I’m new to the discussion forums and would like your advice… I’m really interested in investment properties. I currently have my real estate lic. in WI. I’ve been reading books on forclosures, flipping etc. and trying to read anything and everything I can get my hands on. I need a little advice as to how to choose which route to take as a beginner. Rentals vs. flipping (I do have a full-time job), slow or fast approach in today’s market. What to look for and the best place to look for properties (besides MLS). Any advice for a beginner would REALLY be appreciated. And also from the lending side as well (money down, etc.). :biggrin Good Luck to all!!!
There are a lot of variables to consider. I have been rehabbing for a long time and always have done it to flip. I never wanted to be a landlord and I also wanted quicker cash flow. There are advantages and disadvantages either way.
Right now, buying REO’s or foreclosures are a great way to go. Just make sure you buy a manageable project in a desirable neighborhood. Also, if you are planning to flip, make sure it will be the nicest house in its price range when it is done - and that you are prepared to hold it if the market stays slow.
I have recently been working on green modular homes as an alternative to rehabs - I think it is another good option to find a niche. Where in Wi are you - I am in Madison? Contact me directly if you want.
Ron
Frank,
Could you explain more about what a “green modular home” consists of? Also, would you mind talking a bit about what it is you do in relation to these green homes?
Thanks
Sure - the modular home package I am working with is built to the same specifications as a site built home but with the greater quality control of indoor prefabrication. It is delivered to the job site and weather tight in a day or two. The green specifications involve increased energy efficiency, healthy materials, and sustainable practices.
I provide my clients with basic training and supervision in contracting their own home. The modular package provides for greater efficiency in budget and schedule. My package is very flexible and customizable - I work on a very individual basis in consideration of personal needs and goals.
I primarily like to encourage creative small green homes. It is the one area of housing that is on the increase in sales. My website provides more information about me - feel free to ask any specific questions.
Ron
When you’re new to investing, I suggest starting out with either wholesaling or flipping. Holding rental properties is a great way to build wealth long term, however many new investors get stuck very early on when something goes wrong (and usually it does) and they don’t have a substantial cash reserve to handle those things (like vacancies, maintenance issues, etc).
It’s also a good way to transition your mindset from that of a realtor to that of an investor (and it is extremely different).
When you begin, make sure you’re clear about what it is you’re trying to accomplish with the property. If your intention is to buy it, have it fixed up and re-sell to a homeowner, you will look for properties in nice neighborhoods (where homeowners want to live) and look for good deals. Based on where things are in the economy, it happens to be REOs as a significant source of properties. You as a realtor can find on MLS. Other people can go to the websites, like fanniemae.com or ocwen.com…there are many many of these websites. In my opinion, this is one of the easiest ways to find properties.
Next, you need to know the value of the property. Subtract the costs of doing the deal from the amount you feel you’ll be able to sell it for. For example, subtract rehab costs, holding costs (property taxes, utilties and property insurance), closing costs, financing costs and selling costs. Then subtract the amount of profit you want to make…pad that a little. What you end up with is your Maximum Allowable Offer - based on the exit strategy of retail flip.
Hope that helps piece some things together. There is a lot to learn, you’re on your way!
Thank you for ALL of your advice. It has really given me a more clear perspective has to which route to take. THANK YOU!!
My pleasure. :beer