My name is Chris. I’m about to buy my first rehab house from an investment services firm that I found by calling a number on a “handyman special” bandit sign.
I’m okay with going this route the first time, but when I found this site today I learned that it seems most of you buy your properties direct.
I’m still interested in using this firm since I have picked out a house and want to get started. I have looked into this company and they seem very legit and trustworthy, but I’m worried that they take all the profit a distressed house has to offer. They offer financing but the closing costs are sky high. Their numbers on cost to rehab and resale value seem less than accurate. I’m okay with “breaking even” on my first project, but I just wanted to ask:
Is this a bad idea to buy from this firm? Or is it “maybe ok, maybe bad”? Just asking if I should “run, run fast” or “proceed with caution”…
Would you let a brain surgeon operate on your head, ‘since it’s OK to go this route this one time, because he seems very legit and trustworthy, but some of what he’s telling me doesn’t sound right.’ 'Hey, he offers financing, but it seems a little pricey. But I’m OK with just surviving the surgery, even if nothing’s actually better afterward.
Personally, I would not deal with the outfit you described. If you think they are taking all the profits - in advance - than you don’t need any other reason to NOT do business with those folks.
I just published (for FREE) my 22-Chapter book “Pssst - Wanna be a Real Estate Millionaire?” in this very website to answer questions such as this. Before you waste your money and get a bad-taste as a result, take the time to actually read my book and then do it correctly.
Thank You OldGuy. I had already seen your book and appreciate you taking the time to provide the wonderful information and I fully intend to study it thoroughly. However, with the time situation that I’m in I guess my basic question is - is it ever a good idea to buy from the investment broker type real estate dealer, or should that always be avoided 100%.
I don’t know because your questions are so vague. Throw out some numbers. There’s nothing wrong with buying from a middle man if the numbers work. What’s the cap rate? What are the expenses and what does it rent for? Are the numbers realistic for this neighbourhood? What kind of neighbourhood is it? All I care about are the numbers, not vague sales pitches.
Does the building pay for your time? If you’re just breaking even on operating expenses, then absolutely not. Why should you work for free? Likewise, if this is your first project, why should you learn for free if you’re taking on a lot of risk? I think if you’re taking on risk, you should be entitled to having a building that generates a decent reserve to deal with any costly risks that might arise. Just breaking even on operating expenses is absolutely unacceptable!
You took the words I wanted to use right out of my mouth…
I would’ve added that serious investors don’t invest to break even. As a result, a serious answer didn’t seem warranted.
You’re not ready to invest yet. You are a serious liability to your own wallet. It’s not that you won’t ever be ready, but the casual attitude, and ambivalence toward the results you’re willing to achieve is so atrocious, I can’t breath.
You are probably not going to understand what I’m talking about, which is another reason, you need to rethink the reason you are wanting to invest in real estate. It’s obvious to me that this is just a distraction for you, with no real point. Otherwise, you would be insisting on a specific outcome, and look for investments that promised to produce that outcome.
As it is, any outcome is fine for you, since you’re leaving the results up to someone else. That’s not investing. That’s gambling.
That’s why I just suggested shooting yourself in the head, because with your attitude and approach, it’d be less painful, than what you’re intending to do to yourself financially.
Short of that, I wish you good luck, as you figure out why you’re investing in real estate, and begin doing it with a sense of purpose, instead of asking “Is this a good scam to get into?”
They are right. You make break even now but if you are holding the investment as a rental - then that’s a recipe for disaster.
Taxes, Insurance, etc…always go up. Need to look at rental rates, typical increases for your area and see if they will be able to absorb those increases and still have some left over to be placed in rainy day repairs account. You try to collect ahead of the curve.
I have rentals so I this is not what I think - but what I know!
Lastly, with their Seller Financing when is the property deeded to you? Will you use a title company to close?