BiggerPockets

Here's a few ideas:

1) Owner financing. Get the seller to provide financing.
2) Hard money rehab loan. Buy the property and get rehab money using a hard money lender. Fix it up, get a tenant in place, and refi.
3) Subject to. Keep existing financing in place and take over payments. Not entirely comfortable with they myself, due to risk of having the loan called, but I know someone who has a bunch of these.

Jon

Owner financing. Get the seller to provide financing.
2) Hard money rehab loan. Buy the property and get rehab money using a hard money lender. Fix it up, get a tenant in place, and refi.

Those are solid ideas. I too am not quite comfortable with sub2, but many investors do it. I know a guy who closes houses at his kitchen table (so he says) - that makes me a bit uneasy to put it lightly.

Only do a deal if you are comfortable with it - play around with the numbers until you have worked a deal that you can sleep comfortably with.

The hard money loans are every bit as legit as a loan from a bank. I work through a mortgage broker. He takes care of all the paperwork - deed of trust that shows me as the grantee, promisary note between me and the borrower, makes sure I'm named on the insurance, orders apprasial and gets everything through the title company.

The deed of trust gets recorded. So, the property is the collateral. I will only take first position. I get a title policy paid from the title company that ensures I'm really in first position.

Your credit and cash reserves do matter.

The deal itself matters a lot. The broker will get an apprasial. I'll look at that and the comps the appraiser selected. I'll also look at the title company records for other sales in the same area and make sure the comps are representative. The max LTV for the loan vs. the appraisal is 70%.

I'll inspect the property before closing, and consider your list of repairs. I hold back the money for the repairs and only release it as the repairs are completed. I'll want to see release of liens from any contractors you've had working on the place. And, I'll want to see receipts for the repairs.

The loans are only short term. Six months, typically, though they're typically paid off in three. If you don't pay, or don't pay off the house at the end of the loan term, I will foreclose. If I've done my homework correctly, I'll take possession of a house that still at a decent value.

Hard money loans do not require 30% downpayment. They do require a 70% or lower LTV. But, unlike conventional loans, the value is the after repaired appraised value rather than the purchase price. If you find good deals, you should be able to find a hard money loan that allows you to acquire a property with minimal cash out of pocket. I will close on one next week where the purchase price plus rehab is 63% of the ARV. That allows enough room to get the points and closing costs into the loan.

I've heard a lot of talk about unsecured lines for buying property. I've yet to hear about someone actually getting a 100K line of credit, let alone 300K or more. Can you realistically provide such a line of credit? There's a guy who runs around in our REIA claiming this, too. But, in addition to the interest you pay (not cheap) he gets five points every year you have the line. And, his points are based on the line amount, not what you actually borrow.

Yes, and only through a broker. I want to be able to look at the properties and do my own assessment.

So what is " hard money" actually called? How do I find someone locally that does these type of loans? I have bought 2 houses on credit cards where I can get up 30+k direct deposited to my checking at about 5.9%, but I'm looking for other possiblities. The 30K doesn't leave much money left for the rehab and holding costs on top the purchase price of the property.

If you want to be successful in this business and own several rental properties you need to learn how to avoid the banks.

You need to do owner financing and subject-to's.

Trying to put 20% down on properties is crazy and would take forever to build your empire.

Also, with subject-to and owner financing you will always want to go to a title company and have them do the closing, I would never do a kitchen table closings.

Remember, we are " creative real estate investors" that is why we don't use traditional financing.

I don't think you need to buy at 70% of a discounted value, rather, I would recommend that you buy at a wholesale value, 50-60%, in an area of town that you know, through some help with a realtor and MLS data, that the rents and values have not dropped as much as in other parts of town.

With gas at $4 a gallon, it does not take a rocket scientist to figure that if there are more jobs downtown, people will want to live closer to downtown. So look for areas of town that are more desired now. If you have to drive 30 miles each way to a job, and your neighbor is in the same boat, you can get a heckuva deal on the property (supply and demand), but you may need to be able to hold onto it for the next business cycle.

Hard Money is everywhere these days. Just look at the stock market, unless you short stocks for a living, most stock market jockeys are looking around for 12-15 percent returns through investors. Check out your local Real Estate Investment Association for other fellow investors. Look in the newspaper, under the section, Investor properties, for these hard money people. They are there and they need you to put the money to work for them!

If I would be wholesaling properties, how would it work if I were to do owner financing or subject-to's. I would think that in order for them to let me do anything to the house that they would have to own it free and clear. Am I wrong. I am trying to find the best way to get into wholesaling.