Hello All -
I am a newbie to REI and was looking for some explanations on the “terms” and “lingo” everyone is using in the forums. I know these are probably dumb questions but somebody has to ask them :mrgreen: .
What does the term “LTV” stand for? And what does it mean?
Could someone explain what “Bird Dogging” means?
Could someone give me a brief explanation of the “Wholesale” process of REI?
Thank you for your help in advance!!
Makbren
LTV stands for loan-to-value. A term used by lenders to express what percentage of the appraised value that the lender is willing to loan on a project. For example I have a deal approved where the hard money lender will loan 70% of the appraised value of the property after fix up. The house I am doing should appraise for $85,000 and hopefully sell for that. I am getting it for $45,000 and will spend $10,000 in rehab. The lender will loan $59,500 to me to do the deal whict ia a LTV of 70%.
Birdogging is helping find deals like the one above and letting investors know about it for a small fee. They do not actually put them under contract usually. They just help find deals. Sometimes they may not even know if they are for sale or not. "Hew I saw a vacant house at 123 E 12 th, It is alll boarded up and looks bad, It may be for sale? The more info the more the fee.
Wholesalers go the extra mile. Usually under contract. They will do a lot more homework including getting comps, estimates for repairs. They too are looking to flip the property to an investor but for a larger profit.
Hope this helps a little
Happy Hollidays and Thank you,
Ted P. Stokely Jr
11505 Sw Oaks
Austin, Texas 78737
512-301-9171 home
512-587-6177 mobile
Tedjr
Thank you for the information. This is very helpful. I do have one clarification question. Could you or someone give me a brief overview of the process involved in wholesaling.
Your help is much appreciated!
Makbren
You are selling deals to other investors. You find a distressed seller and sign a sales contract where you agree to purchase the property. If it needs repairs you will get a contractor or several contractors to give you bids for repairing the property. You will get a list of sales comps in the area and rental comps if it is rental property. You will order the title policy thus making sure the seller has good title.
The property should be priced well below market. For example you will not selll a $100,000 house that needs $10,000 in repairs to an investor for $90,000. They will have carry costs, closing costs in and out, appraisall, survey, points to buy and sell. hard moey costs perhaps, and commissions, title policy, to name a few of the costs to rehab and sell a property. Plus a profit of 20 to 25%. You have to make a profit too of 1 to 5 % or more if you get a super deal.
It would be best to know what rehabbers are looking for and try to suit their needs instead of finding a property and then trying to find a buyer.
You do not want to put you earnest money at risk. If you are able to close the deal if you can not sell it that would be best or have finance clauses or ?? in the sales contract that will give you a reason to back out. Also remember that both the buyer and seller will need to sign off on any earnest money refunds.
I hope this kind of explains the ins and outs of the process. Let me know if you have more questions. I am available for private tutoring and mentoring at a small fee also if you need one on one consulting
Happy Hollidays and Thank you,
Ted P. Stokely Jr
11505 Sw Oaks
Austin, Texas 78737
512-301-9171 home
512-587-6177 mobile
Tedjr -
Thank you for the great information. This gives me a better understanding of the wholesale process.
When you say get a list of sales or rental comps are you referring to comps as comparisons of what other properties in the area are selling or renting for?
Thanks for all your help!
Makbren
Actually the sales comps should be properties that have sold. What active listings are priced at is good too. Just trying to get a sales price per square foot average.
All you can go on for rentals is what is for rent or has been rented too.
Happy Hollidays and Thank you,
Ted P. Stokely Jr
11505 Sw Oaks
Austin, Texas 78737
512-301-9171 home
512-587-6177 mobile