BiggerPockets

I run my own business and i make good money about 8-9 k a month. I save most of it cause my bills for the month are 1000 dollars. I have about 200k saved and i want to get into rei but i seem to scared to deal unless it too good to be true so i end not doing any deal. Well i am getting tired of that! Is it smart for me to buy a house not at a crazy discount and just buy it rehab it and sell it and even if i break even that will get me out of my hump and i learn some rehabbing tools as i go along. In my eyes even if i break even i will have learn so much by the process . Is this a smart way to go? I was thinking about purchasing a hud home to start.

Having cash is KING in this market.

Think of it this way, you go to a retailer and an item you want is on sale. You know that a fair price is $100; but you know (a) the retailer is hurting for sales (distressed) and (b) you have cash.

He has it on sale for $90. You already know right off the bat that it's a good price, but since you have cash, you offer $60.

That's the essence of this current market. Now just add a few 0s to my example.

Thanks for the replies . So i would acquire the property according to him and give him 10 percent. I really want to get started. Been ready! I would want the property in my nAme correct. Man when it comes my wholesale business i know the INS and outs, but the real estate game is a doozy!

I agree with Jon, Get your money working either as a hard money lender or partner with someone first to get some experience.

If you're making a loan secured by the property, it will be in the rehabbers name and you will have a deed of trust (or mortgage, depending on the state) on the property. He will own it, but you will have a security interest. If he doesn't pay off the loan based on the agreed-upon terms, you could foreclose and take it away. A rehabber would probably be unwilling to do this deal if you insist in the property being in your name. Too much risk on his part.

Typically, you would get an appraisal by an appraiser of your choosing. The appraiser would consider the proposed repairs to come up with an ARV. You could then lend based on that. 65-70% would be most lender's maximum. Or, could could lend based on the purchase price. In any case, you want to borrower to have some money in the deal.

well, if you end up losing x amount of dollars on your first deal you may be out of the business for good or decide that you need to get that money back and take an even bigger risk. I was of the same mindset about a year ago...ready to flip houses. I was looking at all the wrong houses in the wrong neighborhoods and had the wrong agent. Finally, I decided to become a private lender to a local company and completed four deals(3rd closes next friday and 4th just went on a market monday) this year. This is how I am learning the business and making a nice percentage on my cash as well. I have partnered up with another local investor and we closed on a house about a month ago and am learning a ton from him. Think long term.