Right Or Wrong Steps?
Hi everyone I need some help and your opinion on this. Please educate me and leave any suggestion or comment for me. if you think any section or step is useless please tell me. and if you think I need more detail in a step please add on it thanks alot. here what i got so far if any additional step are needed please add them in for me.
Step 1: Get Educated
Step 2: Commit Myself To This Path and Go For It. Write down a plan and follow it
Step 3: Get professional help (attorney,CPA,Title Company)
(for this I was wondering do I really need these people? If I do how much would they cost averages? and how would the pay goes like would I have to pay them monthly or pay them for every transaction?)
Step 4: Set up a corporation,LLC or whatever mine CPA or attorney recommends. (Do I really need to set up a corporation?)
-usually need to open up a business checking account
-pick out a company name
Step 5: Investigate before Investing
- Look for one or two areas with low-to-mid-priced home values
- Look for sale signs. Write down their phone/other infomation. Call each agent or homeowner and make an appointment and find out what homes are selling for in the area and always ask the real estate agent how much other homes have sold for in the area. Get actual sales figures.
Step 6: Look for funding sources
-Private Lenders or Hard money lenders at 16% interest if possible
-they will hold a first mortgage on any property they fund and I'll sign the deed over to them for their attorney to hold in escrow.
-tell them I'm looking for no more than 70% of the after repaired value of the property.
-every property will and should have a clear title and hazard insurance, so they are fully protected
-ask them how much money would they be able to set aside for this and how quickly the money would be available (or how ''liquid'' they are) when I have a deal
-as backup I should line up some good hard money sources and private lenders
-always borrow more money than actually need. so I can pay the monthly interest payments by increasing construction/repair costs the equivalent of two to three month of interest payments.
For example, if I purchase a property for $60,000 and total repair cost $30,000 the total amount I need is $90,000. Monthly interest payments based on a rate of 18% will be $1,350. 1350 x 3 (months) = $4,050 so I should ask my contractor to increase his bid to $34,050 so lets say around $35,000. $95,000 x .18 (18%) = $17,100 in interest. $17,100/12 (months) = $1,425 per month interest. $1,425 x 3 = $4,275 so that I wouldn't have to take any money out of my pocket if the house should take long to sell.
Step 7: Start Looking for properties from REO, foreclosed, pre-foreclosed, etc.
-always know my profit. never make an offer unless I know my profit ahead of time or right up front. If I'm not sure, don't make any offer. Determine that I'll make at least 30% Net profit before I buy.
Step 8: Make My Offer
-always offer a lower figure than the "asking price" so the seller doesn't think they're selling too low
Step 9: Sign The Dotted Line
-Sign all paper work that needs to be signs
-Once I have a signed contract, ask them if they have an attorney they prefer to use if not I should help them find one.
-Fax or drop off the contract to my attorney and let them know who the seller's attorney is
-Make sure there's Clear Title
-Once everything is agreed to, have my attorney order Title Insurance and a Survey so it protect me if any old judgments or liens show up after closing also will need to know the name of lender before they issue the insurance
Step 10: Line up the money for the deal.
-Once I have a clear title give my attorney or settlement agent the investor's name so they can put it on the title so that it protects my lender in case the loan goes bad
-Call my investor and let them know I'm buying a property. Give them the property address so their attorney can make up the mortgage and note and give them my attorney or closing agent's contact information
-Make sure I get enough money to do the entire deal and not just enough to buy the house
Step 11: Choose My Contractors
-While I wait for closing date, bring my contractors out to see the house (if repairs are needed). Do Not give the entire job to a single general contractor instead hire a carpenter for carpentry work, an electrician for the electrical and so forth.
-Do whatever repairs make sense for my market, for the price range of houses in the area. Don't do more than needed it's not my home.
-Get repairs lined up and do whatever needs to be done to put the house in an attractive, sellable condition and not a penny more.
Step 12: Find buyers
-Get buyers lined up and collect their infomation this will give me a buyers list so I can tap again and again. Offering to pay closing costs is an easy way to get a lot of people on my list, fast (not required)
Step 13: Protect my lender and myself
-Once the title search is finshed and the title is clear with no liens or judgements, it's time t order hazard insurance. I will need to give the insurance agent the name of the lender so that he'll be insured in case of any type of liability
-Once I have the policy, have it send (along with the Title Policy) to the lender's attorney, so she can prepare the loan documents.
Step 14: Close the Deal
-At closing, I'll sign a Closing Statement showing all the fees involved in the transaction (for attorneys, title insurance, survey, etc.)
-I'll also sign mortgage documents (or deed of trust, depending on state) including the note
Step 15: Pre-Approve My Buyers
-Make sure they can get approved on a mortgage right away! Ask them if they have a Pre-Approval Letter. If not, tell them to go and get one from their bank or mortgage broker today.
-Find out if they have an attorney or closing agent they want to use, if not agree to both use my attorney.
-Send the attorney/closing agent a copy of they contract and pre-approval letter
-Have the buyer put down a deposit about 5% of the purchase price
-Once I have a contract and downpayment, make sure my buyer can get the money. Take control of the paperwork process immediately and secure 5% total downpayment.
Step 16: Seal The Deal
-By this time I should have a contract with a qualified, pre-approved buyer with at least a grand down.
-It's my job to get the repairs done as quickly as possible so I can close the deal
-Have the buyer get involved in the repairs and upgrades because it's their house so that they can take mental and emotional ownership the more they are emotionally involved in making it "their home" the more copperative they'll be if any problems arise.
-Once repairs are done walk through with my buyer and make sure that everything I agreed to has been completed satisfactorily. Have them sign off the repair list showing their satisfied.
-The buyer should let his mortgage agent know the house is ready for an appraisal, and they'll send out an appraiser
Step 17: Step on top of everything
-Call my buyer as often as necessary and make sure they get everything the mortgage company asks for.
-Make sure the buyer's attorney has ordered title, and that the buyer has gotten the hazard insurance.
-Once the loan is approved the mortgage company will contact the buyer's attorney for a closing date, and she'll contact my attorney to schedule one that works for both parties.
-Call my investor and ask them for a payoff letter for that date showing the total amount owed and a discharge of mortgage or deed of trust.
-My buyer and I sign a new closing statement and other documents and I'll receive my check.