be affected. Your credit will not be affected. You are technically only managing the trust. Tell them however, you wouldn’t spend the money on creating this trust if you weren’t confident that you will be able to eliminate this burden for them.
When you buy a property subject 2, it can have liens and judgments all over it which doesn’t matter to you as they don’t become yours because the property didn’t really ever change hands, it just went into a trust. The judgments drop off in 20 yrs, unless the creditor uses their right to extend it for an additional 20yrs. IRS drops off in 10 yrs. You can leave those judgments on it which would only become an issue if you are trying to actually sell the property. At that point, you may already have enough equity in the property from renting it to pay off a negotiated discount to the lienholder.
I explained this to you as junkers are typically loaded up with liens and judgments.