Thread: Motivated and READY to invest, but need guidance!

Originally Posted by GoneSingle

how does this "group of investors" work? i ask because i may eventually want to put together a group as well...or maybe get myself involved with some investors?

The group of investors that I have are a combination of family, friends, friends of family, and other people who I have met in my 1 year spent in commercial real estate.

I'm in the process of building my website right now which should help to funnel more investors as well as home buyers to it. Once it's done I'll be sure to show it.

As others have mentioned, finding the right deals these days is tough. Im 24 and have spent the past 2 years trying to get this going and to be honest it is the most trying thing I have ever done. Lots of idle time, lots of self doubt, lots of second guessing. But, I see the light at the end of the tunnel and I see how it could be my path to everything I ever wanted. My goal is to get into large scale real estate green development. Anyway, he's some more help.

Using the MLS to locate short sales or REO's is one way to go, but if you want to make a killer profit to make your time and your investors cash worth it, you'll need to get creative. Trustee sales, probate sales, auctions, etc are all ways to go.

For example, I contacted this home owner who turns out to be a 80+ year old single lady in bad health. Bascially, she told me she isn't capable of making any decision on a sale because she is sick right now. However, she did mention that her home is in poor condition and was curious as to what her home was worth. I know what I'd be willing to pay $320K (with full rehab I could sell it for $450+) and planted that it her head. Essentially I let her know that the lower end homes in her area sell anywhere between $350-$375. She thanked me and I wished her the best of health and informed her I will follow up soon. I'll call her in a few weeks, ask how she's doing, I already know she'll still be sick, and then offer her to send my cleaning crew over at no charge. I'll show up with them, give her an all cash offer of $320,000 and offer to pay for few months in a smaller apartment somewhere nearby. Hopefully that will do the trick.

It's methods like this one that you will need to implore to be succesful in this market. Everyone and their mom's have seen that REO or short sale that's a killer deal and thus end up over paying. Get creative in finding the right deal.

4drian's post +1 ..
but dont let it deter you .. My buddy just got into the game less then 2 yrs now and with around 200k he allready has close to a 1M in real estate established .. But he fixed up himself for cheap and rented out and basically in the end it pays the mortgage and taxes dosnt leave much in the end but in 5-10 yrs his properties will be paid off and hell be sittin on bunch of paid off properties that will still be yeilding income for times to come .. Here in Detroit houses can be had just for paying back taxes owed on properties the county seized for lack of payment like the whole house n property for under 10 k .. But once these strippers go in and some even work for the banks , steal the whole plumbing for copper scraps , take out the whole vent systems and furnaces and basically gut the house of anything worth anything its sometime more expensive to rehab then the actuall purchase .. Im also interested in aquiring a dealers liscense but IMHO its almost cheaper to just pay a dealer $4-500 and find what u want and go from there then have to deal with the having to have a property zoned for a dealership , having togo through all the paperwork and insurance regulation , have to be bonded for such amounts of liability n coverage , fleet insurance . can get costly if you dont have enough startup .. Ive had very good lucky buying bikes for the low and selling for grand or two more then purchased also with bike parts , just parted 2 gsxr 600's 06&07 . paid a grand for both made about $4k just selling the parts on 1 motorcycle forum no ebay whatsoever , even saved on Paypal by having them send payment as gift instead of goods purchase . Bought a 01929rr for in 09' for $2500 rode it for a yr sold i for $4500 and thats with 33k miles and salvaged title lol .

The real estate game is a big game if you get your grips right , but as statedby 4drian .. If you dont have somone who works for the bank or with the bank your basically gonna get the hand me downs . Locall ive been watching the forclosure market daily for the last yr and half to make a personal home purchase and truthfully the deals arn't like they were 2-3 yrs ago .. I seen plenty of homes that where sold on foreclosure , rehabed , and back on the market as a short sale for 20 grand more even though owner claiming 50-60k in upgrades/repairs but they arnt getting it .

If you dont pay cash or atleast 20% you will need to pay insurance on your mortgage that can be anywhere from $50 -200 more on your mortgage depending on loan rate and such but i say GO FOR IT if u have a little something to play with and are willing to help your handyman buddy when your not working you can probably come out of it ahead .

One other thing i will tell you , hopefully its differnt in your area , but every single forclosure i have put a offer on has always been replyed with , Thanks but we allready have a higher offer please submit your best and final offer , and this isnt even lowballing them , Last july i put offer of $140k on a home that was listed for $160k in a area where the homes sold for $170-$220 , The $220k homes was a newer addition built into the neighborhood . Not on the street i was looking .. The home in question needed about $40-50k to be livable and upgaded to my standards or actually likings . The bank came back said we allready have offer for listed price do you want to offer higher , well my wife liked it alot so i said hell its $160k and they have that allready offer $165 why lose it for 5k . but after inspection i dropped it cuz everything was original and will need replacing over next 5 yrs . something i dont want todo in my personal home .

Amongst kings also talk the rigth way , I know more people that purchased their own homes through some sort of sale other then listing that im wishing i can find one for myself that way .

If you want to invest in Detroit let me know, I'll match you 50/50 and have the hookup on labor and materials =)

Originally Posted by GoneSingle

As for my budget, i can comfortably put down 10k - not working with much in terms of cash. I was going to get a pre-approved loan and see if that figure is something i could afford to work with.

Save your money, learn the market, and hold out on trying to flip homes. The low end foreclosure market is saturated with all cash buyers who are prepared to purchase the property over asking in a matter of hours. Your offer will be blown away. When you factor in all costs, your $10,000 will be gone in a second and is not enough to cover your bases.

Ultimately, you'll gian MUCH more if you were to save your money until you're financially ready to buy a home with at least 30%-50% down and have the reserves to factor in additional costs.

If you're set on purchasing a home, go the low-risk route and buy a normal sale, fixer home at just under market price. With some upgardes and a good tenant, you'll be able to break even, build equity, and eventually sell the home for a profit. This will give you the opportunity to expand your skills. Eventually, you'll have built up a large enough equity to 'cash out' and purchase a second home.

Graham

Originally Posted by GStephan

Save your money, learn the market, and hold out on trying to flip homes. The low end foreclosure market is saturated with all cash buyers who are prepared to purchase the property over asking in a matter of hours. Your offer will be blown away. When you factor in all costs, your $10,000 will be gone in a second and is not enough to cover your bases.

Ultimately, you'll gian MUCH more if you were to save your money until you're financially ready to buy a home with at least 30%-50% down and have the reserves to factor in additional costs.

If you're set on purchasing a home, go the low-risk route and buy a normal sale, fixer home at just under market price. With some upgardes and a good tenant, you'll be able to break even, build equity, and eventually sell the home for a profit. This will give you the opportunity to expand your skills. Eventually, you'll have built up a large enough equity to 'cash out' and purchase a second home.

Graham

Graham,
That's exactly what I did in 2010. I purchased a short sale with 30% down, got my 8k tax credit, and have been renting out the rooms ($400 profit after expenses), and waiting to be able to cash out some equity to place on another property. I'm going to continue to save and in 2012(hopefully) I can put 30% down on a 2nd property.

I also have an uncle whose a broker, and a cousin who owns a property management company, who source me some low-end homes outside Atlanta, GA. Last year I purchased 9 properties (same owner) for $100k less than the FDIC wanted 11 months previously. They currently have 90% rental with over $2k in profit monthly(after expenses and management fee's). Yes, its "slum lord" type properties, but they cash flow amazingly well!

+1 on what other said about learning the market, making contact with other professionals, and saving to allow a significant down payment!