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I've got a little time to kill, someone throw up a link to an investment property for me to analyze. I actually get a great enjoyment from dissecting deals, it's fun for me. I'm here for a little bit, would love to dig into a deal or maybe two.

Throw up a link to a property you have been thinking about.

Actually, even when I am not here, I like doing it, and would be happy to not be OVERWHELMED with a ton of them left in the thread, but happy to look at some if you are getting serious.

I am MUCH better at Multi-Families (2-4).
Click to expand...
I find out tonight if my last bid got this one.
Click to expand...
Got it! Had the second highest bid but highest net to HUD. Anyone know the timeframe I'm looking at to close? Any and all suggestions appreciated.link
Click to expand...
I read it was around 30 days after acceptance.
 
Explain to me the timing aspect of flipping a house.  You find a house, get it under contract and then look for a gc to handle the fixups?  How do you guys work it so that you minimize the time it takes to fix the place up and resell it?
Click to expand...
Wow, that's not a small question. You will need to get more specific with what you are asking.On your time line:

If you don't have the skills to handle things yourself, I would get a GC involved well before I got it under "contract" (Not exactly sure what you mean by under "contract", I can imagine a number of definitions)

Number 1 tool anyone in the Real Estate business can have is a PUNCH LIST. Make one, and stick at it. First thing I ever do in a property is walk the place, make a punch list, and staple it to the wall. First thing I do.

Actually, I make a limited punch list before I buy the place as I first walk through it. Later, when you are at home with your thoughts, I want to go over the list, and see what I can handle, and what I can't. Also, it helps you get things in logical order. You certainly want to replace the Houses Main water cutoff before you ever have the water turned on just as a matter of precaution (I've been burned on that too many times). Knowing that, you know to put anything that needs water off for a few days.
Click to expand...
What is this? A budget?
Click to expand...
A Punch List is just your "to-do" list.Walk into every room and figure out exactly what you have to do there.

If you don't, you will be bouncing all over the property, never really checking anything off. Figure out your game plan before you ever start.

For me, I get the LARGE sheets of paper like from an Easel, and I staple it to a wall in the room, and write out all my notes on it for what happens in that room. As we go along, mark off what you have done, and feel a sense of accomplishment.

I use a 4 color system of Black, Red, blue, and green felt tipped pens. Red is DO NOW, Green is do later (Like carpet after painting), Blue is middle of the time line stuff that can just get checked off, and Black is when I cross it off as done. ONLY I can cross things off as done.

I know this sounds dumb, but trust me, and give it a try.

It also helps you plan out things in the order you need to do them. As an example, EVERY home I buy where the water is turned off, I replace the main water cut off for the house before I turn on the water. I've been burned TOO many times on this. You have the water turned on, then discover a leak at the Main cut off, and have to waste days getting it turned off and then replace it, then wait some 4 hours for the Water company on a morning, all the while praying to the Gods of soaked basements, sub-floors, and plumbing that your repair held. This alone can cost you a week delay on ANYTHING that has to do with water. (Like Bathroom breaks while you are working) Now I MIGHT have been known to turn off the water to the house at the street and take care of this, but the average guy certainly isn't going to, and shouldn't turn the water off at the street.

Just one example. You will easily see to work on whatever caused the water stains from above before you start painting, things like that.

So you have Huge lists, more advantages:

Anyone who comes into work can hit the ground running, as they know to just goto the punch list and start. This can save HOURS working with others/friends/laborers as you don't have to keep finding work for them, have them ask you a thousand questions, BUG YOU!

You get a sense of accomplishment as I knock my main House list of Roof/Foundation/Electrical/BONES of the house off, and then move room by room, checking off the room, closing the door, and never going back. You don't have 8 things sort of part way done, and get overwhelmed. EVERYDAY you work on it, you move forward, you see results. This is more key than you can Humanly understand. The mind will wear you down, accomplish things, and feel great.

One of the biggest keys is that you have planned everything out and know the scope of the work. The #1 place that rehabbers fail is hire in a Contractor/plumber/electrician/handyman, give them a job, and then start changing the job. I was ABSOLUTELY guilty of changing my plans a ton in the beginning. That's where the Pro jacks you hard. They bid on the job, and changes go at maybe 4 times the going rate. You get destroyed. Every contractor knows you will be changing things that they can rape you on, so they don't worry about overages, or anything. They run over, they bill you and blame it on your changes. They don't have to be good businessmen if you make changes, you will be eating any costs they may have on any aspect of the job anyway. Could be as simple as another Plug in a room that costs you $600.00

You buy a Duplex, and realize after the electrician is working that it only has one water heater, and you want to save big long term money by having each one pay for their own electric hot water heater. At this point, it's a change, and the electrician has a somewhat simple job of running a new line down from the top of the house electric panel to the basement. He will claim that now he has to run a whole new wire when it was easy before (It's still easy, but what do you know?), and the wire costs you hundreds. This is how Electricians make their money, they know you will make changes. After the fact, you thing about it, and want a separate light and fan control on the wall for the Ceiling fan (Who wouldn't? Pulling the chain some 30 times to get it right sucks), anyway, that is a Hundred bucks because it is a change.

Also, if you are going to be hiring people, you have a Master list, and can easily have multiple things done at once. You will save a Fortune in Trip charges alone if you have a guy do four things at once, instead of calling someone out 4 different times. Also, the Handyman is going to give you a better rate as you have more for him to do, and he can stay busy working for a week instead of a day. These guys have to put food on the table, and need to work every day. You will get a bulk rate (Still shop around early on before you have your Go-to guys).

End result, I have a Big list posted in every room of the house with what has to be done. This seems so simple that you really aren't going to waste your time trying it. I would suggest that you do.

When I get a Property (Just agreed to buy this one Saturday):

1126 Nelson St (I already own the Green House you see on the Right, and I own a Brick one right across the street)

When I get a Property, Before anyone does anything, I spend the first couple of days walking around. Go in, staple up your Paper, spend time in each and every room writing what you want to do.

Some rooms are just Paint, some are paint and carpet.

Some are Paint, pull carpet/pad/tack strips, refinish Hardwood floor, add a plug on the north wall, change the door to swing out, Repair wall holes, rebuild 2 windows, Frame in new Closet, Finish new Closet, Pull down drop ceiling, repair drywall ceiling (Or hang new drywall), New light fixture, move light switch, and so on. (And this might be a simple bedroom, imagine a kitchen)

Anyway, end of the day, you save tons of money, TIME, and YOU have a great handle on what is happening at YOUR property even if you never personally lift a hammer. Every person in the place has YOUR vision, and they can work on things without you having to tell them every little thing to do.

You will be professional, organized, and in the zone.

And really, it doesn't cost you really anything for some big paper, and a few hours of your time that really can save you Thousands in both money and time as you move forward.

Also HUGE, it sets the tone for any other people in the House. They see Random's vision, that's the way it is, it's easy to stick to your guns and not let contractors run over you and try and take advantage of a new investor. YOU set the tone, this is what we are doing. Ask me for clarification, but never ask me what to do, it's right there on the wall. I can't tell you how many times I have had to just stand there and look stone cold at a worker with a Question that was already answered on the wall. I just walk them back into the room, point to the list, explain it again if there is a real question, and get them back to work.

At this point, my Rehabs move like Clockwork, everyone and anyone including myself knows exactly what to do. If I only have an Hour today, I can walk in and hit the ground running. Maybe I have zero time today (I make sure to accomplish something, anything, 6 days a week), anyway, maybe I just walk in and change out Face-plates on the light switches and plugs. Or maybe I just cut out a room in wall paint, close it up, and go home, but it's ready to roll now. Something gets done every day, and I am not walking around in the house wasting 30 minutes every day trying to find something useful to do.

Also, since you know exactly what you are doing (Sure, things change, but you know what's going on), you can see what supplies you need coming up. You know that the Porch floor needs Sister boards to reinforce it, and you can have the 2x6s on property days before that project is starting, and you have to drop everything to run to the store. You will be able to see what you need for each individual project. In looking at one little project at a time, it's easy to have supplies prestagged, and know exactly what you need. You won't get overwhelmed.

I know, sounds so silly and easy that you won't do it. I know. I have tried to get countless people to make a Punchlist on their property, and it rarely happens. The successful ones do though.

All I can say is that it costs you really nothing out of pocket, I promise that it will help, and I take the time to do it with 10 years in RE now.

 
Last edited by a moderator:
I've got a little time to kill, someone throw up a link to an investment property for me to analyze.  I actually get a great enjoyment from dissecting deals, it's fun for me.  I'm here for a little bit, would love to dig into a deal or maybe two.

Throw up a link to a property you have been thinking about.

Actually, even when I am not here, I like doing it, and would be happy to not be OVERWHELMED with a ton of them left in the thread, but happy to look at some if you are getting serious.

I am MUCH better at Multi-Families (2-4).
Click to expand...
I find out tonight if my last bid got this one.
Click to expand...
Got it! Had the second highest bid but highest net to HUD. Anyone know the timeframe I'm looking at to close? Any and all suggestions appreciated.link
Click to expand...
It should be 30 days. With a REO the Bank wants to push you to 2 weeks, but HUD is in no rush to stop using taxpayer's money.The reality of it is about 35-40 days as they WILL screw something up in the paperwork, and need more time. DEAR GOD if you need more time it will cost you $100.00 a day if they will even extend and not just kick it back into a new Owner Oc window.

 
Explain to me the timing aspect of flipping a house. You find a house, get it under contract and then look for a gc to handle the fixups? How do you guys work it so that you minimize the time it takes to fix the place up and resell it?
Click to expand...
Wow, that's not a small question. You will need to get more specific with what you are asking.On your time line:

If you don't have the skills to handle things yourself, I would get a GC involved well before I got it under "contract" (Not exactly sure what you mean by under "contract", I can imagine a number of definitions)

Number 1 tool anyone in the Real Estate business can have is a PUNCH LIST. Make one, and stick at it. First thing I ever do in a property is walk the place, make a punch list, and staple it to the wall. First thing I do.

Actually, I make a limited punch list before I buy the place as I first walk through it. Later, when you are at home with your thoughts, I want to go over the list, and see what I can handle, and what I can't. Also, it helps you get things in logical order. You certainly want to replace the Houses Main water cutoff before you ever have the water turned on just as a matter of precaution (I've been burned on that too many times). Knowing that, you know to put anything that needs water off for a few days.
Click to expand...
What is this? A budget?
Click to expand...
A Punch List is just your "to-do" list.Walk into every room and figure out exactly what you have to do there.

If you don't, you will be bouncing all over the property, never really checking anything off. Figure out your game plan before you ever start.

For me, I get the LARGE sheets of paper like from an Easel, and I staple it to a wall in the room, and write out all my notes on it for what happens in that room. As we go along, mark off what you have done, and feel a sense of accomplishment.

I use a 4 color system of Black, Red, blue, and green felt tipped pens. Red is DO NOW, Green is do later (Like carpet after painting), Blue is middle of the time line stuff that can just get checked off, and Black is when I cross it off as done. ONLY I can cross things off as done.

I know this sounds dumb, but trust me, and give it a try.

It also helps you plan out things in the order you need to do them. As an example, EVERY home I buy where the water is turned off, I replace the main water cut off for the house before I turn on the water. I've been burned TOO many times on this. You have the water turned on, then discover a leak at the Main cut off, and have to waste days getting it turned off and then replace it, then wait some 4 hours for the Water company on a morning, all the while praying to the Gods of soaked basements, sub-floors, and plumbing that your repair held. This alone can cost you a week delay on ANYTHING that has to do with water. (Like Bathroom breaks while you are working) Now I MIGHT have been known to turn off the water to the house at the street and take care of this, but the average guy certainly isn't going to, and shouldn't turn the water off at the street.

Just one example. You will easily see to work on whatever caused the water stains from above before you start painting, things like that.

So you have Huge lists, more advantages:

Anyone who comes into work can hit the ground running, as they know to just goto the punch list and start. This can save HOURS working with others/friends/laborers as you don't have to keep finding work for them, have them ask you a thousand questions, BUG YOU!

You get a sense of accomplishment as I knock my main House list of Roof/Foundation/Electrical/BONES of the house off, and then move room by room, checking off the room, closing the door, and never going back. You don't have 8 things sort of part way done, and get overwhelmed. EVERYDAY you work on it, you move forward, you see results. This is more key than you can Humanly understand. The mind will wear you down, accomplish things, and feel great.

One of the biggest keys is that you have planned everything out and know the scope of the work. The #1 place that rehabbers fail is hire in a Contractor/plumber/electrician/handyman, give them a job, and then start changing the job. I was ABSOLUTELY guilty of changing my plans a ton in the beginning. That's where the Pro jacks you hard. They bid on the job, and changes go at maybe 4 times the going rate. You get destroyed. Every contractor knows you will be changing things that they can rape you on, so they don't worry about overages, or anything. They run over, they bill you and blame it on your changes. They don't have to be good businessmen if you make changes, you will be eating any costs they may have on any aspect of the job anyway. Could be as simple as another Plug in a room that costs you $600.00

You buy a Duplex, and realize after the electrician is working that it only has one water heater, and you want to save big long term money by having each one pay for their own electric hot water heater. At this point, it's a change, and the electrician has a somewhat simple job of running a new line down from the top of the house electric panel to the basement. He will claim that now he has to run a whole new wire when it was easy before (It's still easy, but what do you know?), and the wire costs you hundreds. This is how Electricians make their money, they know you will make changes. After the fact, you thing about it, and want a separate light and fan control on the wall for the Ceiling fan (Who wouldn't? Pulling the chain some 30 times to get it right sucks), anyway, that is a Hundred bucks because it is a change.

Also, if you are going to be hiring people, you have a Master list, and can easily have multiple things done at once. You will save a Fortune in Trip charges alone if you have a guy do four things at once, instead of calling someone out 4 different times. Also, the Handyman is going to give you a better rate as you have more for him to do, and he can stay busy working for a week instead of a day. These guys have to put food on the table, and need to work every day. You will get a bulk rate (Still shop around early on before you have your Go-to guys).

End result, I have a Big list posted in every room of the house with what has to be done. This seems so simple that you really aren't going to waste your time trying it. I would suggest that you do.

When I get a Property (Just agreed to buy this one Saturday):

1126 Nelson St (I already own the Green House you see on the Right, and I own a Brick one right across the street)

When I get a Property, Before anyone does anything, I spend the first couple of days walking around. Go in, staple up your Paper, spend time in each and every room writing what you want to do.

Some rooms are just Paint, some are paint and carpet.

Some are Paint, pull carpet/pad/tack strips, refinish Hardwood floor, add a plug on the north wall, change the door to swing out, Repair wall holes, rebuild 2 windows, Frame in new Closet, Finish new Closet, Pull down drop ceiling, repair drywall ceiling (Or hang new drywall), New light fixture, move light switch, and so on. (And this might be a simple bedroom, imagine a kitchen)

Anyway, end of the day, you save tons of money, TIME, and YOU have a great handle on what is happening at YOUR property even if you never personally lift a hammer. Every person in the place has YOUR vision, and they can work on things without you having to tell them every little thing to do.

You will be professional, organized, and in the zone.

And really, it doesn't cost you really anything for some big paper, and a few hours of your time that really can save you Thousands in both money and time as you move forward.

Also HUGE, it sets the tone for any other people in the House. They see Random's vision, that's the way it is, it's easy to stick to your guns and not let contractors run over you and try and take advantage of a new investor. YOU set the tone, this is what we are doing. Ask me for clarification, but never ask me what to do, it's right there on the wall. I can't tell you how many times I have had to just stand there and look stone cold at a worker with a Question that was already answered on the wall. I just walk them back into the room, point to the list, explain it again if there is a real question, and get them back to work.

At this point, my Rehabs move like Clockwork, everyone and anyone including myself knows exactly what to do. If I only have an Hour today, I can walk in and hit the ground running. Maybe I have zero time today (I make sure to accomplish something, anything, 6 days a week), anyway, maybe I just walk in and change out Face-plates on the light switches and plugs. Or maybe I just cut out a room in wall paint, close it up, and go home, but it's ready to roll now. Something gets done every day, and I am not walking around in the house wasting 30 minutes every day trying to find something useful to do.

Also, since you know exactly what you are doing (Sure, things change, but you know what's going on), you can see what supplies you need coming up. You know that the Porch floor needs Sister boards to reinforce it, and you can have the 2x6s on property days before that project is starting, and you have to drop everything to run to the store. You will be able to see what you need for each individual project. In looking at one little project at a time, it's easy to have supplies prestagged, and know exactly what you need. You won't get overwhelmed.

I know, sounds so silly and easy that you won't do it. I know. I have tried to get countless people to make a Punchlist on their property, and it rarely happens. The successful ones do though.

All I can say is that it costs you really nothing out of pocket, I promise that it will help, and I take the time to do it with 10 years in RE now.
Click to expand...
There has never been a better post in all of FFA history. Stop through on your way to Columbus sometime, I owe you a beer or ten.
 
Explain to me the timing aspect of flipping a house.  You find a house, get it under contract and then look for a gc to handle the fixups?  How do you guys work it so that you minimize the time it takes to fix the place up and resell it?
Click to expand...
Wow, that's not a small question. You will need to get more specific with what you are asking.On your time line:

If you don't have the skills to handle things yourself, I would get a GC involved well before I got it under "contract" (Not exactly sure what you mean by under "contract", I can imagine a number of definitions)

Number 1 tool anyone in the Real Estate business can have is a PUNCH LIST. Make one, and stick at it. First thing I ever do in a property is walk the place, make a punch list, and staple it to the wall. First thing I do.

Actually, I make a limited punch list before I buy the place as I first walk through it. Later, when you are at home with your thoughts, I want to go over the list, and see what I can handle, and what I can't. Also, it helps you get things in logical order. You certainly want to replace the Houses Main water cutoff before you ever have the water turned on just as a matter of precaution (I've been burned on that too many times). Knowing that, you know to put anything that needs water off for a few days.
Click to expand...
What is this? A budget?
Click to expand...
A Punch List is just your "to-do" list.Walk into every room and figure out exactly what you have to do there.

If you don't, you will be bouncing all over the property, never really checking anything off. Figure out your game plan before you ever start.

For me, I get the LARGE sheets of paper like from an Easel, and I staple it to a wall in the room, and write out all my notes on it for what happens in that room. As we go along, mark off what you have done, and feel a sense of accomplishment.

I use a 4 color system of Black, Red, blue, and green felt tipped pens. Red is DO NOW, Green is do later (Like carpet after painting), Blue is middle of the time line stuff that can just get checked off, and Black is when I cross it off as done. ONLY I can cross things off as done.

I know this sounds dumb, but trust me, and give it a try.

It also helps you plan out things in the order you need to do them. As an example, EVERY home I buy where the water is turned off, I replace the main water cut off for the house before I turn on the water. I've been burned TOO many times on this. You have the water turned on, then discover a leak at the Main cut off, and have to waste days getting it turned off and then replace it, then wait some 4 hours for the Water company on a morning, all the while praying to the Gods of soaked basements, sub-floors, and plumbing that your repair held. This alone can cost you a week delay on ANYTHING that has to do with water. (Like Bathroom breaks while you are working) Now I MIGHT have been known to turn off the water to the house at the street and take care of this, but the average guy certainly isn't going to, and shouldn't turn the water off at the street.

Just one example. You will easily see to work on whatever caused the water stains from above before you start painting, things like that.

So you have Huge lists, more advantages:

Anyone who comes into work can hit the ground running, as they know to just goto the punch list and start. This can save HOURS working with others/friends/laborers as you don't have to keep finding work for them, have them ask you a thousand questions, BUG YOU!

You get a sense of accomplishment as I knock my main House list of Roof/Foundation/Electrical/BONES of the house off, and then move room by room, checking off the room, closing the door, and never going back. You don't have 8 things sort of part way done, and get overwhelmed. EVERYDAY you work on it, you move forward, you see results. This is more key than you can Humanly understand. The mind will wear you down, accomplish things, and feel great.

One of the biggest keys is that you have planned everything out and know the scope of the work. The #1 place that rehabbers fail is hire in a Contractor/plumber/electrician/handyman, give them a job, and then start changing the job. I was ABSOLUTELY guilty of changing my plans a ton in the beginning. That's where the Pro jacks you hard. They bid on the job, and changes go at maybe 4 times the going rate. You get destroyed. Every contractor knows you will be changing things that they can rape you on, so they don't worry about overages, or anything. They run over, they bill you and blame it on your changes. They don't have to be good businessmen if you make changes, you will be eating any costs they may have on any aspect of the job anyway. Could be as simple as another Plug in a room that costs you $600.00

You buy a Duplex, and realize after the electrician is working that it only has one water heater, and you want to save big long term money by having each one pay for their own electric hot water heater. At this point, it's a change, and the electrician has a somewhat simple job of running a new line down from the top of the house electric panel to the basement. He will claim that now he has to run a whole new wire when it was easy before (It's still easy, but what do you know?), and the wire costs you hundreds. This is how Electricians make their money, they know you will make changes. After the fact, you thing about it, and want a separate light and fan control on the wall for the Ceiling fan (Who wouldn't? Pulling the chain some 30 times to get it right sucks), anyway, that is a Hundred bucks because it is a change.

Also, if you are going to be hiring people, you have a Master list, and can easily have multiple things done at once. You will save a Fortune in Trip charges alone if you have a guy do four things at once, instead of calling someone out 4 different times. Also, the Handyman is going to give you a better rate as you have more for him to do, and he can stay busy working for a week instead of a day. These guys have to put food on the table, and need to work every day. You will get a bulk rate (Still shop around early on before you have your Go-to guys).

End result, I have a Big list posted in every room of the house with what has to be done. This seems so simple that you really aren't going to waste your time trying it. I would suggest that you do.

When I get a Property (Just agreed to buy this one Saturday):

1126 Nelson St (I already own the Green House you see on the Right, and I own a Brick one right across the street)

When I get a Property, Before anyone does anything, I spend the first couple of days walking around. Go in, staple up your Paper, spend time in each and every room writing what you want to do.

Some rooms are just Paint, some are paint and carpet.

Some are Paint, pull carpet/pad/tack strips, refinish Hardwood floor, add a plug on the north wall, change the door to swing out, Repair wall holes, rebuild 2 windows, Frame in new Closet, Finish new Closet, Pull down drop ceiling, repair drywall ceiling (Or hang new drywall), New light fixture, move light switch, and so on. (And this might be a simple bedroom, imagine a kitchen)

Anyway, end of the day, you save tons of money, TIME, and YOU have a great handle on what is happening at YOUR property even if you never personally lift a hammer. Every person in the place has YOUR vision, and they can work on things without you having to tell them every little thing to do.

You will be professional, organized, and in the zone.

And really, it doesn't cost you really anything for some big paper, and a few hours of your time that really can save you Thousands in both money and time as you move forward.

Also HUGE, it sets the tone for any other people in the House. They see Random's vision, that's the way it is, it's easy to stick to your guns and not let contractors run over you and try and take advantage of a new investor. YOU set the tone, this is what we are doing. Ask me for clarification, but never ask me what to do, it's right there on the wall. I can't tell you how many times I have had to just stand there and look stone cold at a worker with a Question that was already answered on the wall. I just walk them back into the room, point to the list, explain it again if there is a real question, and get them back to work.

At this point, my Rehabs move like Clockwork, everyone and anyone including myself knows exactly what to do. If I only have an Hour today, I can walk in and hit the ground running. Maybe I have zero time today (I make sure to accomplish something, anything, 6 days a week), anyway, maybe I just walk in and change out Face-plates on the light switches and plugs. Or maybe I just cut out a room in wall paint, close it up, and go home, but it's ready to roll now. Something gets done every day, and I am not walking around in the house wasting 30 minutes every day trying to find something useful to do.

Also, since you know exactly what you are doing (Sure, things change, but you know what's going on), you can see what supplies you need coming up. You know that the Porch floor needs Sister boards to reinforce it, and you can have the 2x6s on property days before that project is starting, and you have to drop everything to run to the store. You will be able to see what you need for each individual project. In looking at one little project at a time, it's easy to have supplies prestagged, and know exactly what you need. You won't get overwhelmed.

I know, sounds so silly and easy that you won't do it. I know. I have tried to get countless people to make a Punchlist on their property, and it rarely happens. The successful ones do though.

All I can say is that it costs you really nothing out of pocket, I promise that it will help, and I take the time to do it with 10 years in RE now.
Click to expand...
There has never been a better post in all of FFA history. Stop through on your way to Columbus sometime, I owe you a beer or ten.
Click to expand...
:goodposting: Although I might include NCState Girl thread in the mix.

 
Last edited by a moderator:
1126 Nelson St (I already own the Green House you see on the Right, and I own a Brick one right across the street)
Click to expand...
What does each unit rent for? Tons of these in my area, though not in the best part of town.example
Click to expand...
First, remember that this is within a National Register Historic District. It is regulated by the Department of the Interior, and has massive protections. It's the Neighborhood I live in, and quite different from the "Bad section of town". If you look at the property Homer posted that is in my Neighborhood, it is a mansion. My area is full of half million dollar castles, great quarter million dollar Victorians, a bunch of $100K Victorians, rentals, beat up pieces of junk, Huge empty buildings worth 100s of thousands that sit empty that you can pick up for $5-15K, my area sells for Half a Million to $3K. All in a 7x7 block area.

This property that I just agreed to buy for $32.5K is actually a House I agreed to buy a year and a Half ago on a Short Sale for $47K. The Owner had no end of problems, the Short Sale fell apart because he was insane, and it has been off the market for over a year. The Bank put it up, and wants to close in 2 weeks.

Remember that I promised myself I wouldn't buy ANY properties this year until I got caught up. I've only bought 4 so far, so I am doing good. :thumbup:

Anyway, I pay water, the rest is split out. This is dead across the street from a large 1.5 block City Park. For years, this was THE street for Artists, and was very high end. Over the past couple of years, it's certainly slipped some, but it has made it ripe as I have picked up 3 of the 6 total properties.

I have 4 Units already on the street where they currently rent from $450-575 a Month where I only pay water. I have this earmarked (and I know the rents here like the back of my hand) for $525 down, and $475 up, or a Grand a Month.

At $32.5K with maybe $3.5K to turn it around (And that's only if I run into Electrical problems as it is supposed to have, it will be more like $2K if I am clear), it's a good investment where I only pay water.

There is so much to be made in the right downtown areas, it's not funny.

 
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1126 Nelson St (I already own the Green House you see on the Right, and I own a Brick one right across the street)
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What does each unit rent for? Tons of these in my area, though not in the best part of town.example
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And to be clear, I can pick these up all day in areas I don't personally want to be in, but I do own some there.There are areas I really don't personally want to be in that you can pick them up for half that much.

You have to know your area.

 
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Mike, I just want to say that if you ever need a kidney or something, you got it.

I have a few questions as well. I posted a listing last week that I'm going to call the agent tomorrow about. It's listed at 120k with both sides rented for $575 each. As there are already tenants, there shouldn't be any immediate rehab costs. Anyway, without a lot to put as a down payment, how hard would it be to buy another place if I buy this one? I want this to be the beginning of something, but as far as financing goes I'm still pretty clueless in that regard.

I'm going to be putting together a business plan this week and next...not sure if that will make a difference to a lender or not. I'm doing it more for my own benefit, actually.

Also, I was talking to a couple of friends (one of whom is a super-duper handyman type) about investing together in rehabs and rentals. Do you know anything about forming an investment group or LLC to do these kinds of projects? I'm assuming you have an LLC simply for liability purposes, but that's just an assumption. From what you've said, I doubt if there are any other investors with you.

But the thing is, I don't have a lot of cash on hand and I think I'll need some help in that area. I'm not sure how far credit will carry a guy in this business. Mike, you've been in it a while but think back to when you were starting out...how did you finance everything? Where did the capital come from?

And another one...let's say my first property is a big rehab where after purchasing the property I'll have to sink another 15k into the place. Where does the rehab money come from? Is it a dual loan at closing? Is it something I'll have to get after that? If so, can I get a guarantee on that loan before closing? That may be an idiotic question, but I haven't even started yet...bear with me.

 
But the thing is, I don't have a lot of cash on hand and I think I'll need some help in that area. I'm not sure how far credit will carry a guy in this business. Mike, you've been in it a while but think back to when you were starting out...how did you finance everything? Where did the capital come from?
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Credit will carry you a looong way, but not on its own.
And another one...let's say my first property is a big rehab where after purchasing the property I'll have to sink another 15k into the place. Where does the rehab money come from? Is it a dual loan at closing? Is it something I'll have to get after that? If so, can I get a guarantee on that loan before closing? That may be an idiotic question, but I haven't even started yet...bear with me.
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You've got a couple different options. A Rehab or construction loan can be the ticket. Here's the short version. You find the right property, and you get bids from contractors and find out how much it's going to cost to fix the property, and with your application, you submit the purchase and sale, the cost of the work, and an appraisal that shows the value of what the property will be worth when you're done, as well as a schedule. The lender inspects the property when work is complete, and pays the contractor as they go. Interest accrues on the draws (payments to the contractor) and gets added to the total loan amount when the work is done. All of the money borrowed gets added up and turns into one loan upon completion of the work.

Here's the thing. If you're a new agent, there's no way on earth you'll get a loan for this without any money down. You can do it with limited funds right now, and hopefully use some profits to work on the next property.
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I now know a lot more than I did this morning. Thanks, brutha.As a lender's rep, does buying a rental with a couple hundy a month in profit help or hurt my situation?

Also, have you ever done financing for a group to buy homes?

 
I now know a lot more than I did this morning. Thanks, brutha.

As a lender's rep, does buying a rental with a couple hundy a month in profit help or hurt my situation?

Also, have you ever done financing for a group to buy homes?
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There are three big things a lender looks at - income, assets, and credit history. Cash flow affects the debt to income ratio, or the first one. It helps, but it's not like the lender is going to give you the loan only because it makes you a couple hundred a month.I've done loans for small groups. Any more specifics for me?
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Several young professionals. One a soon-to-be real estate agent (me), one a handyman type, one a designer, and a few that have cash/credit/labor to spare. BTW, all of them own their own places except yours truly.Plus, I have a couple of sibling that are very well off. One is the second highest ranked attorney at GE...surprisingly, she makes some decent scratch. ;) Anyway, these are all resources that can be tapped...I'm just reticent about having to tap them (so to speak). I'd like to do as much on my own as I can, but I lack a couple of vital resources--cash clearly, but the technical handyman know-how as well.

Your forte is clearly the cash angle (while Mike can advise on the know-how) so I guess I'm asking how, if the credit situation is dispersed among several investors with good credit...how does that help/hurt my situation?

Would it be better in your opinion to just borrow as much as I can personally? Not just from the banks, but from family as well and try and make a go of it myself...or should I try and get some other investors involved to spread out the risk? Does that diffused risk even matter to a lender?

Again, I'm asking as a guy with just enough knowledge at this point to be dangerous.

 
Mike, I just want to say that if you ever need a kidney or something, you got it.

I have a few questions as well. I posted a listing last week that I'm going to call the agent tomorrow about. It's listed at 120k with both sides rented for $575 each. As there are already tenants, there shouldn't be any immediate rehab costs. Anyway, without a lot to put as a down payment, how hard would it be to buy another place if I buy this one? I want this to be the beginning of something, but as far as financing goes I'm still pretty clueless in that regard.

I'm going to be putting together a business plan this week and next...not sure if that will make a difference to a lender or not. I'm doing it more for my own benefit, actually.

Also, I was talking to a couple of friends (one of whom is a super-duper handyman type) about investing together in rehabs and rentals. Do you know anything about forming an investment group or LLC to do these kinds of projects? I'm assuming you have an LLC simply for liability purposes, but that's just an assumption. From what you've said, I doubt if there are any other investors with you.

But the thing is, I don't have a lot of cash on hand and I think I'll need some help in that area. I'm not sure how far credit will carry a guy in this business. Mike, you've been in it a while but think back to when you were starting out...how did you finance everything? Where did the capital come from?

And another one...let's say my first property is a big rehab where after purchasing the property I'll have to sink another 15k into the place. Where does the rehab money come from? Is it a dual loan at closing? Is it something I'll have to get after that? If so, can I get a guarantee on that loan before closing? That may be an idiotic question, but I haven't even started yet...bear with me.
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Homer,I'm in the process of buying my first rehab as we speak. As far as financing goes, I'm getting my current residence reappraised as to hopefully buy the property on my HELOC (reappraisal needs to come in 10K higher than last year to finance the property and repairs). If I cant squeeze the repairs out of my HEL, I'll be putting them on a 0% 12months card I just applied for (actually, I'll probably do this anyway).

I was also approved for a conventional loan on the property if all else fails, and can use HELOC for repairs and down payment.

HTH

 
But the thing is, I don't have a lot of cash on hand and I think I'll need some help in that area.  I'm not sure how far credit will carry a guy in this business.  Mike, you've been in it a while but think back to when you were starting out...how did you finance everything?  Where did the capital come from?
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Credit will carry you a looong way, but not on its own.
And another one...let's say my first property is a big rehab where after purchasing the property I'll have to sink another 15k into the place.  Where does the rehab money come from?  Is it a dual loan at closing?  Is it something I'll have to get after that?  If so, can I get a guarantee on that loan before closing?  That may be an idiotic question, but I haven't even started yet...bear with me.
Click to expand...
You've got a couple different options. A Rehab or construction loan can be the ticket. Here's the short version. You find the right property, and you get bids from contractors and find out how much it's going to cost to fix the property, and with your application, you submit the purchase and sale, the cost of the work, and an appraisal that shows the value of what the property will be worth when you're done, as well as a schedule. The lender inspects the property when work is complete, and pays the contractor as they go. Interest accrues on the draws (payments to the contractor) and gets added to the total loan amount when the work is done. All of the money borrowed gets added up and turns into one loan upon completion of the work.

Here's the thing. If you're a new agent, there's no way on earth you'll get a loan for this without any money down. You can do it with limited funds right now, and hopefully use some profits to work on the next property.
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I now know a lot more than I did this morning. Thanks, brutha.As a lender's rep, does buying a rental with a couple hundy a month in profit help or hurt my situation?

Also, have you ever done financing for a group to buy homes?
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Homer, it really sounds like you need one partner with some cash. Most lenders are going to want 10% down. While I'd be all over the property with tenants already making the payments, you should probably look at for the first property as something you can flip to create capital for future purchases. Not that I mentioned a partner, I'd be wary about going that route. Definately don't go with more than one partner. It's a pain getting numerous people on the same page to make a decision. Worse yet, if one of the kicks the bucket, you may suddenly have another half a dozen partners in the form of aires that have totally different goals than you. Personally I wouldn't worry about an LLC until you personally have substanial assets to protect. The money is better spent on liability insurance. The costs of an LLC (forming, yearly filings) can easily eat away the profits of one income producing rental. Down the road remember that for an LLC to work, you'll need to keep the number of properties in each to a minimum.Lastly, let me say that banks and their rules suck. Debt to income ratio will kill you at every turn. Let's say you own a property that rents for $700 a month and your payments are $400 a month. That's a whale of a deal right (definately is in my market)? Well the ratio is 57% and most lenders I talk to don't want your ratio to exceed 50%. In other words, by adding a property that will be generating cash flow, you be dinging your ability to borrow in the future. Eventually you need to move into a commercial scenario rather than a personal scenario unless you can up your personal income in your day job. Probably your best route to get started is owner occupied properties. It's like the rules disappear and the lenders will throw money at unqualified people and finance to 100%. If you can move from property to property, you can definately use this to your advantage to access cheaper and easier to obtain financing.

 
Mike, I just want to say that if you ever need a kidney or something, you got it.
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Mike, Proninja, Bass, The Jeffs, you guys are all up for FBG of the year. Amazing the help you get around here. I hope to be able to contribute one day.

 
But the thing is, I don't have a lot of cash on hand and I think I'll need some help in that area. I'm not sure how far credit will carry a guy in this business. Mike, you've been in it a while but think back to when you were starting out...how did you finance everything? Where did the capital come from?
Click to expand...
Credit will carry you a looong way, but not on its own.
And another one...let's say my first property is a big rehab where after purchasing the property I'll have to sink another 15k into the place. Where does the rehab money come from? Is it a dual loan at closing? Is it something I'll have to get after that? If so, can I get a guarantee on that loan before closing? That may be an idiotic question, but I haven't even started yet...bear with me.
Click to expand...
You've got a couple different options. A Rehab or construction loan can be the ticket. Here's the short version. You find the right property, and you get bids from contractors and find out how much it's going to cost to fix the property, and with your application, you submit the purchase and sale, the cost of the work, and an appraisal that shows the value of what the property will be worth when you're done, as well as a schedule. The lender inspects the property when work is complete, and pays the contractor as they go. Interest accrues on the draws (payments to the contractor) and gets added to the total loan amount when the work is done. All of the money borrowed gets added up and turns into one loan upon completion of the work.

Here's the thing. If you're a new agent, there's no way on earth you'll get a loan for this without any money down. You can do it with limited funds right now, and hopefully use some profits to work on the next property.
Click to expand...
I now know a lot more than I did this morning. Thanks, brutha.As a lender's rep, does buying a rental with a couple hundy a month in profit help or hurt my situation?

Also, have you ever done financing for a group to buy homes?
Click to expand...
Homer, it really sounds like you need one partner with some cash. Most lenders are going to want 10% down. While I'd be all over the property with tenants already making the payments, you should probably look at for the first property as something you can flip to create capital for future purchases. Not that I mentioned a partner, I'd be wary about going that route. Definately don't go with more than one partner. It's a pain getting numerous people on the same page to make a decision. Worse yet, if one of the kicks the bucket, you may suddenly have another half a dozen partners in the form of aires that have totally different goals than you. Personally I wouldn't worry about an LLC until you personally have substanial assets to protect. The money is better spent on liability insurance. The costs of an LLC (forming, yearly filings) can easily eat away the profits of one income producing rental. Down the road remember that for an LLC to work, you'll need to keep the number of properties in each to a minimum.Lastly, let me say that banks and their rules suck. Debt to income ratio will kill you at every turn. Let's say you own a property that rents for $700 a month and your payments are $400 a month. That's a whale of a deal right (definately is in my market)? Well the ratio is 57% and most lenders I talk to don't want your ratio to exceed 50%. In other words, by adding a property that will be generating cash flow, you be dinging your ability to borrow in the future. Eventually you need to move into a commercial scenario rather than a personal scenario unless you can up your personal income in your day job. Probably your best route to get started is owner occupied properties. It's like the rules disappear and the lenders will throw money at unqualified people and finance to 100%. If you can move from property to property, you can definately use this to your advantage to access cheaper and easier to obtain financing.
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Bass, I'm willing to do this. I'm just curious as to why or how it really works. If I've moved 4 times in 4 years to an owner occupied property, what does the mortgage lender say when I'm asking to move into and buy my 5th house, even though I already own 4. That's kosher?
 
But the thing is, I don't have a lot of cash on hand and I think I'll need some help in that area.  I'm not sure how far credit will carry a guy in this business.  Mike, you've been in it a while but think back to when you were starting out...how did you finance everything?  Where did the capital come from?
Click to expand...
Credit will carry you a looong way, but not on its own.
And another one...let's say my first property is a big rehab where after purchasing the property I'll have to sink another 15k into the place.  Where does the rehab money come from?  Is it a dual loan at closing?  Is it something I'll have to get after that?  If so, can I get a guarantee on that loan before closing?  That may be an idiotic question, but I haven't even started yet...bear with me.
Click to expand...
You've got a couple different options. A Rehab or construction loan can be the ticket. Here's the short version. You find the right property, and you get bids from contractors and find out how much it's going to cost to fix the property, and with your application, you submit the purchase and sale, the cost of the work, and an appraisal that shows the value of what the property will be worth when you're done, as well as a schedule. The lender inspects the property when work is complete, and pays the contractor as they go. Interest accrues on the draws (payments to the contractor) and gets added to the total loan amount when the work is done. All of the money borrowed gets added up and turns into one loan upon completion of the work.

Here's the thing. If you're a new agent, there's no way on earth you'll get a loan for this without any money down. You can do it with limited funds right now, and hopefully use some profits to work on the next property.
Click to expand...
I now know a lot more than I did this morning. Thanks, brutha.As a lender's rep, does buying a rental with a couple hundy a month in profit help or hurt my situation?

Also, have you ever done financing for a group to buy homes?
Click to expand...
Homer, it really sounds like you need one partner with some cash. Most lenders are going to want 10% down. While I'd be all over the property with tenants already making the payments, you should probably look at for the first property as something you can flip to create capital for future purchases. Not that I mentioned a partner, I'd be wary about going that route. Definately don't go with more than one partner. It's a pain getting numerous people on the same page to make a decision. Worse yet, if one of the kicks the bucket, you may suddenly have another half a dozen partners in the form of aires that have totally different goals than you. Personally I wouldn't worry about an LLC until you personally have substanial assets to protect. The money is better spent on liability insurance. The costs of an LLC (forming, yearly filings) can easily eat away the profits of one income producing rental. Down the road remember that for an LLC to work, you'll need to keep the number of properties in each to a minimum.Lastly, let me say that banks and their rules suck. Debt to income ratio will kill you at every turn. Let's say you own a property that rents for $700 a month and your payments are $400 a month. That's a whale of a deal right (definately is in my market)? Well the ratio is 57% and most lenders I talk to don't want your ratio to exceed 50%. In other words, by adding a property that will be generating cash flow, you be dinging your ability to borrow in the future. Eventually you need to move into a commercial scenario rather than a personal scenario unless you can up your personal income in your day job. Probably your best route to get started is owner occupied properties. It's like the rules disappear and the lenders will throw money at unqualified people and finance to 100%. If you can move from property to property, you can definately use this to your advantage to access cheaper and easier to obtain financing.
Click to expand...
Bass, I'm willing to do this. I'm just curious as to why or how it really works. If I've moved 4 times in 4 years to an owner occupied property, what does the mortgage lender say when I'm asking to move into and buy my 5th house, even though I already own 4. That's kosher?
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Most lenders only seem to be interested that you're classifying it as your primary residence. The qualification bar for a primary residence is lower and you can even finance to 100%. The lowest down payment I've seen on investment property is 5%, but usually it's 10%. What you're doing appears to be kosher with the people I've been dealing with.
 
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Cool. Am I also correct in saying that you can obtain owner occupied financing on anything under 5 units? I've been on the lookout for 4-plexes to purchase that way.

 
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Cool. Am I also correct in saying that you can obtain owner occupied financing on anything under 5 units? I've been on the lookout for 4-plexes to purchase that way.
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That's what I've heard, but I don't know it to be fact. I wish we had more duplexes and quads around here. They are in such small supply that they bring top dollar.
 
Cool. Am I also correct in saying that you can obtain owner occupied financing on anything under 5 units? I've been on the lookout for 4-plexes to purchase that way.
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That's what I've heard, but I don't know it to be fact. I wish we had more duplexes and quads around here. They are in such small supply that they bring top dollar.
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Is it not cost effective to build new ones?
 
Mike, I just want to say that if you ever need a kidney or something, you got it.

I have a few questions as well. I posted a listing last week that I'm going to call the agent tomorrow about. It's listed at 120k with both sides rented for $575 each. As there are already tenants, there shouldn't be any immediate rehab costs. Anyway, without a lot to put as a down payment, how hard would it be to buy another place if I buy this one? I want this to be the beginning of something, but as far as financing goes I'm still pretty clueless in that regard.

There are ways to get money for the down, Jeff and ProNinja will be stronger at that for you. There are a NUMBER of creative ways to do things, but at the end of the day, ANYTHING short of full disclosure to your lender is Fraud. A number of things that the average gun shy person in the industry would call Fraud are not, As long as your lender has complete and entire disclosure. Seller can carry a forgivable second, or even provide the down payment. Some lenders won't be close to interested. The ones that sell on the secondary market will shun you like an Amishman, as the fear is that there is creative financing up front, it gets sold onto the secondary market, you fail, and the entity that bought the paper sues everyone in the chain for fraudulent practices. The longer you have been around, the easier it is, AND THE LESS YOU NEED IT. It's a double edged sword. Anyway, Jeff can get real creative here.

I'm going to be putting together a business plan this week and next...not sure if that will make a difference to a lender or not. I'm doing it more for my own benefit, actually.

I have NEVER had a lender ask for a Business plan in writing. I have often met face to face, and spelled out the long term plan.

Also, I was talking to a couple of friends (one of whom is a super-duper handyman type) about investing together in rehabs and rentals. Do you know anything about forming an investment group or LLC to do these kinds of projects? I'm assuming you have an LLC simply for liability purposes, but that's just an assumption. From what you've said, I doubt if there are any other investors with you.

I am not going to get into a Huge post with this one. I have had Investors and Partners from time to time. I'm not really against investors where you pay a couple points over going rate to quickly rehab a cash property, put a big mortgage on it, and clear $25K in 4 months (Where most of that time is just waiting on closing/seasoning) after ALL expenses including the investor are paid off. I took in a total of $5K from two different guys in my Dynasty League last year to buy a SLAM Dunk that I just couldn't easily snag at the time in a Cash offer. I was a little short, and those guys got a 10% return in 7 months. Not that I would offer that regularly, but it was guys in my League. I would take a Cash Investor on a Cash Deal where I am going to get them out of my Pocket in under a Year. I would not take a cash investor on a Long term hold (Unless MAYBE it was completely spelled out that they were even less than silent partners, I run things my way period, but really, I won't do it). However, if you are really ready to walk down the Partner road, let me know, so I can post some about it before you agree to anything. Avoid Partners if possible. If not, let's talk about it.

I do have an LLC, and I have gone back and forth on this a TON of times. I set it up because that it what everyone said you should do. LLC if you want to rent, and a Corp to flip. In fact, some of the best Flippers I know, set up the property in a Corp, and then when the time comes, actually sell the Corp that holds the property, not the property it's self. There are alot of advantages in this. Anyway, I firmly believe that a good level of insurance and a Million dollar umbrella is just as good, if not actually better than an LLC. There is alot of Maintenance in an LLC, and I leave equity in my Properties for rainy days, so an LLC that protects my personal interest can be protecting the smaller side of my assets at times. Also, Everything in the LLC is open to attack, so if you have 10 properties in an LLC, they are all open to attack. 10 LLCs would be a nightmare. It's somewhat hypocritical, as I have an LLC, and truly believe that big insurance can be the better option, I just haven't killed the entity. An LLC protects you from the things that insurance won't cover without paying too much in Insurance. Lead, Mold, etc. However, a huge lead case might suck every property in the LLC down. Best way to avoid this is the strip EVERY bit of equity in the properties (Borrow against them to the hilt, but I like Monthly Cash flow), so any lawyer will see that there is nothing to get. Being in the Midwest, the Lead laws are EXTREMELY gentle to us as compared to the Socialist Republic of California, and the East Coast.

But the thing is, I don't have a lot of cash on hand and I think I'll need some help in that area. I'm not sure how far credit will carry a guy in this business. Mike, you've been in it a while but think back to when you were starting out...how did you finance everything? Where did the capital come from?

And another one...let's say my first property is a big rehab where after purchasing the property I'll have to sink another 15k into the place. Where does the rehab money come from? Is it a dual loan at closing? Is it something I'll have to get after that? If so, can I get a guarantee on that loan before closing? That may be an idiotic question, but I haven't even started yet...bear with me.

Seller concessions. I was big on asking the seller to fix whatever I could. My first deal was pay full price, and have the Seller escrow $10K for repairs with the lender. It was a PAIN. I had to get bids so we knew that the amount of $10K would work, then the Contractor does the work, submits the bill to the bank, the bank pays. At the end, everything left in the escrow account returns to you. As with anything, there are ways to use the system. As it becomes more of a buyers market, these types of deals will become more common. As it has been a Sellers market forever, it wouldn't be easy to get a seller to make huge concessions as they could just sell to someone else. Remember that I now buy almost exclusively beat up houses, where sellers can't move it, and NEED to move it. Email me at Anderson1170@msn.com for more on this.

All the Dual Loan closing stuff will need to come from ProNinja and Jeff. I honestly have never done it.
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I've read 80% of this thread and the other real estate threads on the board, but I'm not completely clear on this question:

If I drive by a property a want to inquire about buying, should I ask a buyer's agent to represent me?

 
Homer,

If you are asking for my absolute opinion on what you should do, I'll give it to you along with the story of how I started out.

I was working in the Country/private Club industry because what I went to school for proved worthless in the real world, and I could get a good Food and Beverage job. I was wearing a suit to work, and living with 4 other guys in a beat up, wrecked rental, and trust me that we were not great tenants, but the LL was completely hands off, and didn't care. He ended up going down hard for Fraud issues. Anyway, wearing a Suit every day, and just figured that I was supposed to own a home.

Started looking, and getting Ducks in a row. I didn't make enough money as a large chunk of my income was commission. I restructured my pay to have a greater base, with a lower commission, and actually LOST money in the deal, but it was what the Lender needed. On top of that, I still couldn't seem to make enough money, so the Lender told me to look for a Duplex where I would live in half, and the rent from the other side would add to my Income to push me over.

I went to college for a degree in History, and have ALWAYS been drawn to older things. I was actually born about 100 years too late, I would fit in great turn of last century. Anyway, started looking in the neighborhoods built in the 1870s-1900s for a Duplex.

Found the one I live in now (I haven't lived here the whole time, but I moved back into it a few years ago) that was built in 1883. It was an 800 sqft upper one bedroom, with a 2K sqft lower/upper 2 bedroom that took the rest of the house, where the rent was actually greater than the mortgage.

We agreed to a price where the seller escrowed $10K for Paint and Chimney repair. I went FHA, put $5K down and bought a home for $80K with $10K in escrow as repairs.

I lived in the top like a King. I worked in the food industry, so I ate there every day, and the other side paid the mortgage. WAY too much extra money for booze. Seriously, WAY too much. but being about 24, I thought this was the greatest life in the world. Not married, no kids, driving a 1979 Jeep CJ-7 that was paid off and I had to work on at least twice a month to keep it alive. I had no expenses.

Next door was a rental where the LL kept putting in bums. I mean Bums. Dregs of Society.

I had a decent salary (Terrible compared to the Millionaires at FBGs), and about Zero expenses from living Owner Oc in a duplex. Within a short time, my Bank account balance was over flowing. I made a move, bought the Degenerate rental. Since I have always been very frugal, I always attempted to fix anything myself. (Remember, born 100 years too late). Between just mucking around on my home and the rental, I learned how to do most things. If I had to hire someone, I stood over them like a Hawk, watched everything, and asked a TON of stupid questions. Tons of them. Learn how to do it.

I moved to Indy for a Job after that, but eventually came back to do Rentals.

But here is the thing, when starting out, I didn't have to drive the newest car, I lived in a one bedroom even though I owned a couple of buildings. I didn't have a huge TV, or Cable, I worked on figuring out how houses worked in my free time.

I bought in the National Historic District, and my Home is now surrounded by great properties, and worth over $200K. It came by working on the area immediately around me. There were always homes in my Neighborhood that could be picked up for cash, where you could piddle around in them at your speed. Get them up and running, refinance, pull out more than enough to buy another two houses taking rehab into account.

I might suggest that your first home be a Historic Flip, where you create a big nest egg to work off of.

BUT REALLY, Buy a Multi-Family, and live in it. Have zero rent/mortgage payment, learn how to do things, and watch for ways to help yourself in your immediate area.

That's exactly what I did as a 24 year old with average to bad credit, and not enough income.

 
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I've read 80% of this thread and the other real estate threads on the board, but I'm not completely clear on this question:

If I drive by a property a want to inquire about buying, should I ask a buyer's agent to represent me?
Click to expand...
Just to make sure I understand, are you talking about a house that is not on the market, and you just see it, it has no sign in front?Or are you talking about a house with a for sale sign from a Realtor?

Or a FSBO?

Would you be buying it to live in?

Have you bought before?

 
Homer,

If you are asking for my absolute opinion on what you should do, I'll give it to you along with the story of how I started out.

I was working in the Country/private Club industry because what I went to school for proved worthless in the real world, and I could get a good Food and Beverage job.  I was wearing a suit to work, and living with 4 other guys in a beat up, wrecked rental, and trust me that we were not great tenants, but the LL was completely hands off, and didn't care.  He ended up going down hard for Fraud issues.  Anyway, wearing a Suit every day, and just figured that I was supposed to own a home.

Started looking, and getting Ducks in a row.  I didn't make enough money as a large chunk of my income was commission.  I restructured my pay to have a greater base, with a lower commission, and actually LOST money in the deal, but it was what the Lender needed.  On top of that, I still couldn't seem to make enough money, so the Lender told me to look for a Duplex where I would live in half, and the rent from the other side would add to my Income to push me over.

I went to college for a degree in History, and have ALWAYS been drawn to older things.  I was actually born about 100 years too late, I would fit in great turn of last century.  Anyway, started looking in the neighborhoods built in the 1870s-1900s for a Duplex.

Found the one I live in now (I haven't lived here the whole time, but I moved back into it a few years ago) that was built in 1883.  It was an 800 sqft upper one bedroom, with a 2K sqft lower/upper 2 bedroom that took the rest of the house, where the rent was actually greater than the mortgage.

We agreed to a price where the seller escrowed $10K for Paint and Chimney repair.  I went FHA, put $5K down and bought a home for $80K with $10K in escrow as repairs.

I lived in the top like a King.  I worked in the food industry, so I ate there every day, and the other side paid the mortgage.  WAY too much extra money for booze.  Seriously, WAY too much.  but being about 24, I thought this was the greatest life in the world.  Not married, no kids, driving a 1979 Jeep CJ-7 that was paid off and I had to work on at least twice a month to keep it alive.  I had no expenses.

Next door was a rental where the LL kept putting in bums.  I mean Bums.  Dregs of Society.

I had a decent salary (Terrible compared to the Millionaires at FBGs), and about Zero expenses from living Owner Oc in a duplex.  Within a short time, my Bank account balance was over flowing.  I made a move, bought the Degenerate rental.  Since I have always been very frugal, I always attempted to fix anything myself.  (Remember, born 100 years too late).  Between just mucking around on my home and the rental, I learned how to do most things.  If I had to hire someone, I stood over them like a Hawk, watched everything, and asked a TON of stupid questions.  Tons of them.  Learn how to do it.

I moved to Indy for a Job after that, but eventually came back to do Rentals.

But here is the thing, when starting out, I didn't have to drive the newest car, I lived in a one bedroom even though I owned a couple of buildings.  I didn't have a huge TV, or Cable, I worked on figuring out how houses worked in my free time.

I bought in the National Historic District, and my Home is now surrounded by great properties, and worth over $200K.  It came by working on the area immediately around me.  There were always homes in my Neighborhood that could be picked up for cash, where you could piddle around in them at your speed.  Get them up and running, refinance, pull out more than enough to buy another two houses taking rehab into account.

I might suggest that your first home be a Historic Flip, where you create a big nest egg to work off of.

BUT REALLY, Buy a Multi-Family, and live in it.  Have zero rent/mortgage payment, learn how to do things, and watch for ways to help yourself in your immediate area. 

That's exactly what I did as a 24 year old with average to bad credit, and not enough income.
Click to expand...
I should add that you will have to be someone who can deal with/Manage people to do this. I was a Restaurant Manager who didn't necessarily hire the Rhode scholars of the world. The people that worked for me were renters. I felt comfortable in dealing with them.You will be living with your renters. Really, I thought it was great! I knew what was going on, I set the ground rules, and had a handle on what happened regularly at my properties, as I was right there.

The #1 rule of Renting is: The LL is in charge, the Tenant is not

Say that to yourself every day if needed. It's your way or the Highway. No quarter, no give, you can be a nice guy, but a Nice guy on your terms. There is no leeway when it comes to rent. The LL comes before Rent-a-Center, the Cell Phone, whatever. You have to be firm on this issue, you get paid first.

Dealing with people in general is a skill. You can't be a pushover as a LL, and certainly not if you live on Property. Off property you can hide behind notices and letters. On property, you deal head on.

I love it, it works for me, I know what goes on, and I can correct immediately. Just understand that living next to your tenants can carry some difficulties depending on what type of person you are.

The LL is in Charge, the Tenant is not.

 
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I've read 80% of this thread and the other real estate threads on the board, but I'm not completely clear on this question:

If I drive by a property a want to inquire about buying, should I ask a buyer's agent to represent me?
Click to expand...
Most likely, yes. If you post the details Mike requested, I'll be able to give you a better response.
 
I've got a buddy in RE working down in some of the rougher areas of Atlanta. His RE model seems insane to me, and I wouldn't do it, but he is successful.

Anyway, I get great stories from him on things like the tenants that ran out on him and left a few grenades in the kitchen, things like that.

He recently sent me an Email with pictures from his latest story where the tenant was smoking in bed, caught the place on fire, and ran leaving a big dog chained to the front so you couldn't even get in the house.

If anyone wants me to forward the Email of the damage pictures to his rental, shoot me an Email Anderson1170@msn.com

 
This one seems too good to be true.

Out here, if I am going to jump in, I will have to jump in big (prices are crazy).

Bayonne is here

underdeveloped considering the proximity to NYC, but its time is coming.

Thoughts?

With 3 units this seems like it has huge potential. Trying to get more info.

 
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Great stuff here Mike. Back soon with a couple more questions--suddenly got a little busy here.

Oh, and I was a History major too...and like all of our compatriots, I was in the bar business for a few years as well. ;)

 
what was the site that gives you your home value .. ??
Click to expand...
zillow.com, but it's accuracy it questionable.
Click to expand...
VERY Questionable, I wouldn't trust it with thousands on the line in a RE deal.
Click to expand...
Actually guys, I don't think the house values Zillow provides are questionable at all.Without question, they are terrible.
Click to expand...
Hi or low or all over the place?My neighborhood looks somewhat accurate at least from house to house comparison standpoint.

 
what was the site that gives you your home value .. ??
Click to expand...
zillow.com, but it's accuracy it questionable.
Click to expand...
VERY Questionable, I wouldn't trust it with thousands on the line in a RE deal.
Click to expand...
both houses I am interested in buying are coming up about 40- 60 G's under the asking price... I was planning on makin 2 low-ball bids ..one about 30G under the asking.... the second (a pre-forecloser , divorcing situation) I am thinking of bidding under 60G their asking.

Kinda of shook buying a home right now with so many questions about the market right now.............any advice would be helpful !!!! :popcorn: ...been reading this thread for weeks.

I own a home that I plan to rent out (to my parents - they are renting to someone they dont know now anyway.. it is a way to invest in their grand kids future)... looking to buy a new home for me and my family.

 
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But the thing is, I don't have a lot of cash on hand and I think I'll need some help in that area. I'm not sure how far credit will carry a guy in this business. Mike, you've been in it a while but think back to when you were starting out...how did you finance everything? Where did the capital come from?
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Credit will carry you a looong way, but not on its own.
And another one...let's say my first property is a big rehab where after purchasing the property I'll have to sink another 15k into the place. Where does the rehab money come from? Is it a dual loan at closing? Is it something I'll have to get after that? If so, can I get a guarantee on that loan before closing? That may be an idiotic question, but I haven't even started yet...bear with me.
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You've got a couple different options. A Rehab or construction loan can be the ticket. Here's the short version. You find the right property, and you get bids from contractors and find out how much it's going to cost to fix the property, and with your application, you submit the purchase and sale, the cost of the work, and an appraisal that shows the value of what the property will be worth when you're done, as well as a schedule. The lender inspects the property when work is complete, and pays the contractor as they go. Interest accrues on the draws (payments to the contractor) and gets added to the total loan amount when the work is done. All of the money borrowed gets added up and turns into one loan upon completion of the work.

Here's the thing. If you're a new agent, there's no way on earth you'll get a loan for this without any money down. You can do it with limited funds right now, and hopefully use some profits to work on the next property.
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I now know a lot more than I did this morning. Thanks, brutha.As a lender's rep, does buying a rental with a couple hundy a month in profit help or hurt my situation?

Also, have you ever done financing for a group to buy homes?
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Homer, it really sounds like you need one partner with some cash. Most lenders are going to want 10% down. While I'd be all over the property with tenants already making the payments, you should probably look at for the first property as something you can flip to create capital for future purchases. Not that I mentioned a partner, I'd be wary about going that route. Definately don't go with more than one partner. It's a pain getting numerous people on the same page to make a decision. Worse yet, if one of the kicks the bucket, you may suddenly have another half a dozen partners in the form of aires that have totally different goals than you. Personally I wouldn't worry about an LLC until you personally have substanial assets to protect. The money is better spent on liability insurance. The costs of an LLC (forming, yearly filings) can easily eat away the profits of one income producing rental. Down the road remember that for an LLC to work, you'll need to keep the number of properties in each to a minimum.Lastly, let me say that banks and their rules suck. Debt to income ratio will kill you at every turn. Let's say you own a property that rents for $700 a month and your payments are $400 a month. That's a whale of a deal right (definately is in my market)? Well the ratio is 57% and most lenders I talk to don't want your ratio to exceed 50%. In other words, by adding a property that will be generating cash flow, you be dinging your ability to borrow in the future. Eventually you need to move into a commercial scenario rather than a personal scenario unless you can up your personal income in your day job. Probably your best route to get started is owner occupied properties. It's like the rules disappear and the lenders will throw money at unqualified people and finance to 100%. If you can move from property to property, you can definately use this to your advantage to access cheaper and easier to obtain financing.
Click to expand...
Bass, I'm willing to do this. I'm just curious as to why or how it really works. If I've moved 4 times in 4 years to an owner occupied property, what does the mortgage lender say when I'm asking to move into and buy my 5th house, even though I already own 4. That's kosher?
Click to expand...
Absolutely, and it is by far the best way to obtain cheap financing for your rentals. You just sign an affadavit that says "I intend to occupy the property as my primary residence." That's it. Now, some lenders have rules, six months, one year, so on, but as long as you can show intent to occupy, you're fine.Now, lenders aren't stupid. If you live in a big house on the hill, and you say you're going to owner occupy half of a duplex in the ghetto, they'll just say no. So, you start small and move up. Be careful not to move up too fast, or you'll run out of upward mobility.

There is nothing illegal or dishonest about this, and I'm perfectly comfortable recommending it to anyone here or any client of mine. This is what I did for my first 3.

I'm serious when I say don't move up too fast though. The last home I bought, while a really nice house, is kind of hamstringing me right now with a pretty bloated mortgage payment, and now I've got to figure out a way to afford another rental after I just threw my available cash at my dream home. It's not the worst problem, but it's a problem.
Click to expand...
I've always heard the opposite. It's much easier to tell your lender you are leaving your two family house to a single family house since you no longer need to have someone share your house anymore.If you go from a single family house to a multi-family house, I would think the lender whould say that doesn't make sense and you will be stuck with a higher lending rate.

 
This one seems too good to be true.

Out here, if I am going to jump in, I will have to jump in big (prices are crazy).

Bayonne is here

underdeveloped considering the proximity to NYC, but its time is coming.

Thoughts?

With 3 units this seems like it has huge potential. Trying to get more info.
Click to expand...
I will look in just a second, but I need to say this...READ NJ LAWS BACKWARDS AND FORWARDS before you buy a rental there. NJ has some of the hardest laws on the books against LLs.

The Eviction laws alone are unusual, and it doesn't end there.

It doesn't matter if it's a MTM or a Year Lease in NJ if your unit is under the anti-eviction act you must renew the lease, you have a tenant for life in NJ.

An eviction for anything other than non-payment of rent requires notice to cease/ time for tenant to cure, then after a month or so move for eviction but it's still very hard.

There are SOME exemptions if the landlord wants to move them self or their family into the property. Which is how you have to play the game some times.

The Socialist Republic of California and the Upper East Coast are some of the hardest places in the Country to be a LL.

NEW JERSEY LANDLORD-TENANT LAW

 
This one seems too good to be true.

Out here, if I am going to jump in, I will have to jump in big (prices are crazy).

Bayonne is here

underdeveloped considering the proximity to NYC, but its time is coming.

Thoughts?

With 3 units this seems like it has huge potential. Trying to get more info.
Click to expand...
First, ignore my last post if you are already a LL in NJ, you know the score.Second, what can you rent this for?

 
This one seems too good to be true.

Out here, if I am going to jump in, I will have to jump in big (prices are crazy).

Bayonne is here

underdeveloped considering the proximity to NYC, but its time is coming.

Thoughts?

With 3 units this seems like it has huge potential. Trying to get more info.
Click to expand...
I will look in just a second, but I need to say this...READ NJ LAWS BACKWARDS AND FORWARDS before you buy a rental there. NJ has some of the hardest laws on the books against LLs.

The Eviction laws alone are unusual, and it doesn't end there.

It doesn't matter if it's a MTM or a Year Lease in NJ if your unit is under the anti-eviction act you must renew the lease, you have a tenant for life in NJ.

An eviction for anything other than non-payment of rent requires notice to cease/ time for tenant to cure, then after a month or so move for eviction but it's still very hard.

There are SOME exemptions if the landlord wants to move them self or their family into the property. Which is how you have to play the game some times.

The Socialist Republic of California and the Upper East Coast are some of the hardest places in the Country to be a LL.

NEW JERSEY LANDLORD-TENANT LAW
Click to expand...
you are 100% correct.I am an attorney (don't do Landlord tenant, but have access to people who do here).

 
This one seems too good to be true.

Out here, if I am going to jump in, I will have to jump in big (prices are crazy).

Bayonne is here

underdeveloped considering the proximity to NYC, but its time is coming.

Thoughts?

With 3 units this seems like it has huge potential. Trying to get more info.
Click to expand...
First, ignore my last post if you are already a LL in NJ, you know the score.Second, what can you rent this for?
Click to expand...
some comparable rentals are herewithout seeing the units, I would guess gross around $3K. The two bigger units for $1100 and the smaller for $800 (which probably is too low).

 
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This one seems too good to be true.

Out here, if I am going to jump in, I will have to jump in big (prices are crazy).

Bayonne is here

underdeveloped considering the proximity to NYC, but its time is coming.

Thoughts?

With 3 units this seems like it has huge potential. Trying to get more info.
Click to expand...
First, ignore my last post if you are already a LL in NJ, you know the score.Second, what can you rent this for?
Click to expand...
some comparable rentals are herewithout seeing the units, I would guess gross around $3K. The two bigger units for $1100 and the smaller for $800 (which probably is too low).
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You know, not knowing Taxes in NJ, and a Litany of other things like your market, I would pass this off to ProNinja who understands the money side, and is in a bigger hot market. I wouldn't touch it here, but this is Northern Indiana.I would think it's ability to make money would depend entirely on your Interest rate, term, and Property Taxes. But you might be buying it based on future appreciation?

 
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Mike (and others)

The HUD home I'm looking at went straight from a 9 day owner oc period to a daily period open to everyone. I didn't get a bid in yesterday because of a busy day at work and my anniversary. My question is....

Do you have any experience in one day review periods? Obviously they are trying to move it quicker than normal, so I think I'm going to shoot low and work my way up.

TIA

 
Amazing the help you get around here.  I hope to be able to contribute one day.
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For the record, you HAVE BEEN contributing every day. This thread has been moving forward faster than it ever did since you, battles, and Homer started posting questions. Those questions allow for answers, and without them, this would be a dead thread.You ARE one of the biggest contributors here. :thumbup:

 
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Mike (and others)

The HUD home I'm looking at went straight from a 9 day owner oc period to a daily period open to everyone. I didn't get a bid in yesterday because of a busy day at work and my anniversary. My question is....

Do you have any experience in one day review periods? Obviously they are trying to move it quicker than normal, so I think I'm going to shoot low and work my way up.

TIA
Click to expand...
I think this is how mine went too. If your state is like mine, you should be able to find a bid stats page as well as a bid results page.
 
Mike (and others)

The HUD home I'm looking at went straight from a 9 day owner oc period to a daily period open to everyone. I didn't get a bid in yesterday because of a busy day at work and my anniversary. My question is....

Do you have any experience in one day review periods? Obviously they are trying to move it quicker than normal, so I think I'm going to shoot low and work my way up.

TIA
Click to expand...
I think this is how mine went too. If your state is like mine, you should be able to find a bid stats page as well as a bid results page.
Click to expand...
Bid stats for the first bid period on the property your looking at? Really? :o I'm searching, but haven't found anything like that yet.

 
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