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General Real Estate Investing
21

Sent a couple more letters, and got my first call back from notes left on doors.

It was a rental that looked like it had been on the market awhile- no interest in selling, but really nice guy, and a great opportunity to network.

Trying to network and get to know people in my community! Called a home inspector I met the other day, emailed a couple investor friendly realtors with my criteria, made some calls regarding properties.

I’m still trying on the big house across the street from the townhouse we’re buying. I sent her a letter and I added the owner on Facebook (she accepted!) and sent her a message…she didn’t see it. She’s older and I doubt she uses messenger. So I added her daughter. I picked up all the newspapers and junk outside the house so it doesn’t look so abandoned…and attract others like me…

Talked to a guy while we were both waiting at Jiffy Lube, told him what I do and got his info, he does siding so maybe a good future resource there.

Going to try Rando’s suggestion of listsource and listgiant. Aaaand got my business cards in! I’ll be passing these bad boys out like crazy.

The house is a mess and my poor husband had to eat hot dogs last night, so time for me to take a minute to cook and clean and be a good wife. Apron going on and pork loin going in the oven!

:beer

22

Man oh MAN! So this big abandoned house I’ve been rattling on about…well I got a lead.

After looking up in the parcel map/county records, I added the lady on Facebook, messaged her, tried the neighbors several times, added her daughter on Facebook, sent a letter, put a note on the door…I was about out of luck.

One of her Facebook friends has a roofing company that has a phone number. So I left a voicemail with the roofing company and turns out that guy works with a guy…and get this…this guys brother in law’s dad is who owns the property…

And I got his phone number! The owner of the house! Straight up!

Too late to call tonight but it’s not a dead lead yet!

23

Why didn’t you just send them a letter?

24

I did (see above). But I have a goal to do a deal before the end of the year. Who knows when they’ll get the letter and when/if they’ll call me.

I’d rather take the lead and do my best.

Called and left a voicemail, and on to the next!

Sold a futon couch last night, passed out a card to the buyer. Sent a thank you to my hairdresser for my haircut this week…told her what kind of houses I’m looking for and included my business card.

When I went to send the letter, mailman pulled up and I gave him my card and told him to text me any abandoned/vacant/etc houses he sees and that I pay $500 cash finders fee if I buy it.

Had lunch with a girlfriend that’s becoming a Realtor, and same thing.

Leads are starting to come in from bird dogs, now time to vet them and make sure these guys know what kind of houses to be sending me.

Working on a list from list source- anyone have any tips on good criteria?

Going within a few miles of my house, age 65+, 50% equity/$50,000 equity, less than $200k house. I can use the same list to market my estate sale company so two birds.

25

Over the weekend I read the book over again for motivation.

Made a list of absentee owners on the other side of the street I mailed to last week. Again about 5 out of 30. Wrote them letters that are a little more refined. Instead of I want to buy your house! We have Cash! I’m putting, I am interested in buying your house on (street), we have cash. If you are interested in selling please call or email me.

It’s a small area so I’m going to keep farming it little by little.

On list source, I have a saved list of about 160 homes. Talking to a rep from Listgiant today to see how much the same list would cost.

I know some of you that have done this are reading this and going come on lady, work smarter not harder. That doesn’t work, this does…please chime in and let me know what I’m doing wrong. I would love the cc.

Otherwise I’ll just keep on trudging along and learning from my mistakes as I go.

26

Met with our new CPA- need to register DBA with courthouse and do deals under LLC. Gave him my card, told him what I’m looking for.

And did you know…you can write off finders fees? ‘Koolaid Man Voice,’ “OOOOHH YEEAAAHHHH”

Posted on Nextdoor (an app like Facebook but for neighborhoods) what I’m looking for. That reaches 17 neighborhoods by me and about 4000 people.

27

Been passing out cards left and right- every cashier I check out with, every neighbor and mailman.

The leads have started coming in and people are starting to get the letters I sent. I have an appointment tomorrow with someone who needs to sell.

Quick story behind it- went to Ace to buy paint for our front door. Chatted up the paint guy, turns out he just painted his door to get ready to sell. (Say whaat?) I start asking questions, come to find out they’re behind in taxes, house needs a lot of work, going to court Dec 1 if they can’t pay tax bill by then. Got his and wife’s info and address, gave card but they never called me, so wrote letter. Wife texts today and wants to meet tomorrow. Let y’all know how it goes…

Also, word got around in our neighborhood and three doors down they want to sell. Don’t owe much on it, needs a little work but sellers retired and back problems and don’t want to do it, house is too big and they want a little place on the water like yesterday.

They’re asking about $30k under market. If we can get another $10-$15k off we might have a deal. We’re having them over to grill steaks tomorrow night.

Tomorrow I need to print out some contracts and get back to lead generation. Took a few days for Thanksgiving and it’s back to work…if you can call it that!

One month to go to close a deal!

28

Forgot to mention! Nextdoor app got some good responses and one great lead. Elderly couple got flooded out, $250k country club home on golf course and just walked away. Wrote to them and mailed it Thanksgiving morning, along with a few more in my farm area. That was a success for lead generation and I’ll definitely post on it at least monthly.

29

That’s such fun reading!!!

30

Made my first offer today! Wife of the hardware store guy.

Bought house three years ago- cash from a windfall inheritance.
Paid $125,000 and she wants to get her $125k back out of it.

ARV $156-$160,000

I offered $82,278. Trust me, I had good reason.

Here’s how I broke it down-
ARV $156,000
x70% $109,200
-repairs $13,600 (carpet, paint, trash, cleaning, broken window pane, kitchen drawers hanging off, pool pump, MIL apartment, landscaping, some exterior, miscellaneous.)
-taxes $6169 (back owed taxes)
-$1300 back owed taxes on second lot
-$254 back owed water bill

  • survey $450
  • title work $1649
    -legal fees $3500

House sits right on the lot line of two lots- one lot is owned by another person who probably doesn’t know they own it. House was built in 1991, how it got through this long of a chain of title without being discovered, I do not know.

House is brick, good roof, 1800 sf, 3 bed/3.5 bath, small MIL apartment outside, on two large lots at the end of a cul-de-sac, nice street, lots of shopping nearby. Awesome swimming pool with waterfall, jacuzzi, and table/bar in the water.

Right now it’s a pond swamp. Oh and did I mention they have 6 cats? No?

Also the water to the house has been turned off for 6 months…they shower at the gym… That is correct: 6 cats and 6 months with no water. And a chest high trash pile on the west side of the house.

She paid off the $6k in taxes later today after our meeting, and we had a long talk on the phone. I actually really like her a lot and am going to do everything in my power to help her out, but I can’t overpay for her house. With the taxes up to date, I can come up to $90k.

Her husband doesn’t know it yet, but she’s divorcing him, and he’s not on the title at all. She’s a very motivated seller, in a huge mess with the house sitting on the lot line, nothing but equity and a divorce right around the corner. I think there’s a deal there, eventually.

31

My pitch-

You get $83k cash just in time for Christmas.

Or you can take care of the survey/title work/legal stuff yourself first, then all the repairs, and after realtor and closing fees, net $115k, but you will be out of pocket $20-$30k before it’s all said and done.

I know she doesn’t have the money for it, so basically its my lower offer and I assume all the risk and repairs, and she gets cash now.

Or she tries to go full retail on it, barely makes any more than that, and is out of pocket tens of thousands of dollars, and lots of time.

32

In other news, the neighbors are asking $150k for their house that’s worth about $170k. Going to offer $140k.

Leads are coming in fast! I’ve been passing out 3 to 6 cards a day. All while running errands. Talking to everyone I can, every cashier, dry cleaners, neighbors.

There’s other properties I need to pursue, like the old lady’s house and the one with flood damage.

I need to call them.

Sometimes it’s discouraging to try to crunch numbers and make calls while nursing a 5 month old baby. About once a day there’s a blow out from her diaper and I have to clean poop off EVERYTHING, usually including me. She’s too young for TV. Too young to crawl or stand, or play by herself for long.

I hate to be torn between making that phone call or taking care of my sweet little baby Juliet.

I’m really trying to do both. I know it won’t get any easier so it’s now or never!

Oh would you look at the time. It’s beer o’clock.
:beer

33

Hi,

 I hate to be the dream breaker during this holiday season but someone needs to be or dreamchasing will be broken hearted and crying before Santa comes down the chimney! Now wait a minute because I'm no scrooge but someone has to break a few nuts to get Christmas rolling along.

Now $170,000 FMV
-$10,200 Realtor Commissions to sell $170k home at full price.
-$4,250 Escrow / Title Closing Cost’s for sale to end buyer at retail!
-$2,800 Purchase Escrow / Title from current owner
-$_____ Non owner occupied homeowners insurance?
-$_____ Property Tax Proration?
-$_____ Pool Service?
-$_____ Yard Service?
-$_____ Electric?
-$_____ Water?
-$_____ Gas? (Heating if required)
-$_____ Snow removal?
-$_____ Carrying costs?
-$_____ Overhead?
-$_____ Points?

This is to buy a pristine property with no deferred maintenance and remodeled completely in the last 5 to 7 years.

So your going to take this risk for +/- $_________ In profit or loss!

You should not pay more than $119,000 in pristine condition / Next!

Good luck,

            Gold River Clause  (Ho Ho Ho)
34

Thank you! Finally some input!

35

Our neighbors are coming over tonight to grill steaks and talk about the house.

SO glad GR reigned me in a little.

House is worth $170k, three doors down from us. Not in pristine condition, but some updates, including new AC and ductwork. 30 years old, has new flooring, but needs work on the wallpaper in the master bath, patch a hole in the wall, some new baseboards.

Our plan for it is to get an owner occupant loan on it, 5% down conventional, and move into it. We would rent out our house, which we just finished fully renovating.

My husband is chomping at the bit for house projects now that he’s done with our house. It would be an easy move.

The sellers would do a leaseback until they find a house to buy. They’re shopping now and want to be on a lake north of here a couple hours. They just looked yesterday with a Realtor.

We’d be buying it with tenants in it, probably for a couple months.

$170,000
-$10,200 Realtor
-$4,250 Escrow/title etc
-$2,800 Purchase escrow/title etc
-$500 patch hole in wall
-$2000 baseboards, paint and install
-$2000 remove wallpaper/paint
-$2000 miscellaneous

How would the numbers work for us in this situation? Is a purchase price of $142k still reasonable?

36

Hi,

This is a real estate investing forum not a "Let's move into a home and pay full retail"!

Are you investing in real estate or buying an owner occupied home?

        GR
37

Hi,

Ok, so you buy the house down the street, moving costs, utility deposits, packing materials, an empty house you move out of for a month or two, home inspection, pest and termite, points, PMI, landlord / tenant insurance, etc, etc, etc.

So you rent your home, how many years at $125 (Example) per month positive cash flow does it take to recover all the cost’s, then if you decide to sell in 5 years how is appreciation? You realize to get your equity tax free you have to owner occupy a home 2 years out of the last 5. If you sell your old home in 2 years and 9 months would you have recovered the cost of moving from 2 years and 9 months of rents minus cost’s?

If you don’t sell the old home within 3 years you can not get any of the $250k tax free for a single person or $500k tax free for a married couple!

I have friends who own multiple rentals from moving and keeping the old home but all of them went out and found the next dream home to buy to end up making the old home a rental, if your going to pay retail you should at least buy the new home of your dreams, not an old house down the street from you in the same neighborhood.

Remember PMI alone will cost you a pretty penny every month because you are only doing 5% down, you would have to put 20% down plus closing costs to avoid PMI. (Principle Mortgage Insurance) I believe PMI can no longer be removed from your mortgage ever, the only way to get it off your property is to refinance and it will take some number of years before your loan balance is less than 80% LTV?

What if interest rates go up? Could you afford the home your buying if you had to refinance an old PMI mortgage into a new XX percent new mortgage loan in XX years?

Even people in Beverly Hills dream of living in Bel Air some day!

                        Gold River Clause
38

Talked to the lender last week and they said PMI can be removed with a new appraisal if there’s 20% equity in the home. After talking to sellers last night, we can get the house for $136,800 and market value on it is about $178,000, after about $5k in easy cosmetic repairs. We’d be walking into it with 20% equity.

This isn’t our dream home, and we don’t plan on finding our dream home for at least 5 years- we plan on moving every year or so and leaving a wake of rentals.

At what point do you pull the trigger on an investment? Is 75 cents on the dollar and under good?

We’re not stealing it… but feel like it’s a good deal. Not a smashing home run, but an easy safe start to building a portfolio…no?

We can expect to CF 300 a month on our home that we’re moving out of.

Tell me, do we pass up this deal or snatch it up and keep going?

39

There’s more than one school of thought on accumulating rentals.

One is capturing equity at the time of purchase, which naturally lends itself to faster, eventual cash-flow.

Another is capturing appreciation (and eventual cash-flow) over the long haul, where it doesn’t make a lot of difference what you paid, once the debt is paid off. This would be a buy-and-hold forever play.

Amateurs buy only steals. Professionals control whatever they can, and make money however they can. There’s several ways to make money in real estate, and each investment offers its own profit points, and don’t have to conform to identical profiles from deal to deal.

For example, one deal may be a cash-flow play. Another may be a forced appreciation play. Another deal may be a simply a tax write-off play. And there’s several other ways to make money that don’t depend solely on negotiating a steal.

Again, for example, I specialize in low equity deals, and expect to hold them five years (give or take). The caveat is that they can’t be fixers. I then create equity out of thin air by offering financing on these houses to buyers who can’t qualify conventionally for financing. Sometime I get the houses back, and repeat the process.

Otherwise, the rest of the basics are the same. I only pitch motivated sellers. I have to get in with as little cash as possible. And I need a solid market that I can anticipate market appreciation (without having to depend on forced appreciation).

I also buy for cash. And in that case, I buy heavily discounted deals, that may, or may not, need lots of work.

The common denominator is having a strong upside available ‘somewhere’ in the deal.

So, the more reasons you can buy and hold, the more flexible you can be on what you buy. You just need to know WHY you’re buying, in order to know where your profits are going to come from.

Hope that helps.

40

More than one way to skin a cat.

We did it. Just finished signing the contract.

Buying at $136,800- 5% down, owner occupant conventional, moving into it to work on it while we live in it, and renting out our house.

I’m tired of thinking, and reading, and talking about doing things. At a certain point, you just have to do it.

I’ve seen so many deals come and go by and I’ve always been talked out of it and scared to pull the trigger. I’m tired of waiting for the perfect deal. If it’s good enough, it’s good enough.

What, am I going to get broker? Have less property, less money?

I have nothing to lose.

Sometimes when you’re playing poker you take home a few small pots, and your stack gets a little bigger, and your ego feels a little better. Sometimes you go all in and double your stack. I admit I’m just taking the blinds on this one, but it’s better than nothing.

I’m sure the numbers on this house are a lot more exciting to the more seasoned investors out there if they had another couple zeros, but we’re just getting started, hence the beginners forum. Pretend this is a $1,700,000 property and we have it under contract at $1,368,000. Yeah, it’s not the deal of the century, but it’s not the worst either.

My old screen name on here used to be bossladyjack. Going through my old posts, I’ve spent the last ten years watching deals go by because I didn’t know how to do it, or I was scared, or my boyfriend at the time said I couldn’t do it because I couldn’t afford to.

I once let two houses go by where I had the in with the lender. They were both foreclosures, right next to each other, brand new gut job, new roof, new AC, new everything and cute as all get out. Great rental area.

0 down, no closing costs, no credit check, 1.99% 5/1 ARM portfolio loan held by the credit union. The lender told me about the deals first, since I was their go-to Realtor at the time, and I had a few days to think about them. I decided not to buy both of them because my boyfriend at the time said “what if a water heater goes out? you won’t have the cash to get a new one, they’re $800.”

I was in my early twenties, and was like, “yeah you’re right…”

An investor bought them the day I put them on the market and had tenants ready to go before they closed.

Well, ten years has gone by and now I can’t afford NOT to do something. Imagine where I’d be if I had bought those two, I would have had a confidence boost and maybe would’ve been brave enough to snag all the other deals that I’ve seen come…and go…

Our strategy with rentals is buy and hold, two properties a year. However we can finance them, and as little cash as possible out of pocket.

In the meantime, I keep searching high and low for any deals I can get.

If I can make the numbers right, I’ll try my hand at an option!

:beer