How do you find properties to rehab?

I buy some with cash, and some with financing from local banks.

The properties I buy with cash are those I expect to hold for a short period of time (or have thinner margines), and would prefer to save the costs associated with originating a loan.

I will also buy with cash anything that I plan to owner finance for more than a year.

The rest I buy using financing; the banks I work with will finance the purchase and the rehab costs for up to 12 months interest-only at 6.5%, so that's a good option for my typical flips.

Edited: 06/26/2010 at 08:58AM by J Scott

Corey Demuth

Real Estate Investor · Queens, New York

356 posts
1450 Influence
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Icon_minipost Jul 14 '09, 05:35 AM

Originally posted by J Scott

The rest I buy using financing; the banks I work with will finance the purchase and the rehab costs for up to 12 months interest-only at 6.5%, so that's a good option for my typical flips.

How the hell do you get that deal?

Edited: 06/26/2010 at 08:58AM

J Scott

Real Estate Investor · Atlanta, Georgia

6088 posts
66759 Influence
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Icon_minipost Jul 14 '09, 05:52 AM

Originally posted by Corey Demuth

Originally posted by J Scott
The rest I buy using financing; the banks I work with will finance the purchase and the rehab costs for up to 12 months interest-only at 6.5%, so that's a good option for my typical flips.

How the hell do you get that deal?

Great credit, strong business plan, proven track record and a personal guarantee against my assets...

There are plenty of small banks out there that will happily work with investors and provide great terms...you just need to find them and prove to them that you're a good investment...

Edited: 06/26/2010 at 08:58AM by J Scott

Eddie Ziv

Real Estate Investor · Studio City, California

1803 posts
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Icon_minipost Jul 14 '09, 06:15 AM

I work very similarly to J. I buy cash, only MLS and only REO. If you take that rout, you really have to be familiar with the geographical areas you are buying in. Wells Fargo offers 1st + rehab loans but they have stringent rules with regard to contractors you hire (Which makes it quite expensive) and the whole process is lengthy and tedious.

By the way, J. Scott. Who is you banker? I would love to have a deal like that.... :wink:

Edited: 06/26/2010 at 08:58AM

J Scott

Real Estate Investor · Atlanta, Georgia

6088 posts
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Icon_minipost Jul 14 '09, 06:52 AM

Originally posted by Eddie Ziv

By the way, J. Scott. Who is you banker? I would love to have a deal like that....

Eddie -

I *was* using two banks in the Atlanta area, each with pretty much the same financing terms...

One was a national bank (Omni National Bank), but went out of business a couple months ago, so they're not longer offering financing.

The other is a local bank (Quantum Bank) that only finances in the Atlanta metro area, so I don't think they'd help much out where you are.

Edited: 06/26/2010 at 08:58AM

Eddie Ziv

Real Estate Investor · Studio City, California

1803 posts
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Icon_minipost Jul 14 '09, 07:36 AM

Most of my business is done in Alabama. Do they work in Alabama? Most regional bank work in several states if they are in the same region.

Edited: 06/26/2010 at 08:58AM

J Scott

Real Estate Investor · Atlanta, Georgia

6088 posts
66759 Influence
13 Awards

Icon_minipost Jul 14 '09, 08:08 AM

Originally posted by Eddie Ziv

Most of my business is done in Alabama. Do they work in Alabama? Most regional bank work in several states if they are in the same region.

I'll ask my loan guy. Because they inspect all the properties before and during rehab, I'm not sure they can handle stuff outside of easy driving distance, but I'll certainly ask.

Can you PM me your contact info?

Edited: 06/26/2010 at 08:58AM

Mike V.

Real Estate Investor · St. Louis, Missouri

183 posts
1546 Influence
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Icon_minipost Jul 14 '09, 12:03 PM

Mine have all been MLS, either REO or HUD. I used cash on one and construction loans on the other. Local small bank and I get a construction loan. I have to put 20% down of purchase price but then they will give me 80% of ARV for 9mo currently at 7% with one point. If I decide to rent the house I refinance otherwise sell and pay off the construction loan.

Edited: 06/26/2010 at 08:58AM

Scott M.

Real Estate Investor · Rochester Hills, Michigan

632 posts
4345 Influence
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Icon_minipost Jul 14 '09, 12:13 PM

When I first started 100% from the MLS.

Now about 50% from the MLS and 50% from my network.

Edited: 06/26/2010 at 08:58AM

Corey Demuth

Real Estate Investor · Queens, New York

356 posts
1450 Influence
2 Awards

Icon_minipost Jul 14 '09, 10:30 PM

What happens if your credit isn't amazing so at the end of the hard money loan term, you have difficulty getting a refinance but you haven't managed to sell? Just want to know what all the potential pitfalls are!

Edited: 06/26/2010 at 08:58AM

Bryan Stanton

Property Manager · Atlanta, Georgia

7 posts
42 Influence

Icon_minipost Jul 14 '09, 10:54 PM

We also use the MLS - REO and HUD. Recently we picked up a couple from the courthouse steps at 40% of TDM (Today's Market Value). Over the past year or so the courthouse steps wasn't the best place to pick up property but, maybe this is a sign of a new trend. We try to use all cash or Hardmoney.

Please keep us in mind for your Atlanta area property management.

Edited: 06/26/2010 at 08:58AM

Jon Holdman

Real Estate Investor · Denver, Colorado

11859 posts
75547 Influence
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Icon_minipost Jul 14 '09, 11:38 PM

Originally posted by Corey Demuth

What happens if your credit isn't amazing so at the end of the hard money loan term, you have difficulty getting a refinance but you haven't managed to sell? Just want to know what all the potential pitfalls are!

You would first try to negotiate an extension with the lender. You might get a month or two, but might have to pay a point or two for the extension in addition to the interest. If that doesn't work, or when you run out of extensions, you do a deed in lieu of foreclosure and hand over the property to the lender.

Edited: 06/26/2010 at 08:58AM

Jon Holdman, Flying Phoenix LLC

Matt Kearney

Real Estate Investor · Springfield, Massachusetts

138 posts
1292 Influence
3 Awards

Icon_minipost Jul 27 '09, 07:55 AM

I purchase all our properties directly from the sellers. I buy alot of short sales, fire damaged properties, condenmed homes and probate deals.
I have never been able to get a good deal off the MLS.. all the REO's in the neighborhoods I like to buy in sell very quickly with multiple offers. Too much competition.

When I buy from the individual sellers there is usually no competition, I'm the only game in town, and I can make some fantastic deals :D

Edited: 06/26/2010 at 09:08AM

Rodulfo Hernandez

Real Estate Investor · Ewa Beach, Hawaii

1 post
29 Influence
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Icon_minipost Aug 15 '09, 10:54 PM

Originally posted by J Scott

Originally posted by Corey Demuth
Originally posted by J Scott
The rest I buy using financing; the banks I work with will finance the purchase and the rehab costs for up to 12 months interest-only at 6.5%, so that's a good option for my typical flips.

How the hell do you get that deal?

Great credit, strong business plan, proven track record and a personal guarantee against my assets...

There are plenty of small banks out there that will happily work with investors and provide great terms...you just need to find them and prove to them that you're a good investment...

Jason,
Is it possible to get a copy of one your business plans for real estate investing or do you have any tips on writing a succesful business plan?

Edited: 06/26/2010 at 09:22AM

J Scott

Real Estate Investor · Atlanta, Georgia

6088 posts
66759 Influence
13 Awards

Icon_minipost Aug 15 '09, 11:57 PM

Originally posted by Rodulfo Hernandez

Jason,
Is it possible to get a copy of one your business plans for real estate investing or do you have any tips on writing a succesful business plan?

Shoot me a PM...I'll send you a copy of the business plan...

Most of the info is on my blog as well...

Edited: 06/26/2010 at 09:22AM

Jeff Johnson

Real Estate Investor · Young America, Minnesota

18 posts
151 Influence
1 Award

Icon_minipost Aug 16 '09, 02:06 AM

Originally posted by Matt Kearney

I purchase all our properties directly from the sellers. I buy alot of short sales, fire damaged properties, condenmed homes and probate deals.
I have never been able to get a good deal off the MLS.. all the REO's in the neighborhoods I like to buy in sell very quickly with multiple offers. Too much competition.

When I buy from the individual sellers there is usually no competition, I'm the only game in town, and I can make some fantastic deals :D

The question I have for this is how do you find the sellers? If they are not on the MLS? Do you advertise and have them come to you. Do you have such a large network of people that you know when there is a distressed house in the area?

Edited: 06/26/2010 at 09:22AM

Tony Walker

Real Estate Consultant · San Francisco, California

94 posts
711 Influence
3 Awards

Icon_minipost Aug 16 '09, 03:13 AM

Originally posted by J Scott

Originally posted by Rodulfo Hernandez

Jason,
Is it possible to get a copy of one your business plans for real estate investing or do you have any tips on writing a succesful business plan?

Shoot me a PM...I'll send you a copy of the business plan...

Most of the info is on my blog as well...

I would like a copy too, if at all possible. :D

Edited: 06/26/2010 at 09:22AM

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