Hey all, currently I have been getting into tax deeds part-time (TEXAS) and have found it to be a profitable situation. Fortunately,Unfortunately I am in school working on a PhD in finance so cash for investments is limited. Essentially I have a very good idea what I am doing with respect to buying and selling, however I am running short of ideas on how to get cash to take the business to the next level :banghead. My thoughts are to setup a corporation and get business loans, however that is a whole new beast to me. I’m sure I am not the first one to have done this or been in a scenerio like this, How can I get cash to get more and so on? Essentially I want to increase the scope of what I am doing so I can grow faster. Thanks for your help and comments in advance, William.
Aldditionally, I have a very small income from a university job, one rental at 70% LTV and a house I am currently living in, so my debt to income is somewhat at a max. Thanks Again
I don’t see how starting a corporation will help you with the financing. Banks will still judge your situation and that of your new corporation by YOUR financial condition.
You could get into more mainstream investing and buy some properties with owner financing, lease-option (if that’s still legal in TX), subject to the existing financing, on land contract, etc. The real estate market is still headed down and there is an increasing number of people who are desperate to sell their properties. Many of these desperate sellers are willing to do anything to get rid of their problem.
If you don’t already belong to your local REIA, I would strongly suggest joining at the next meeting. Your mission is to meet and make friends with the SUCCESSFUL investors in your area. You would be surprised at the number of deals you will get just by knowing the right people.
Lots of people want to incorporate but my experience is if funding is the problem, a corporation is not the solution. in something like this, your best bet is simply marketing for money. Find creative ways to contact people with money: Lawyers, Doctors, Accountants, etc. Start a newsletter about Tax Deed Investing as a partner. Email it or snail mail it to people who may have disposable income who might like to make great profits - then figure out a way to bring them in on situations that gives both of you good profits.
Consider joining your local REI Club and/or the local Chamber of Commerce. Network network network. When you find an investor do good by them. Whent hey are done, ask them to invest again. Ask them if they have friends or family who has some “lazy money” hanging around - money that isn’t working as hard as it should.
I am in Texas and have tried to do some Tax Deed sales (actually, i purchased one vacant lot to hold for appreciation - i should have purchased the whole street!)
Anyway, the issue you are running into is one that most beginning Tax Deed investors in Texas run into. You have to have cash or credit. As Mike and Salverston point out, starting a company isn’t going to help you get financing right now. I have a company - it gets no financing, except through me. It will help to start doing some things in the name of the company if you want to get financing later, but won’t help you get started.
You should DEFINITELY drop in on some local REI meetings and talk to other investors. There will be people with money to loan - if you have a good plan. The biggest “problem” in Texas is the holding period for whatever is purchased - 6 months for non-primary residence, 2 years for primary residence. That’s a long time just to start to recover any of the money that goes into a deal, but generally, it’s guaranteed money (either you get the property or the owner gets it back and pays you 25% on your purchase).