I am thinking of asking my uncle to fund a rehab project for me. He is a builder/investor and does pretty well for himself. He mostly builds new homes but I know he owns some rentals, done some rehabs etc.
I have never purchased a house yet but feel I am fairly educated and would really like to get my feet wet investing. I am currently renting a townhouse, my lease is up in May, and would like to buy a house. My fiance and I were looking before and were pre-approved for a house that was $106,000 but were out bid and then moved in the townhouse.
My credit is not very good so we were approved based on my fiance. She doesn’t really understand investing and I haven’t done any deals to convince her to put her credit up for a rehab.
My plan is to find something that I can buy and rehab for under what we are willing to pay for a house to live, and in an area we wouldn’t mind living. I would like to rehab and sell it, but if I can’t find a buyer move in it myself. This way there is a buyer lined up (even if it’s me) so my uncle is at less risk and I still gain the experience of doing the rehab.
My uncle lives in Virgina and I live in Michigan. I know I should be talking to him about this but wanted some opinions or advice before I ask him.
Anything thoughts are appreciated.
If you are just starting out, the more exit strategies you have the better. I understand from the media that Michigan is a real tough market right now. I would think you could find a real good deal but will have a tough time selling it. As long as you are okay with buying it yourself, that gives you a pretty good way to start and minimize the risk.
You probably better off in Virginia with your Uncle.
Think about it…he’s a builder, he has contacts with subs that he KNOWS are GOOD and RELIABLE!!!
He knows the market. (knows what a bargain REALLY is)
He has contacts with suppliers.
If possible I would consider just moving out there and spending a year working with him.
Just don’t blow it like most new guy’s do…
What do I mean???
I’ve told at LEAST 20 “new motivated investors” that if they found a deal I would bankroll it for them and walk them through the rehab process and we split the profit 70/30 (no money needed on their part). I figure that if any of these guy’s actually finds a deal, it’s one I would have NEVER have found anyway so it’s a win/win for everyone. Right?
You wanna know how many of those 20 MOTIVATED new investors actually got off their *sses and went looking for deals???
ONE!!!
These nit wits think REALTORS just drop homes in your lap and you make $100K on them. When they find out THE WHOLE SHOW is FINDING DEALS all of a sudden that job they have at the bank looks better and better. “Hey, I get a check every week, they pay my benefits and OH YEA, I just bought a NEW JET SKI last week. ONLY $159/month for 10 years!!! I’ll look for deals after this summer. See ya, going JET SKIING!!!”
If your the REAL DEAL your uncle will be THRILLED to help you because “real deals” are like diamonds in the rough. Just don’t waste the guy’s time.
Thanks for the responses. I agree moving down there would be the best bet and talked with him about that before. Unfortunately, due to some family things it’s not an option for me right now.
I am hoping that he can still help me out even though we live in two different states. Last year I sent him some pictures of some tax sale houses and he mentioned sending up money for me to bid. He changed his mind because he was sitting on three houses down there and wanted to sell one first. (I don’t know if he was gonna buy to get me involved or if he was just interested in the tax sale).
fdjake,
I would LOVE for someone to give me an opportunity like that! That is basically the type of deal I’d like to get with my uncle. Do you think it’s possible to work something like that with him in Virgina and me in Michigan or is that a ridiculous thing to ask?
Do you have any suggestions on how to pitch this to possibly make it a more than one deal thing?
There’s no Realtor houses fairies dropping leads in my lap here either. I know I gotta find 'em.
It’s so simple that new guy’s really don’t hear it. But I can tell you from 20+ years of investing experience that if you TRUELY find a SMOKIN’ deal, getting the money WILL NOT be a problem. Cripes, I’ll go in with you if it’s that great. BUT…
Your first one has to be a GRAND SLAM, OUT OF THE PARK , NO ONE KNOWS IT’S EVEN FOR SALE, OLD LADY OWNED, KILLER DEAL.
You find one of those, in a GOOD neighborhood, and you will have no trouble getting someone to take a portion of that profit.
Be for warned, finding the REAL DEALS is hard. There are TON’S of people (even now) out there looking too. It can be done.
Here’s an idea…
Let’s say you find that old lady, and her house is worth $100K but she’ll take $40K (that’s what a smokin’ deal is now a days) Have her sign a Purchase and Sales agreement with you. Give your lawyer a $500 deposit and tell the woman you want to show it to some of your investor friends who work on houses with you. (what’s the worst case scenerio? you can’t close on the house and YOUR lawyer gives you back YOUR $500) Put that sucker on Craigslist THAT DAY for $60K and you should have it about an hour before it sells. You call your uncle and tell him what you have set up and ask him if he’d like to make $5000 for loaning you $40K for about 3 days. Close on it with his money, and then close YOUR sale to the investor a few days later. You clear $15K in 1 week!!!
How long would it take you to SAVE $15K Dan???
Then repeat. But now… you only need $25K from your uncle and you REALLY have his attention!!! My guess is HE’LL be making a pitch to YOU!
Just make sure and put “And/Or Assigns” after your name in the purchase contract and then you can just sell them the contract. Keeps you from having to pay closing costs. :deal