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Ianster
11-23-2004, 05:45 PM
(Warning: This is long.)

Hi Everyone,

I was wondering if someone would be kind enough to give me some advice. I am an absolute beginner. I have been voraciously reading books on real estate and creative financing, so I do have a basic grasp of many of the concepts.

My main concern is dealing with lenders. My credit score is 649, and I had thought that this would give me horrible terms on a loan, if I could even get one. I have recently found out that my credit may not be as bad as I had thought in regards to buying a house.

My facts are:

1. I will be getting married in August 2005.

2. My apartment lease ends December 31st. Will go month-to-month after 12/31/2005 while looking for a house.

3. My FICO is 649. Most negatives are about 6 years old.

4. I have been renting at the current place for 5 years, always on time with rent.

5. I currently have nothing for down payment, though I hope to use any gift money from the wedding. Still, I expect a very small down payment (around 5% depending on house price).

6. I have been at the same job for a little over 2 years.

7. I had been working as an IT consultant (on a 1099) when I was laid off two weeks before September 11, 2001. I was then out of work for 13 months, and had to live on what was to be my quarterly tax payments. As a result, I currently owe the IRS more than $50K and the state of NJ about $8K. I am in installment agreements with both IRS and NJ, which means that they are not chasing me for the full amount. The policy of the state of NJ is to put what they called a judgement but is listed in my credit report as a "tax lien" for the $8K until it is fully paid off.

My approximate monthly financial info:

Net: 4,700
IRS debt: -1,500
NJ tax debt: -300
Other debt: -150
Rent: -1,175


What I am looking to achieve is to:

1. Move into a house, instead of wasting $1,175 on rent.

2. Build cash flows (or at least mortgage payment offset) through rentals.

3. Build equity through appreciation and paying down the loan.

4. (Maybe) Build cash flows through flipping and rehabbing.


My ideas for achieving it:


I have a friend who bought a duplex in 2002, improved it and refinanced after 18 months. The house had appreciated 20%, and he put a little more money into the refi to bring the loan down to less than 80% so he could get rid if PMI. Now, his rental income pays his monthly mortgage payment. If he ever chooses to move, he can keep the house and rent out his current living space for $1,000. What I would like to do, based on his experiences, is:

1. Some time in early 2006, buy a 2, 3 or 4-plex for as little down as possible.

2. Improve the property to bring up the value, if necessary.

3. About two years later, refinance at a better rate and maybe even throw some money into the refi to get rid of PMI.

4. Move out of the house, renting out my living space to get a positive cash flow.

5. Repeat the process.

6. Separately, look into flipping/rehabbing properties.


Finally, my questions:

1. The IRS debt appears nowhere on my credit report. Do I need to mention this to a lender- either my owing then >$50K or that I pay them $1,500/month? (I feel as though I will be doomed if I do.)

2. The NJ $8K debt appears on my credit report as an $8K tax lien, so I expect I will need to either mention the $300/month payment to NJ or simply pay it off. Will the $8K lien/judgement make it categorically impossible to buy a house? Should I pay that off entirely before even attempting getting a house?

3. I keep hearing mention of building relationships with professionals such as lawyers and brokers. How does a total beginner go about doing that? What can I offer such people in return?

4. Do I seem to be on the right track with my goals?


Thanks very much for any advice people can offer. Please feel free to drop me a line via private message.

Regards,
Ian

Dan Auito
11-24-2004, 03:17 AM
Congratulations Ian. Your a homeowner candidate! Go to a local lender, just walk in the door! Ask for the home loan officer and tell him or her what you just told us. They will most likely be able to qualify you for a certain amount and with a duplex in mind the amount would be higher than a single family home.

Your on the right track, don't be afraid to ask a lender to pre-qualify you, this is a courtesy service that lenders routinely provide to see if they can find a way to safely lend you money. Believe me they are trying hard in your favor to make that happen.

The worst that can happen is you find out what you will need to clear up in order to get approved(a good thing), there are other creative methods to acquiring real estate but I think we should wait on the "subject to" training.

For now go see one or maybe even a couple local lenders that you can sit down with and work out a plan of attack.

Your numbers aren't that bad. I can see no reason why you will not in the end get a loan that will serve your purposes. Do read the two files I emailed you for further insight.

I'll make you the same offer I made Tcuccio above, get the download of my 294 pg e book on the homepage and read it. If you don't feel it helps then let me know and I'll send you a check for the entire $14.95. Nothing else is pushed in the book accept the solid info you need to succeed. Dan

Keep the questions coming all the same.

Aldo
11-24-2004, 05:41 AM
I admire your ambition and forthright statement of your situation. As Dan suggested, visit a few banks with the info you provided here until you find one you are comfortable with, but have a second choice in case the first goes south for whatever reason. If this is to be owner-occupied, I doubt there would be a difference in terms if you were to choose a multi-family property. I'd strongly suggest a duplex, though you might be okay with up to a fourplex. When you get to the point of writing an Offer to Purchase, include a provision that the seller takes back a 10% second mortage. This will help reduce, or even eliminate, the downpayment. (This is explained in Dan's book in plain, understandable English).

Now I don my devil's advocate hat. Soon, probably less than a year from now, there will be a correction in real estate prices. California and the Northeast (including NJ) will be hit the hardest and property values will sharply decline for reasons too complex to explain here. You would be well advised to closely monitor property values in the area you wish to buy.

If you have additional questions at any time, there is a web site you can visit to get whatever answers you require. Go to..........Oh, wait! You're there already.

Ianster
11-24-2004, 02:38 PM
Thank you both very much for the info!

One thing I am still a bit unclear on- when you say to bring all the info I said above, do you mean that I should in fact tell them about the $1500/month (and more than $50K) that I am paying to the IRS? Won't that count heavily towards my debt-to-income ratio?

Oh wait, now that I think about it, it looks like you're saying to go now to a lender so that I will know a year in advance what I will need. Am I correct?

Thanks again!!

-Ian

Dan Auito
11-24-2004, 04:17 PM
Honesty is the best policy, since the debt is being managed they, the lenders will look at it as a revolving debt and factor the payments. The whole truth and nothing but. That way you won't get any surprises at crunch time. Step up and put it all on the table. If they say no you can always go elsewhere with a modified plan if need be.

Ianster
11-24-2004, 04:28 PM
Point taken, thank you.

-Ian

Dan Auito
11-25-2004, 12:30 AM
Point taken, thank you.

-Ian

:SM058: Get that paperwork together and head on out Ian!

lelliot3
11-28-2004, 06:54 PM
Point taken, thank you.

-Ian

This picture is not complete without some financial info on his new wife and an understanding of her tolerance for risk. What is the health of her balance sheet? Are her debts as heavy as yours? Her savings? She knows all about your debts, right? If you would come clean with a bank, obviously you would come clean with your finacee! :biggrin: I am a big believer in having a MINIMUM of six months of living expenses in the bank.

I am a bit of a risk weenie so I would want to see more income and less debt prior to getting into rentals. You don't want to be living paycheck to paycheck and have limited savings and experience a tenant like I had (and many others have had) that did $4500 in damage with 3 months lost rent. Unless your new wife will provide a bit of a financial cushion, adding something like this to your current financial situation could put a real strain on your marriage unless she has a very high tolerance for risk.

And then comes baby!

Dan Auito
11-28-2004, 08:39 PM
Wow, the female perspective can be invaluable when considering the big picture! Thanks for those insights, they really do give one something to think about. Dan

Luci Marcum
11-29-2004, 03:33 AM
Honesty is the best policy, since the debt is being managed they, the lenders will look at it as a revolving debt and factor the payments. The whole truth and nothing but. That way you won't get any surprises at crunch time. Step up and put it all on the table. If they say no you can always go elsewhere with a modified plan if need be.

Hi Ian!

I know this can be confusing :SM032:, but hopefully I can lead you in the right direction.

Do you plan on having your new wife on the loan? If her credit score is higher, I would suggest listing her as the primary and yourself as the co-borrower. Depending on her score, you may be able to get a better rate.

Your job time is perfect. All lenders want at least 2 years employment. Your debt ratio appears to be good. I am not sure, what you mean by negatives being over 6 months. Can you elaborate?

A credit score of 649 is actually just above the national average, so obtaining a loan should not be a problem. I would not put any money towards a downpayment. Keep the wedding money in your bank account instead and only pay the closing costs. Better to have it and not need it, than to need it and not have it.

There are quite a few ways to structure your loan. You could consider and 80% first and a 20% second. It gets kinda detailed from here. If you want to call me, I can probably answer most of your questions for you.

The only hitch I can forsee are the tax liens. I am not sure how your state is but most lenders require tax liens to be paid in full. Definately bring that question up to whoever you choose to work with. They can give you more accurate information specific to your state.

I read in one of my real estate publications that people who work with brokers tend to be happier and better serviced than those who go to the bank direct. This stems from the fact that brokers are on commission and people who work at the lenders direct tend to be salary.

If you decide to work with a broker, don't be afraid to voice to them that you want someone who will give you great customer service. If they don't take care of you right from the beginning, find someone who will. I may sound like I am preaching, but I feel very strongly about customers being treated with respect and top notch service.

Again, please call me direct 602-276-4743 and I can probably guide you a little further on the loan programs and any other questions you may have.

Good luck Ian!! :punk:

kingston
11-30-2004, 06:23 AM
While your shopping around for the best loan/rate you will probably want to have a copy of your credit report and fax that or make sure the broker/lender you will be working has a copy. In other words you don't want each and every lender or broker prequaling you to pull a credit report for each analysis. Too many inquiries may affect your credit score.

There are lenders who will consider your payments for the outstanding lein in your ratios alone as long as you can show consistency in payment history for at least a year.

Last but not least it will be in your best interest to disclose everything depending on the type of documentation your loan program requires lenders have been know to cease funding evening after closing/signing due to failure to disclose information and in some cases you won't be able to reapply with that lender. Granted there are thousands of lenders to choose from

Good Luck to you and it seems like your on the right track

Ianster
12-01-2004, 05:03 PM
Hi Luci,

Thank you for the advice.

To clarify on your questions- when you said "6 months", I think you were referring to my mention that my negatives are 6 years old. I was hoping that the negatives would drop off my report after they are 7 years old, as I have heard would happen.

I do plan on having my new wife on the loan, and what you say sounds like a good idea. However- would they combine our incomes still or take hers first? The reason I ask is that her income is very little compared with mine.

Again, thank you for the tips!

-Ian

Luci Marcum
12-01-2004, 05:32 PM
Hi Luci,

Thank you for the advice.

To clarify on your questions- when you said "6 months", I think you were referring to my mention that my negatives are 6 years old. I was hoping that the negatives would drop off my report after they are 7 years old, as I have heard would happen.

I do plan on having my new wife on the loan, and what you say sounds like a good idea. However- would they combine our incomes still or take hers first? The reason I ask is that her income is very little compared with mine.

Again, thank you for the tips!

-Ian

You are welcome Ian!

Sorry about the misread on the 6 mths :SM031:.

The lender will combine both incomes and debts together. When you find who you want to work with, present both options to them and they can guide you which way to go.

Congratulations on the soon to be wedding and house!

Ianster
12-06-2004, 04:54 PM
Hi lelliot3,

I have not run her credit report yet, but I believe that her credit is very good. She is on her third car loan, and this time she did not need a cosigner. She is a dancer and dance instructor, and she averages about about $600 to $800 per month income.

Her only debts are a recent car loan and less than $1000 on a single credit card.

She knows every detail of my financial situation, as well as these plans I am discussing here.

Is your suggestion that perhaps the first house should be a single-family, earning income solely by appreciation, as opposed to exposing myself to the risk of tenants? Or are you suggesting that I wait before buying a house?

As it stands, I feel as though I will not get out of this financial hole unless I take some sort of action in real estate. I think that both my fiancee and I are willing to deal with some level of risk, at least early on. I am considering the decreased risk to be refinancing (after appreciation) so that I am not so dependent on the rental income of tenants.

Thank you for your advice!

Regards,
Ian




This picture is not complete without some financial info on his new wife and an understanding of her tolerance for risk. What is the health of her balance sheet? Are her debts as heavy as yours? Her savings? She knows all about your debts, right? If you would come clean with a bank, obviously you would come clean with your finacee! :biggrin: I am a big believer in having a MINIMUM of six months of living expenses in the bank.

I am a bit of a risk weenie so I would want to see more income and less debt prior to getting into rentals. You don't want to be living paycheck to paycheck and have limited savings and experience a tenant like I had (and many others have had) that did $4500 in damage with 3 months lost rent. Unless your new wife will provide a bit of a financial cushion, adding something like this to your current financial situation could put a real strain on your marriage unless she has a very high tolerance for risk.

And then comes baby!

DionEvalueMortgage
12-09-2004, 06:27 PM
Just becuase I am in the mood to post some more responses. It sounds like everyone here is giving you very good advice! Some more peice of mind on property. When it comes to investment properties and lenders there are a plethera of lenders who can accomidate most situations. I would not lean too far into becoming a landlord as fast as I would lean toward just flipping a property.

As stated earlier in the thread the elastic market that everyone is enjoying right now is about to go WACK and head in the other dircetion not that property will ever be a bad investment but that it will knock out some unseasoned investors again for some of the reasons eluded too below. When we come accross new investor folks in our Florida market we tell them to take it slow. A small SFR will get your feet wet and you can still get the feel for what is going on. The management of the property will be what you would want to focus on before you move on, do things that are duplicatable. Keep in mind that when you talk with seasoned investors they already have contacts for the varity of repairs a property might need. Think about how many shanty construction folks are out there.

Well anyway the realtor guys can tell you all kinds of stuff on that. My recommendation while your shopping is stop by a brokerage office too. If they know what they are doing they will explain all the different varitations that would apply to what your doing. Do I buy as an investment or can I take it as a secondary home? What the difference is between the two? They should also be able to help you understand what your getting out of the deal. Even investors eventually flip their properties how long before you let it go? (Keeping in mind it's a first small) There are so many loan programs that are in my opinion highly advantageous to investors it's incredible. Key questions you have to answer on any lending situation is what is the amount of time I will keep the property even in the most unlikely circumnstances. Don't fall victim to comparing your home and mortgage situation with that of an investment. Take it slow and explore and shop not all loan programs are built the same as not all brokers are built the same. When you have some new questions, and you will post them here and get swarmed with responses.

Dan Auito
03-05-2005, 12:48 AM
GOOD ADVICE FOR NEWBIES (Most of these where from Matt at www.dealmakerscafe.com) I added a few at the bottom, Matt is right!)

• Get started today. Drive & look for vacants, rundown, REOs, mail to the pre-foreclosures, start marketing to generate some leads.. ads, signs, & doorknock the pre-foreclosures.
• Draft a list of potential money partners from your circle and another lists of business owners & professionals that you don't know. Mail them about becoming a money partner. Offer above-average interest on short-term deals secured by local real estate. Make no mention of points or deal splits. They're not necessary.
• Talk with a lot of RE Agents. Ask for summary list of REO or Foreclosures (actually they are REOs at this point but most Agents call them Foreclosures) from the MLS. Expect to go through several agents. Most do not understand our business and will not fulfill your requests. Meet them in person to build a relationship.
• Gather all the books, flyers and newspaper supplements advertising real estate in your target market. Get to know the listing/asking prices. Find out the median price in the MLS.
• Be frugal in the beginning & cut back on some things in order to have the funds to use for real estate.
• You focus should be to find deals with equity that you can buy & sell.
• Long-term business plan.. Buy & sell, re-invest profits into bigger deals, rehabs or resort property to re-sell. Re-invest those profits into apartments.
• Read all the posts about marketing, taking calls, talking to sellers. and any others areas you're unsure about.
• Define your goals, write them down, make a plan to achieve them and work on the plan every day.
• Take charge of your life, set goals, plan, implement and progress. :SM144:

SynProp
03-05-2005, 03:14 PM
Hello All...

Sorry if this post makes NO sense, since I only read one or two posts in this thread...

What I am understanding from the originator of this thread, that:

1. He reads a lot of RE and creative financing books.
2. He owes plenty to the gov't.
3. Wants to stop paying rent, and turn it into building equity (home ownership)
4. Worried that his financial situation won't look good to lenders.

My question... Why are you not practicing what you are reading?

This would be an OPPORTUNE time to utilize creative financing to get into a HOME, and WITHOUT worrying about getting a mortgage in your name... It is now time to stop thinking of conventional means of getting into home ownership and start thinking creative financing.

You have to ask yourself: What is wrong with finding a distressed homeowner that allows you to take their home and take over their payments?

Doing such will you get a house, and build equity. Now I am not saying going into a lease-option with the seller. That's crazy, well that is, unless your are leasing from me :icon_aets But getting the deed.

Added to post, per request --> I was asked to give a quick tutorial on getting the deed... How's this for short...Just ask... :clap: Now you will need to get some paperwork together for the seller to sign. Sorry I can't give the paperwork away, since first most of you guys wouldn't know how to use it, and when to use it. Go to www.RonLegrand.com or www.MrPreforeclosure.com and get educated. They give you the forms and education to use them.

Really it is as simple as that. Most people in realty issues will give away their house, just to get rid of the headache.

Michael Suess
Synergy Properties, LLC
Michael@Synergy-Properties.com
www.Synergy-Properties.com

Peter Forest
03-07-2005, 01:20 AM
The tax liens will be posted on the credit report already so there is no reason to be dishonest. The fico (credit) score will qualify you for 106% financing if that is the best route for you to take.

ChrisGA
03-07-2005, 04:43 AM
Are you sure you wanna get married? Dont get me wrong marriage can be a great thing, but do you really know her and how she is in and out.

As for the property, my suggestion is Look for a property that is behind in payments. Buy the property without qualifying or obtaining a new mortgage.
No risk to you and minimum costs. Now I have found that with 10% down you can get a non qualifying loan from a investor for a MF property. Most anyway. They do charge premium interest rates of course which is the down fall.

Now if you choose too go the new mortgage route then at that beacon you can qualify for 100% financing at this time. I would highly recommend though you make sure you find a MF property that is under market rents on the units. And offer a price that you feel comfortable with and something that will give you a PFC for 3 units rented (4plex). Even if it needs work, you can put the 1.5k monthly into the investment and have a nice solid investment for what I consider FREE. Because you will get your money back out if the market dont fall as quickly as the gentleman above believes.

I believe the market has not quite hit as high as it will go and peak yet. I think it might come down some but then go hiigher before the bottom falls out again.

When it does lets all be there to catch the ride to the top again.

David Leach
03-08-2005, 12:19 AM
Wow Ian,

You have included alot of information and it looks like you know where you are going. Congrats on getting married.

I would have two major words of advice....

1. Your scores are high enough to where you won't need to list your income, just your liabilities. This would take care of any DTI ratio problems. If your wife-to-be has higher credit scores, you can use her as the primary borrower to get a better interest rate, but even if you are the primary, there are loan programs that won't require you to disclose your income.

2. You might want to look at properties that won't require a lender. Many multi-family properties are available by the investor selling it for very little down and owner financed. Using an idividual, you avoid any "bank" type questions.

One more thing relative to your credit. Credit doesn't really "drop off" unless you stay on top of it. When I first cleaned my credit up many years ago, I found items that were over 10 years old. The burueas don't keep tabs of that. You have to do it. There are ways to have it deleted before then. If you want to learn how that's done, send me an email.

Best wishes.

Ianster
03-10-2005, 09:05 PM
Thanks very much to everybody for the good advice!

I have A few specific responses to people, but please feel free to respond to any questions posed specifically to one person:

SynProp:

You're exactly right, and since I originated the thread, I have come to learn a lot about creative financing. I have a current possible situation and have posted it here: http://www.magicbullets.com/forum/showthread.php?t=638

Peter Forets:

Only the NJ tax department put a lien in my file. The IRS did not, because I have been in an installment agreement with them and have been paying it faithfully.

ChrisGA: I am REALLY sure I want to get married to this woman! :) Other tips much appreciated and I am looking into it.

David Leach:

I was under the impression that a loan with non-documented income would be worse for me than one with documented income. Especially since I just got a raise that puts me around $100K/year. Correct me if I had the wrong idea. My fiancee has a slightly higher credit score but makes less then $20,000 per year as an artist. Is it possible for her to be the primary borrower with regards to credit score and have them consider our combined income?

Please check out my new thread at: http://www.magicbullets.com/forum/showthread.php?t=638

I'm interested to hear people's thoughts.

Thanks very much, everybody!

-Ian

Dan Auito
03-10-2005, 09:19 PM
Sounds like your making great progress Ian, and you are also getting further information that allows you to get to the next phase! One thing I would suggest if I may, is to private message and or e mail the specific members that you have noted in your post. Copy and paste this link thread from the address bar above and ask them to respond. This way you will alert them to your awaiting reply request! It's all about networking my friend so use these tools to do it! :SM117:

Hint: just click on the members name or go to the members list and select your contact method of choice! Dan

David Leach
03-11-2005, 05:50 AM
David Leach:

I was under the impression that a loan with non-documented income would be worse for me than one with documented income. Especially since I just got a raise that puts me around $100K/year. Correct me if I had the wrong idea. My fiancee has a slightly higher credit score but makes less then $20,000 per year as an artist. Is it possible for her to be the primary borrower with regards to credit score and have them consider our combined income?



Ian,

I'm not why you think non-documented income would be worse than documented. If the scores are right, you can get the same type of rate and terms that you would get with a "full doc" loan.

If your fiancee has higher scores, it could be to your advantage to use her as the primary borrower using combined income. Most lenders will look at whoever makes the most income as being the primary borrower, so this might only work if you use a "no-doc" loan where income isn't stated.

With the right FICO scores, a stated income loan (NIV) or a no-doc could work nicely for you.

Best wishes,

David

Tom Henderson
03-25-2005, 11:19 PM
Hello Ian,

Here is another dandy little technique you can possibly use now to get an astonishing, dare I say it, 138.65% yield, with a minimal amount of cash. Go to your landlord and offer to pay 3 months in advance if he will accept a 10% discount. In your case, your rent is $1,175 a month. Multiply this by 3 months, you get $3,525. If you subtract 10%, or $352.50, you would prepay $3,172.50. This translates into an astonishing 138.65% yield.

You want to put it to him in other terms that does not mention the word discount, like, "Would you rather receive THREE THOUSAND, ONE HUNDRED AND SEVENTY TWO DOLLARS AND FIFTY CENTS now, or wait and get Eleven Seventy Five a month. Remember 3 Thousand is more than Eleven Fifty.

You can lease option property using the same technique. I am doing it on the condo I am living in. The landlord would not go for a 10% discount so I am only getting 44% yield...Heck!!!!

I am getting 31% yield on a note I am paying on.

The reason the yield is so large is because the period is so small (3 months) that it does not take much of a discount to make your yield go sky high.
I have students who is using this technique with her hair dresser, and another with his yard man. Always ask if you can get a discount for prepaying. Now do not use the saved money to buy a six pax, but put it to work for you.

Techniques like this are out there for all. It is just knowing concepts of THE TIME VALUE OF MONEY. There are two types of people in this world...Those who pay compound interest, and those who receive it. Try to be the latter when you can.

If you have any deals that have to do with notes, do not hesitate to contact me.

Hope this helps.

Tom Henderson
H&P Capital Investments LLC
1.800.481.6588
www.hpnotes.com

Dan Auito
03-25-2005, 11:27 PM
You heard the man folks! I would love to see more creative real estate practiced using the paper side of the trade.

P.S. I will be in training with our benefactor above in the very near future! :praise:
Would anyone like to have a chat session with Tom leading the session?

RosewoodTx
03-26-2005, 06:38 AM
Would anyone like to have a chat session with Tom leading the session?

Absolutely, definitely, certainly, and without a doubt, YES, YES, YES and YES!!!

I hope I wasn't vague or somehow unclear as to my position in this matter.

Dan, you can pretty much expect that to be my answer any time you want to bring on a pro in the know that has your approval, especially those who have taken the time to share the wealth of their knowledge here on MB!

M Aron
03-26-2005, 07:56 AM
I would like to do the chat as well.

I have a quick question though. I want to understand Tom's example with the high yield of 138%. I don't know how Tom got to that number. Could someone explain it to me please? Thank you. :praise:

Mat :SM041:

AllenWatkins
03-26-2005, 12:39 PM
Hi Ian,
You have been given a lot of good advice already. I offer to you a free report that will provide you some insight into buying some properties with no money and no credit, where I will even call the sellers for you, structure the deal, take on the financial risk, and split the profits 50/50 with you.
You can request a copy through my web site if interested under Free Reports catagory.
Best of Luck!
Allen
www.HomeBargains.com
Allen Watkins
Life Happens!
Our response builds our character and makes us who we are.
It is far better to attempt something great and fail,
than do nothing and succeed!
www.SaveOrSellNow.com

Tom Henderson
03-26-2005, 10:02 PM
I would like to do the chat as well.

I have a quick question though. I want to understand Tom's example with the high yield of 138%. I don't know how Tom got to that number. Could someone explain it to me please? Thank you. :praise:

Mat :SM041:

Hello Mat,

If you are going to be dealing in real estate, you must learn to use a financial calculator, and know what concepts are being applied. It can make you a fortune...or cost you a bunch. Lots of tricks out there that are illusions.

I am going to give you a brief explanation of this example. I do not have time to go into defintions and the "why", just how the yield was determined. It has to do with the wonders of compound interest, and the time value of money.

Remember the rent was $1175 a month. If you multiply this times 3 months you get $3525. Subtract 10% or $352.50 and you get $3172.50. There are 5 varibles in calculating the time value of money. If you know 4 of the variables, our calculator will do the rest. The 5 variables are
1. N (number of pay periods. Here we are dealing in months so N is 3)
2. Yield (In this case this is what is to be determined)
3. PV (In this case PV is the $3172.50 we gave the landlord)
4. Pmt (The payment is $1175)
5. FV (In this case it is 0)

Merely find these keys on your calculator, and input the variables.

Here is where it gets a little tricky, and is a part of learning your calculator. Since you are going to your landlord when the rent is due, you put your calculator in the BEGIN mode, not END. Leases are paid in advance...Mortgages are paid in arrears. (A topic all its own) Once you have done that, ask your friendly neighborhood calculator to compute your yield. And Lo and Behold, you get an astonding 138.65% yield. If you take a 10% discount for 3 months, you will get the same yield no matter what the rent. ADVICE: REMEMBER TO CHANGE YOU CALCULATOR MODE BACK TO THE "END" MODE. This mistake almost cost me a bundle.

Remember, when you change one variable, another varible changes. By knowing how to tweak notes and rents, you can achieve astronomical yields. With yields like these, it does not take long to start accumulating wealth.

Why was the yield so high with only a $352.50 decrease in PV? Because N was a small number. If you lend $100 and you get paid back $110 in 30 days, what is your yield? 10%...Nope!! You got 10% in one month. Multiply this times 12. Yep, a whopping 120%. Do you see how "payday loans" can be lucrative? Remember, yields are always in yearly terms. This is why on RESPA, you must put the interest in "Effective Yield".

There is a saying: The more the merrier, and the sooner the better. Remember this. More is better than less, and sooner is better than later, but if you are going to pay, you want to go the opposite way.

This is the "nutshell" explanation. Got to go. HAPPY EASTER!!!!

Hope this helps.

Tom Henderson
H&P Capital Investments LLC
1.800.481.6588
www.hpnotes.com

tomkish
04-07-2005, 11:57 AM
Hi Ian! Come check out my site at www.cashflowexperts.biz. I teach people how to use business lines of credit to get cash for the down payment on real estate. Your rental real estate should be in some kind of corporation anyway to protect yourself from liability. I can show you how to use this new corporation to get a business line of credit and which lenders to use.

SCook85
04-16-2005, 12:45 PM
Ian,

You have obviously given a lot of thought to this, and you have read many books to come up with this plan. However, this looks just like the plan that others propose, and not the plan of Ian and his new wife. I don't see anything in here about what you want, what your wife wants, but more a reiteration of what others write.

You do have the basics down, but the pitfalls both personally and for your business are not considered. How does your future wife feel about being in a fourplex and moving in two years? I had to coax my wife to move from our home after two years. To her it was "home". To me it was too big, too much property and required too much of my time. I wanted to simplify. She couldn't understand my point of view and I had a hard time understanding hers. Moving isn't fun, it's stressful, and you need to consider how it affects your marriage.

The tax lien will show up in judgement reports, and there is a question on the 1031 that pertains to judgements and liens that you need to answer honestly. Since the IRS has done a work out plan for you, it will be considered a "trade" and will help you rather then hurt you if you continue to make your payments on time. If it were listed as a "lien" then it would hurt.

I highly recommend buying and selling to start out with. It helps you to understand and learn the process, but most importantly it puts much needed working capital in the bank. With no working capital, rentals can be a drag.

Sit down with your fiance and come up with YOUR plan. What do the two of you want life to look like in 5 years (be honest) and then set up a plan that will get you where the two of you want to be.

Ianster
04-19-2005, 06:12 PM
Thanks SCook85,

I have been constantly talking about my plans with my fiancee and she is totally ok with living somewhere for about two years, then moving into a second house. At this point, I'm leaning more towards a duplex than a fourplex. The area I live in now has been having high appreciation the past few years, however, I am a bit disheartened at how expensive a duplex can be. Even a small duplex (with us living in a space smaller than my current 900 sq. ft. apartment) is going for $350K+.

As far as the tax lien, the NJ tax lien does appear on my credit report (for one agency). My plan is to entirely pay that off before even beginning to look for financing.

The IRS tax debt is not a lien and appears nowhere on any of my credit reports. I have been very vigilant about keeping abreast of what appears on my three reports. The IRS is leaving me alone (on paper) as long as I send out my $1500 each month.

When you said you recommend buying and selling- you mean flipping, right?

Thanks,
Ian

P.S. I'm posting this to the public thread just in case anybody else wants to chime in. Thanks, I



Ian,

You have obviously given a lot of thought to this, and you have read many books to come up with this plan. However, this looks just like the plan that others propose, and not the plan of Ian and his new wife. I don't see anything in here about what you want, what your wife wants, but more a reiteration of what others write.

You do have the basics down, but the pitfalls both personally and for your business are not considered. How does your future wife feel about being in a fourplex and moving in two years? I had to coax my wife to move from our home after two years. To her it was "home". To me it was too big, too much property and required too much of my time. I wanted to simplify. She couldn't understand my point of view and I had a hard time understanding hers. Moving isn't fun, it's stressful, and you need to consider how it affects your marriage.

The tax lien will show up in judgement reports, and there is a question on the 1031 that pertains to judgements and liens that you need to answer honestly. Since the IRS has done a work out plan for you, it will be considered a "trade" and will help you rather then hurt you if you continue to make your payments on time. If it were listed as a "lien" then it would hurt.

I highly recommend buying and selling to start out with. It helps you to understand and learn the process, but most importantly it puts much needed working capital in the bank. With no working capital, rentals can be a drag.

Sit down with your fiance and come up with YOUR plan. What do the two of you want life to look like in 5 years (be honest) and then set up a plan that will get you where the two of you want to be.

ChrisGA
04-19-2005, 07:49 PM
this is just my opinion :SM140:

THe more units you have the cheaper per unit price..........better deals are with the quads than 2plex

more cash flow.........u make more for the same head ache

just my opinion

SCook85
04-19-2005, 08:58 PM
More units usually mean more headaches. Better quality tenants go after better quality properties.

So if you want low management, you go with newer properties in better areas (ie: luxury apartments). If you want cash flow, you go with the opposite.

It's tough to get both, so most settle for a happy medium.

Ian, I was referring to flipping. You still need to come up with a plan. One step at a time and then follow it one step at a time. If you stick to it, you'll get to where you want to be in time. Without a plan, you have no direction, and in time, you'll still be going in whatever direction the wind blows.

Blessings,

Steve

ProCustomHomes
05-14-2005, 03:47 AM
Ian

You've received some excellent information here. I have a thought that may also assist you. Decide now what your exit plan is. Is real estate investing really what you want to do all of your life? Do you have other goals? Visit Europe? Go on a cruise? Build a mountain hide-away?

Have you ever watched those police car chases? Some guy ran a light. The officer wants to stop the driver before they either cause an accident or kill someone. Next thing they know they're in hot pursuit. Lives are at risk but the officer doesn't stop. He continues chasing the driver. Eventually there is damage to private and public property, other cars are involved in an accident trying to avoid the driver and officer. And, someone usually dies.

What went wrong?

The officer forgot what the real purpose of the chase was -- protect the public.

That's where I find that many people who are in business go wrong. They start a business to provide for their family, buy a home, buy a new car, put something away. Then they get so involved in the business -- even after they've achieved what they wanted they're still killing themselves working.

A few months ago, I had a 53 year old divorced woman who owned a printing company in AL tell me that she couldn't afford to retire. I asked her if her home was paid for? (Yes) Did she want to sell it? (never) Did she have a retirement plan? (Yes) How much did she need to live on? ($6k/mo) Come to find out once she did the numbers if she sold the printing company she could retire that day!

The point of this long and involved story is this: Have an exit plan. Decide how much money it's going to cost for your Dream Home, how much you want in your retirement, how much you need to live month to month, and for vacations so you won't have to be working forever.

Then focus on building your business so that one day you can walk away from it. It's nice to earn $20mil in a lifetime but do you really need that much? If your home cost you $500k and is paid for, your retirement plan is growing at 15 points a year, your interest from savings is paying you $75k a year, and your debt free -- isn't that enough?

Why continue to kill yourself? Why not retire early. Relax and enjoy life?

Think about it...
Talk to you soon...

Storm

hseitz
05-17-2005, 03:19 AM
I want to, first off, congratulate you for taking action...

I also want to tell you that you CAN do this with no money and no credit and I am walking proof

When I started investing, I ended up finding a lease option/lease purchase by going through the local newspapers. After several months, I was able to qualify for financing. I worked the contract with the sellers where they contributed to my closing costs and I was able to get 100% financing by way of an 80/20 (80% first and 20% second)... I still do this to this day to minimize any monies I will need to come to the closing table with.

Most, if not all lenders, will allow the seller to contribute 3% towards closing costs. Some will go up to 6% depending on the situation.

To find these properties, you can always go to the For Sale section of the local paper or drive through specific neighborhoods in which you have interest. You would be surprised at how willing people are to talk to you.

You can also market to absentee owners or farm neighborhoods. (To go into great detail about these two methods would take two complete posts of great length!) I just bought a second home in West Palm Beach $50,000 below appraised value and about $95-115,000 below market value after repairs, right next to the intercoastal. I negotiated a great deal, go the seller to contribute 3% to the closing and obtained an 80/20 loan with no prepay because I have the intent to refinance immediately upon completion of the renovations to cash out the equity...

With regard to your credit ... There are several things to consider...

First off, when you fill out a 1003 (loan application), you will be asked TONS of questions and then these answers will be verified by your credit report, bank statements, tax returns, etc. Rather than try and figure out your specific situation, I would recommend that you visit myfico.com or truecredit.com and pull your own tri-merge report and then talk to a mortgage broker about what you can qualify. Tell them you are looking to put AS LITTLE DOWN AS POSSIBLE! See if they have 80/20 interest only loans. If you go over 80% with the first, you will likely end up paying mortgage insurance... Then, you simply find a property you like and begin negotiations.

I can also look up a tremendous resource that I have on credit repair. I just don't have it with me at the moment.

At any rate, I hope this helps answer your question on getting into your first property. You can do it and on the surface, your credit doesn't sound THAT bad. In fact, many great programs are available over 620. I just don't know the specs on the other situations you mentioned.

Hope that helps a bit.
Sincerely,
Heather Seitz
www.yamon.net
www.thenextlevelrealestate.com

Aldo
05-17-2005, 05:37 AM
Heather, I need your FL banks to open branches in WI. The 80/20 you describe is unheard of in all, or most, of the rest of the country. 80/10/10 is the best I've ever been able to do without creative financing. Not to brag, but I could buy any bank in the country on a land contract, if available; yet, I recently looked at a (personal use) property in Leesburg, FL and was told that I needed to have 10% down from personal monies. Sorry, i don' t recall the bank's name, though it's on the tip of my tongue (well, okay ... fingers). The bottom line is that you found a bank I'd like to do business with. Help me out here.

David Leach
05-17-2005, 05:58 AM
Heather, I need your FL banks to open branches in WI. The 80/20 you describe is unheard of in all, or most, of the rest of the country. 80/10/10 is the best I've ever been able to do without creative financing. Not to brag, but I could buy any bank in the country on a land contract, if available; yet, I recently looked at a (personal use) property in Leesburg, FL and was told that I needed to have 10% down from personal monies. Sorry, i don' t recall the bank's name, though it's on the tip of my tongue (well, okay ... fingers). The bottom line is that you found a bank I'd like to do business with. Help me out here.

Not to pop your baloon, nor to step on Heather's territory, but 80/20 loans have been common place for lenders for years. My company does more of those than any other I do.

Also, to make a comment on the mortgage insurance issue, loans up to 100% in one loan are now available without M.I.

Sounds like you need to look for a new lender.

Regards,

David

Dan Auito
05-17-2005, 06:47 AM
I'm just following along gang. I usually just put down the 20% get the loan. Flip or hold for the long haul and get an equity line boost for the trouble due to the fact I buy them low and tweak to get them to come in high.

SynProp
07-14-2005, 04:08 AM
Refinancing a loan?

Is this on a house you ALREADY own, or one you want to acquire? Sorry, haven't followed the thread, jumpped to the end, and am walking blind...

If you are thinking about aquiring a loan, it is far easier to assume the loan verses refinaning out... Plus it is not based on your credit.

Please let me know if I am even walking in the same ballpark, since I can't read the entire thread.

Michael Suess
Synergy Properties, LLC
Michael@Synergy-Properties.com
www.Synergy-Properties.com

Ianster
07-14-2005, 03:03 PM
Hi All,

Thanks so much for all of your replies the past few months. Since my wedding planning is in high gear, I have not been paying as much attention to the real estate side of things, so please excuse me for being late to reply.

Synprop- to answer your question, I am looking to buy a new home with no money down.

Thanks,
Ian

Dan Auito
07-14-2005, 04:04 PM
Ian, congrats on the wedding thing, now all the stuff you own will be half hers! Heh Heh Heh LOL such is life!

Ian, there is no reason you cannot spend more time continuing your education in the real estate field, don't slack off or you will soon find that you will have lost your footing even more.

Make time to stay on track with us here, your going to need it! Those girls and those malls demand cash so your going to have to start making more of it!:eek:

soilder1
08-16-2005, 08:23 PM
this is following in the same mold as Ian's thread so bear with me if this seems long:

My situation:

I am a 21 year college senior with a healthy interest in real estate. Similar to Ian I have read a plethora of real estate books so I know the basics.

I have no credit balances (paid off!!!), small school loans(about $3k; not payable until grad.), car loan ($5k left), and a small balance to pay the IRS ($500).

The twist in my situation is that I currently own my father's home. He got into some tax and mortgage probs so I stepped in and "bought" my dad's home for $300k. The home appraises for ($375k-$400k) and we did a gift of equity purchase. So basically I have equity in the home ($75k-$100k). I am playing around with the prospects of re-fi'ing so that I can have capital necessary to acquire other properties(dont't know if that is the right route). We (me & dad) are currently re-modeling the kitchen and that may raise the property value (not sure how much).

Financial picture

Monthly basis
Income $2k
Emerg. Fund $4k
Debts $300 (car)
$100 (IRS)
Rent $350 (I have a roomie)

I have been at my job 2 years and have lived at my residence for a little over a year. I havent checked my FICO score recently but last time I checked I was at 700 with one late payment that happened 3 yrs ago. So I feel I am in a prime position to acquire property.

My goals

(a) to utilize the equity in my acquired "property" to purchase other income producing properties that will improve my financial independence.

(b) have 2 properties by the end of 2006 producing positive cash flow.

I have started to create my network with bankers, realtors, and investors. I honor the opinion of knowledgeable people who can point me in the right direction. I overstand that there are many methods to finance real estate and my MO is to leverage most of my deals so I can reap healthy returns. o b4 i forgot.....I didnt mention that I reside in CA and the market at this point is booming and I can 4see a bubble bursting in the coming year. So I want to put myself in a position where I can acquire property on the right terms.

Hope this gives readers an insight as to what I am trying to do.

I value all opinions.....

D

Corphelp
08-17-2005, 04:51 PM
Ian, If you ask me there may be a way to structuring you buying a home, but would require several think to fall into place. First is the IRS tax lien, ask your accountant if possible an order to compromise is due able in your state. Than find a seller who is willing to work with you on the sale of there property. When I say work with you, I mean there is a program out there that will provide a grant of up to $22K for use for closing cost, down payment or PAY off bills to qualify. If you can get a seller to work with you the grand money can be offer to the IRS as settlement. That would dramatically reduce your debt ratio. I would gladly provide the information to your mortgage broker. They can email me at
need_more_info@email.com

Best of luck,

Henry_CA

soilder1
08-17-2005, 07:26 PM
corhelp:

can you provide me with the info on the grants for closing costs and other real esate expense?


original_man30@hotmail.com

D

jdoke
09-24-2005, 04:29 PM
As a newbie I too have spent much time reading and am still confused about alot of the creative financing. I have read all this thread with great interest however I still have one question and that is -what is meant by including a provision that the seller takes back a 10% second mortage – how does the 10% second mortgage work if ?
Julie

Dan Auito
09-24-2005, 04:47 PM
Julie say you agree to pay $100,000 for a property and it appraises for $110,000, if the buyer holds seller financing for 10% or $11,000 then the bank could finance the rest based on the appraisal allowing you to do a virtually nothing down deal, with no P,M,I (private mortgage insurance) required. Hope that answers the question?

Burke
09-24-2005, 06:32 PM
Dan,

Your post indicates that PMI will not be required in your example but the numbers you use for example leave a 90% LTV ratio. I thought PMI was required with anything greater than an 80% LTV. Am I misunderstanding your message or maybe I am incorrect about the PMI trigger point of 80%?

Thanks for any clarification you can add.

Burke

David Leach
09-24-2005, 07:55 PM
Dan,

Your post indicates that PMI will not be required in your example but the numbers you use for example leave a 90% LTV ratio. I thought PMI was required with anything greater than an 80% LTV. Am I misunderstanding your message or maybe I am incorrect about the PMI trigger point of 80%?

Thanks for any clarification you can add.

Burke

It depends on the lender. Only Fannie Mae or Freddie Mac backed loans will require it, but many non-conforming lenders offer programs with no MI required at 90% LTV.

jdoke
09-24-2005, 08:37 PM
Hello and thanks for the answer I hope someday I will have expertise that is needed by someone here (I know alot about home repairs :rolleyes: )... now my next question is can I do the same with a conventional mortgage if I purchase at a lower price than the market value? For instance this is what I 'm hoping might work :
if I finance a home for $70,000.00 that is valued (ARV) @ 100,000.00
can down payment of 7000.00 (10%) and $3000.00 (est closing cost) be taken out if
asking price is 56,000 (I plan to offer 50,000) and then I have both repair and holding cost money left...
70,000 - 7000.00 - 3000.00- 50,000 = 10,000 holding cost and repairs
I would not have PMI in this case or would I ?
Is there any way this could work?
Thanks a ton and then some!
Julie

Dan Auito
09-24-2005, 11:27 PM
The diffrence between the sales price of a $100,000 and the subjective appraisal of $110,000 along with the sellers carrying a 10% second would bring it down to 79% loan to value. 80% is indeed the guideline.

Burke
09-25-2005, 12:55 AM
Dan,

Thanks for the clarification. It seems I discussed a similar scenario with a lender I was working with and they indicated to me that the PMI would be based on the sales price not the appraised value (assuming appraised value is higher). Maybe I misunderstood or maybe I need to find a different lender.

Burke

Dan Auito
09-25-2005, 03:06 AM
Lenders these days often go strictly off the sales price which does become a bit frustrating at times,GRRRRRR! Most often in these seller is king times, cash turns out to be the other king.

DionEvalueMortgage
09-27-2005, 05:57 PM
Long time no talk (or type) all. :SM040: Decided to spend a minuete and back up the topic here. A lender will ONLY take the lesser of the two "sale price and appraisal."

A counter statagey is to take on the property with PMI and call the servicing department of the loan and have them complete an AVM (appraisal desktop search) and if the property value comes back at 78% then they will release the PMI.

This statagey is more and more attractive as rates slowly rise and most HELOC's are adjusting hirer and while property values are still moving up rather quickly. Also valueable in new construction end loans.

Burke
09-28-2005, 05:32 AM
Dion,

Thanks for your contribution to this response! How soon after closing could a person reasonably talk the servicing department into doing this? For instance, say I find a motivated seller of a $100K appraised value property who is willing to sell to me for $80K. The lender bases the requirement for PMI on the sale price even though the appraisal shows the value at $100K. Assuming the appraisal is valid and the market is not declining at a rapid pace, I have a less than 80% LTV ratio within months of closing although I realize it isn't much below 80%. Do I have to wait until I have built another 2% in equity through either principle pay down or appreciation before the servicing department will entertain what you are suggesting?

Thanks again for your input!

Burke

DionEvalueMortgage
09-30-2005, 04:44 PM
Burke,

The standard removal of PMI is at 78% if PMI is on the loan on orginatioin. The actual time frame is obviously dependant upon the apprication rate and the amount of equity you have at purchase. I would not factor in the pay down of principle by means of mortgage payments into the equation as the time frame to reduce 2% would be about 24 months on a fixed rate mortgage. Keep in mind that you could always just but 2% down or pay the whole 2% ($1,600) during any particular month after you have made your mortgage payment. (Be sure and specify the amount paid is for principle reduction) The home value is normally based on the lenders appraisal search not the appraiser of your choice.

Also, it does not benefit you to have an appraisal on the purchase money mortgage for more than the appraised value as great value differences are red flags to lenders.

Other than that it looked like you understand the work around.

keyastroke
05-05-2006, 08:44 PM
Ian,

I just want to bring up something that we didn't know when we bought our building. The bigger the building, the greater the down payments for utilities.
It seems to go that the bigger the apt. complex, the higher the security deposit.

For example, my single family home cost the following:

Heating Oil: $100
Satillite TV: $100
Electric: Zero

For our 37 unit converted motel:
Heating Fuel (gas): $5,500
Electric: $1,000
Water/Waste Water: $1,000

So, when you start this process, keep in mind that after closings you are not done spending money. I am sure that it will be lower for you as you are looking at a smaller number of units, but don't be blind sided like we were and have to shell out the last $$$ to your name like we did. Call your local utiltites and find out well in advance what you will need to pay security deposits for and start saving for them when you start looking for property.

Tami

SPIVALAW
05-20-2006, 06:54 PM
Also bigger the profit??
:>)

gene
05-21-2006, 06:36 PM
[quote=Aldo]
snipped from 2004:

Now I don my devil's advocate hat. Soon, probably less than a year from now, there will be a correction in real estate prices. California and the Northeast (including NJ) will be hit the hardest and property values will sharply decline for reasons too complex to explain here. You would be well advised to closely monitor property values in the area you wish to buy.
QUOTE]

Just had to add; WOW, you guys are ahead of the game! (and market)

I wish we had anticipated the disappearance of buyers and investors in our market. Although I have only been here since July, a bit more dilligence in research would have paid off and we would been in a better financial position.:SM108:

SPIVALAW
05-21-2006, 08:47 PM
Despite your past, your future is spotless.

Howard

Bill in Vegas
05-18-2007, 03:20 PM
Those are a lot of questions, I will help with what I have time for and can.
Congrats on your wedding!!!
Do not buy a house. Use them money for your business, thus you are also not performing home maintenance. Money killer, the latter, a time killer, time is you most valuable asset as a newbie. You have more time than money right now. That will change!

That is great your friend is doing well with the duplex. I however chose another specialty of investing, as there are many. Wholesaling, I have rehabbed, sub to'ed ect, but I am back to wholesaling. Its the quickest, less messy, least expensive, way to make money in the biz, and to learn areas to search for wholesale deals, and begin to master your area.

I did that in vegas, with the help of some birdogs and wholesalers and we have done about 147 houses in 3-4 years! It really really is the best way to learn, hands down. Its not good for residual long term income, unless you make a system out of it, but its the best way to learn my friend. I have written articles on just that, I feel its the best way to start.

waynelong
05-21-2007, 12:22 AM
Ian,
How bout an update. I came to this thread way late but found it very interesting. What did you do? How goes everything. Wayne

flick_mao
05-24-2007, 09:37 PM
Have you heard about this contest called “2007 Renegade Real Estate Warrior of the Year” – apparently over 50 speakers from the Real Estate Investor-world are putting on seminars to talk about their style and type of investing strategies, along with great deals on their product. They have some big names like Ron Legrand and Michael Gerber on the list to speak. Seems pretty cool and informative… :)

Dan Auito
05-24-2007, 11:35 PM
Hey I got invited to this as a contestant and turned'em down! It will be a good event with the sponsors backending the people who give them their e mail, so be prepared for an onslaught of special offers once you get into their promotions pipeline!

SPIVALAW
05-25-2007, 02:02 AM
Wish they would invite me, Id go speak and teach and sell nothing.

Debbie
05-25-2007, 02:17 AM
Hey I got invited to this as a contestant and turned'em down! It will be a good event with the sponsors backending the people who give them their e mail, so be prepared for an onslaught of special offers once you get into their promotions pipeline!

Why'd you turn them down? Did they want you to sell? Is that what they meant by "contestant"?

SPIVALAW
05-25-2007, 08:51 PM
Dan would sell the dickens out of MB book there!!!!!!!!!!!

Dan Auito
05-25-2007, 11:08 PM
That's just it, the players that are doing this have $1,000 sales packages all day long and basically live on the phone or the road hawking those wares.
I don't go on the road and certainly don't push my own $1,000+ products.
I didn't think I could offer that circuit as much as the other players so I just said no thanks and best of luck.

Debbie
06-18-2007, 02:04 PM
Hi, This post is very informative, however I would like some specific information. If someone can help me then please send me a private message. Best Regards,

Pakistan Property (http://www.zameen.com) | Wholesale Suppliers (http://www.dailytrader.com)
Wholesale Canadian Directory (http://www.wholesale-canada.com) | All UK Wholesalers (http://www.uk-wholesaler.co.uk)

Nabeel,

Asking for private message for unknown specific reason is not a good way to develop any good RE relationship with us. We do not know you. For all we know, you could be a spammer and want to use our email addresses.

In order to give you the benefit of the doubt, create a new thread if you genuinely want to ask for specific RE questions.

gelokron
06-25-2007, 03:24 PM
ive done some rentals in new jersey before. Mainly in seaside heights. The most important thing with these properties in any market is to make sure that they will cash flow! A lot of beginner investors get excited to quickly and forget about that, now you don't want to have another house that you can't get rented quickly. So do your homework and figure out what is fair market rent and make sure you are netting at least a few hundred bucks everymonth after taxes, insurance, and maintanence costs.

waynelong
07-25-2007, 07:11 AM
What seems to work the best for me is a hand written note. I hired a high schooler with good hand writing to write notes and address them for me. It is the same short note - just changing the name. Sounds personal but the same thing goes out to everyone.

When I bring in the mail - if I have a hand written note - that will be the first thing I read!

Dan Auito
07-25-2007, 09:13 PM
Buying the first one? Read this: http://www.geminirealtyli.com/buyinghomes.pdf
Then this: http://www.magicbullets.com/gifts/final%20cows%20from%20kendall-1-s.pdf

waynelong
07-25-2007, 09:25 PM
Dan - Great ebook. You are a gifted writer.

Bill in Vegas
08-04-2008, 05:29 AM
Ian,
I was wondering, what descisions did you make and how is your investing going? I have been reading the responses over the months and was just courious, have you done a deal yet? Hope its going well.
bill

Ulric
11-12-2008, 06:16 AM
Buy yourself a home to live in, build some equity, then start thinking about trying to make money flipping houses. You need to understand the economics of home ownership before you try high-risk investing. One of the reasons we have a credit fiasco right now is because too many people thought it was a slam dunk to flip a house, and got in over their heads.

triggalicia1
06-15-2009, 11:24 PM
I admire your ambition and forthright statement of your situation. As Dan suggested, visit a few banks with the info you provided here until you find one you are comfortable with, but have a second choice in case the first goes south for whatever reason. If this is to be owner-occupied, I doubt there would be a difference in terms if you were to choose a multi-family property. I'd strongly suggest a duplex, though you might be okay with up to a fourplex. When you get to the point of writing an Offer to Purchase, include a provision that the seller takes back a 10% second mortage. This will help reduce, or even eliminate, the downpayment. (This is explained in Dan's book in plain, understandable English).

Now I don my devil's advocate hat. Soon, probably less than a year from now, there will be a correction in real estate prices. California and the Northeast (including NJ) will be hit the hardest and property values will sharply decline for reasons too complex to explain here. You would be well advised to closely monitor property values in the area you wish to buy.

If you have additional questions at any time, there is a web site you can visit to get whatever answers you require. Go to..........Oh, wait! You're there already.

I just have to say, this info. is sooooo helpful.

ReCoachDennis
02-07-2010, 08:52 AM
Definitely good comments from everyone.

One thing I would add here is not to go into a buy and hold situation just yet.

I would start by wholesaling which allows you to earn while you learn.
By doing this, you achieve lots of important skills such as identifying what a deal looks like, marketing, negotiation, inspection, repair estimation, contracts etc.

All of this while risking very little if any of your own money.

This way you limit your risk, while you gain vital experience.

One you ahieve these skills, you can move onto actually taking title to properties along with the risks and expenses inherent in that next step.

All the best

Dennis

brokerbids
02-27-2010, 12:34 AM
Your numbers aren't that bad. I can see no reason why you will not in the end get a loan that will serve your purposes. Do read the two files I emailed you for further insight.

Dan Auito
02-27-2010, 05:01 AM
Thanks for supporting another member my fine Broker!

HeatherSMT
03-17-2010, 02:03 AM
Those are all great suggestions. Thanks for some new ideas. www.propertymanagementblog.ca

gshan12
05-10-2010, 04:43 PM
I would start by wholesaling which allows you to earn while you learn.
By doing this, you achieve lots of important skills such as identifying what a deal looks like, marketing, negotiation, inspection, repair estimation, contracts etc.



Office Chairs (http://www.officechairsuk.com/Office Chairs.html)

Dan Auito
05-11-2010, 12:18 AM
Wholesaling is the right answer for todays markets, it will be in high demand for the next few years while excess inventories are liquidated. Lower priced homes are selling well as people with big mortgages are walking away and into houses they can live in for $800.00 a month PITI (West Central Florida Stats) What lower priced housing range is selling in your demographic area, no doubt DC, LA, NY etc are going to be higher that 800 bucks!

DarkLender
04-13-2011, 08:42 AM
Now its my turn, its 2011 now and I am just 20 years old, my girlfriend and I are planning to have marriage five years from now. We also want to have a house before that year. Is it wise for the both of us to have loan and both of us paid it even if we don't live there? I mean, because we are not married yet. What is the best option for us?

Debbie
04-14-2011, 07:01 AM
Now its my turn, its 2011 now and I am just 20 years old, my girlfriend and I are planning to have marriage five years from now. We also want to have a house before that year. Is it wise for the both of us to have loan and both of us paid it even if we don't live there? I mean, because we are not married yet. What is the best option for us?

Your best option is to save money for at least 20% down payment and a good credit report.

Regarding "marry or not to marry" before purchasing a house -- common sense will tell you that it is never wise to
co-purchase with anyone unless you have some type of legal agreement. A marriage certificate is one of them.

DarkLender
04-15-2011, 05:46 AM
Thank you so much. Me and my girlfriend should save first our money. We all do not know what will happen tomorrow. But I hope that we will end up together as well. I love her so much. :)