BiggerPockets

Hi everyone,

I am a newbie to the site. I have been searching the forums for about a month or so. Great Site!

For a few months I have been aquiring buyers and researching houses with the plan to wholesale them. Finally I feel like I can begin to consider making offers. My question is what can I expect when I have no money? My income is around $30,000 a year and I have little money for down payment. I know pre-foreclosures are the best way to go for my situation but should I even consider REOs or foreclosures. Will an offer even be considered by a bank? I am looking at houses from $40,000-100,000. My goal is to get I deal completed within two months.

Thanks!

Eric,

Its going to be a while before your ready for bank REO's. You might need to assign contracts for a while which will be very difficult. Keep with it, otherwise find a money partner and go for the bank owned deals.

An excellent point James. Reputation is important and the ability to get it done and close is JUST as important as finding the deal & negotiating it.

I actually was looking at expanding into McKinney a couple years ago.

I'm going to split from the pack here and advise that short sales and REO's are NOT the best way for you to start wholesaling.

The best way for you to start in McKinney with $0 is to start driving older neighborhoods looking for vacant houses and tracking down the owners and asking them if they want to sell. I would also start dissecting the newspaper and cheap classifieds.

In the meantime cut your expenses and start saving money for your business. Making $30,000 a year is no excuse to not have a couple thousand dollars saved up. Living above your means will cost you financial security, and making more money will not solve the problem. You can be broke at any income level. No matter what your income is, you should be saving money. Even $50 or $60 a week will start adding up, and more importantly it will teach you how to live below your means. I'd recommend you read The Richest Man In Babylon. Great book on financial intelligence.

Ryan, where are you in Texas? I've been looking at Lewisville, The Colony and McKinney.

I work as a server so my money fluctuates as I decide how much I want to work any given week. I have about a $1000 right now but I agree Ryan I need to cut expenses. Thanks for the book recommendation, I'll check it out.

As for Comps on surrounding neighborhoods, I know a few realtors but I have also been researching them myself. I once read in an article or post that a way to spot a great deal is to pick one neighborhood and become an expert in it.

Thanks.

I'm in Amarillo which is in the Panhandle.

I would start with lower end, older areas. Areas that have plenty of equity but stay away from absolute war zones. From what I remember of McKinney I don't think you have any war zones.

You absolutely need to learn your farm areas like the back of your hand. Pulling comps is the most accurate way to compare values, but I would also research every for sale house or rental in the area. Know how long they take to sell at what prices, how nice the houses need to be, if they need tile, or vinyl, or central heat and air. What are the rents for a 2 bedroom or a 3 bedroom?

Well congratulations on taking action my question for you is why if you have no money would you consider reo's? you have to put deposits down and possibly fund the deal. And with pre-foreclosures your in most cases going to have to work a shortsale. Is that what you plan to do? If you want to wholesale and don't want to put any money out of pocket you need to consider dealing with homeowners with equity. trust me there are tons out there contrary to popular belief. go after motivated sellers like tired landlords, probates, recent evictions, code violations ad so on. when your wholesaling you have to find people with equity that's the name of the game so you can buy them under value and flip for a profit.

Brian Haskins

Brian,
Not sure I agree with your comments. Dealing with pre-foreclosures (short sales) can get an investor into and out of deals with no money out of pocket. REO's can be done with private money or jv partners. While that is certainly a more advanced strategy, it is also obtainable for even the newbies.
Just my opinion.

I have not done any short sales but it kinda sounds like a scam. I would check to see if the person is actually on the deed. I can see someone offering a property cheap, getting your deposit and splitting. I could be wrong though.
Anyone on doing shorts?