Re: Investor Advice for Starting Out

[Dominique Myles]

Good Afternoon,

I am a teacher interested in entering real estate. I have a two year goal that I have set for myself to save a least $40,000. However, a colleague of mine recently advised me that she was told that money up front was not necessary in order to turn an immediate profit. She mentioned to me that an individual that she met advised her to get a list of foreclosures, contact interested investors, and simply act as a "middle man" between the investor and the homeowner. She would be responsible for securing the transactor for the investor and helping to relive the owner of the soon to be foreclosed property. She would be able to "write in her transaction fee" for 10k or so dollars. Is this true? This sounds rather too easy, and if so, why aren't there many other investors participating in this sort of deal?

Thanks in advance for your feedback! It is greatly appreciated!

[Bill Gulley]

Been having BP site problems Steve, but there is so much bad stuff posted it's hard to keep up.

@Dominique Myles 

you got some poor advice, not only does TREC hammer unlicensed RE activities, targeting foreclosures is really a bad idea for newbies. Recent federal law targets those who advise or offer some method or to buy properties to save the owner from foreclosure after notice has been given. Only an attorney or someone with a HUD credit counselor license may discuss or advise owners in foreclosure.

Banks are involved, any attempt to delay or interfere in any way with a bank foreclosure is another violation of federal law.

Consider what can happen once a bank finds out that the copy of the contract they got was bogus, from someone who didn't have the ability to buy, that attempted to assign that contract. The bank sees that as interference and it is, while a lender won't really stop the FC process (but they might) knowing the property is to be sold, they will change how they treat the matter and their FC process, that ends up being additional work, time and attention.   

99% of investors I see on here talking about chasing foreclosures seem to be totally mislead. Guess it's based on the perception that borrowers are desperate (they may be) but that doesn't mean there is a deal there. They also have no clue as to what a lender does in the FC process which means they have no clue as to what to do and not do that may interfere.

If you don't have cash to buy or are certain that you can obtain cash within the timeline required, you will be interfering.

Besides, most foreclosures don't have enough equity in them to make them the deal gurus like to impress you with. Once you contact that owner and begin your ploy, you'll likely be in violation of law before you ever find out that there isn't enough equity to mess with it, if that owner talks to their attorney about you being interested, you can had before you even contract!

As a teacher, you don't need to be charged with a felony! Even if you don't get the max of $100,000 in fines and/or 10 years in federal prison, just a plea deal that lets you off easy may well cost you your job!

RE is serious business, newbies need to stop treating the business with such a casual approach as if they are selling widgets out of the back their your car. :)