BiggerPockets

my name is melvin estrict and i live in alabama although i grew up on the east coast (go giants!) and i have been in the real estate finance business since 1995. i have owned a mortgage brokerage as well as a property management business. i have worked on wall street in sales as an investment consultant, but now i am here in alabama (by choice) but with no money. i am able to come across attractive deals, but often face huge obstacles when attempting to close with no dough! my goals are to become successful (extremely) in the real estate business but i am starting from zero armed only with knowledge and ambition while lacking money and credit. i represent the usual story of expensive divorce and loss of a business.
so now what?

Why don't you wholesale the deals that you find to other investors in your area.You dont need Money or credit to do that just find local investors in your area and flip the deals to them. They will pay you a small fee if they close and use that towards more deals.

great idea bruce, it makes a lot of sense. that is why the one thing i have learned in all of my expereince, is that there is always something you can learn if you listen to the thoughts and ideas of others. i should have used that when i got married,because i was warned...i guess as men we never learn!

good point. playing the advocate on this one...how or what would you suggest that could possibly entice an individual to play ball?

You're talking about a money partner. Typical terms for a first time deal are that the money partner provides all the funding and you do all the work. When you sell, the money partner takes 50% of the profit on the sale.

A decent fix and flip (I think that's what you're proposing) would be to have the purchase plus rehab costs at 70% of ARV (the selling price). The profit on a deal like that, after all the costs of purchasing it, holding it (insurance, taxes, utilities, etc.) and selling it, but not including any money costs, could be up around 20% of ARV, maybe a little higher IF, and its a big IF, you stick to your refi budget, sell it at the expected ARV, and sell it within six months. More realistically, you'll go over budget, over time, and sell for less than you expect, and you'll be doing good to make a 15% of ARV profit.

A cheaper alternative may be hard money. However, if the HML will go 70% of ARV, you'll still need about 10% of ARV for other costs. Closing costs, points, interest payments, and holding costs would have to be covered on your own.

Many HMLs are only doing 80% or maybe 90% of purchase plus rehab.

Wholesaling may be a way to do it. It work, and I think a lot of people try with little success. But some folks seem to make it work.

Do you have a job where you could scrimp and save up $10K? If you can do relatively low priced deals, that might be enough to get started. How about a second job? Anything personal you can sell, or bills you can eliminate.

You can also try for creative deals with the owner. Find a desparate owner with a junker property and offer to fix their place and then get a share of the profit. You want to get a deed up front so you don't do a bunch of work and have them flake out. Split the net profit on the sale 50/50, then have them reimburse all your costs out of their half. That would mean you would need to be able to come up with the fix up cash, but it avoids money costs on the property itself.

In other words, wholesaling, birddogging, and for that matter, fix and flipping is a JOB. They're not "investing". No issue with that at all, but if your goal is to generate some cash to invest (buy and hold) or to fix and flip, you really should ask if that's your best approach. Loral Langemeier calls this your "fastest path to cash". These real estate related jobs may not be your fastest path to cash.

They do have the advantage that you're in the business. You're making contacts and starting to make deals. Its a way to see a lot of properties and learn what's a good deal and what's not. Bird-dogging and wholesaling are relatively low risk. Odds are you won't lose much money. Not really true with fix and flipping. Buying the wrong property can end up costing you a BUNCH of money.

If your goal is to generate some cash, you may have other options that generate more cash faster than these RE related jobs.

I started out in a similar spot and found money partners - I gave them 50% of the profit - I did all the work and if a deal went sideways made sure they got paid anyway.

If I were you I wouldn't be stating my terms - i would be accepting others terms to just get some deals done.

All of your suggestions and advice are extremely appreciated and vauable to me.
In response, i hope that my OFFER is viewed as just that an
OFFER and not hard line terms because i realize i am not in a position to make any such demands. i will undoubtedly consider any counteroffer from any interestred partner.

in consideration of some of the advice given, i accept that i am actually looking for a money partner to assist me in getting the ball rolling. And to expand on the comment made by
Eddie Ziv, there are actually several gold mines here in alabama! Tuscaloosa,Selma, Montgomery and Valley Grande are just a few.
in towns like Uniontown which are more rural it is not my goal to make these my sole markets, it is just one of the places to start and eventhough the property values are lower in such towns the margins are there as well as investor friendly mayors that are seeking the assistance of outside influences to help them make their towns more attractive to companies that create jobs by opening busiensses in these areas.
the thing that i bring to the table is my ability to provide the financing for the conventional and fha buyers as well as by and sell the notes for the seller held transactions in addittoin to the contractors, plumber,electricians and such that i have on the sidelines. My relationships with the local real estate agents will help to provide potential buyers. i am also becoming somewhat of an expert in these areas i have mentioned. my contacts are spreading out in the bham area also, i have some real estate people in the bham area and i am somewhat familiar (there are one or two properties out there i maybe able to secure in bham) with the market there as well.

i work everyday at my alternatives and i feel this topic is doing just what i hoped it would do, that is bring forth ideas and solutions to the challenges that i am facing here in this state with my situation.
i have had some attractive residential as well as commercial proposals thrown my way... i have even gone into negotiation to buy some and so far non have actually closed, but i AM still going at it daily. at this point i feel that a money partner would be an important addition to this puzzle. after i establish that i believe there will be momentum, and from there i feel i can get on the right road then work my way to the fast lane.