Find funding first, or get a contract THEN find funding

14 Replies

I'm a little confused as to which step I should take first..

1) I could talk to a few mortgage brokers in the area, tell them roughly the amount I would be buying a property for, and see what kind of financing I could get..or

2) There is a great deal near my house that I will be getting a call about either today or tomorrow. If it is as good as it sounds, I want to fax the guy a contract that would be contingent upon me getting favorable financing and complete inspection of the property

This is the problem. I'm only 20, have very little money, and although my credit is very good for my age, it's probably only about average..which would get me nowhere with a bank. I would pretty much need to get 100% financing on about a 130k property and have the seller pay closing costs and attorney fee's (which I would put in the contract)

I have enough money to get an appraisal, contractors inspection and those types of things..but after that I would be broke

If anyone can advise me on what would be good to do, please let me know ...thanks in advance

In my opinion find out how much you can affford to buy then start looking. There is nothing worse than to look at homes and find out you can only get a loan for less than you have been looking at. My standard practice is that if a buyer does not get a full preapproval from a lender I will not go out looking a second time. It just proves to me that they are looking and not ready to buy as they not taken the proper steps. A preapproval does not tie you into one lender you can still loan shop but it gives you a price to look at.

I would recommend going with a good local mortgage broker and checking with either Countrywide or Wells Fargo also. The mortgage broker that I deal with has about 350 lenders. He's not always the lowest if I have someone with a great credit score and down payment money countrywide normally gets the loan. When someone is under a 700 score or needs 100% the broker normally wins. Get some referals from realtors on people that they trust some brokers will rake you over the coals (as will some real estate agents)

awesome..thanks for the advice

I'm going tohave to check and get my credit score...i'll have to see what is the best route to take in regards to getting that done. Plus I just found out that my dad knows a retired investor fairly well ( i just saw the guy yesterday actually) i'm going to call him and take him out to lunch and see if he can mentor me a bit, and hopefully he knows some people in the area

Also, I'm signed up with Pre Paid Legal for both ID Theft and their regular plan..and for my ID theft I got my score from experian 4.5 months ago

It says that my experian credit report is 672 on a scale of 150-930 (I thought it only went to like 800?..can anybody explain that?)

Also, thats when 1 of my cards was just about maxed out. I'm also (in the next few days) going to be put as an authorized user under 1 or 2 of my dads credit cards so it will seem as if I had all those years behind me so that'll help

So all in all, 700 should be coming up pretty soon

Originally posted by "jimmyolsenblues":
I just simply don't believe anyone could begin investing in real estate with zero credit, zero dollars, and zero help.
Save, Repair Credit, Get a prequalified loan letter, then go get the absolute best deal.

There's alot of things that alot of people thought couldn't happen. I'm not trying to be a wiseguy...but ANYTHING is possible. ESPECIALLY in a field like real estate. Just matters how much you want it thats all

Plus I never said I had zero credit (it's average)..I don't need to repair it, I just need to be alive longer lol. I have enough dollars for some professionals to check the place out, and I have help (realtors, this forum, books, audio cds, etc.)

Really the only problem is money..but there's always ways to come up with money if ya try hard enough

have you ever considered partnership financing for your first project? I'm not exactly sure what area of real estate you want to go into, but I have been in contact with people who will offer partnership financing. That way, you do not need to borrow as much, and it is realatively easier to get loan approval. It's worth looking into comming from another young person (24 yr old) starting up in real estate

Good luck!

Yea I've thought of and my brother will most likely be partners actually b/c he's getting into RE as well

I'm looking at a duplex in my area for 33,'s renting right now for $415 and the other side is vacant b/c he just had to evict them for not paying. The tenants in the side thats rented have been there for over 7 years

I'm meeting with the RE agent next week sometime to look at it..I just have to call her back and let her know when its good for me b/c I have school and work

If nothing else, it will be a good experience with me to tell her what kind of properties i'm looking for so she could remember me and maybe let me in on a deal coming up in the future

Here are some facts about the property i'm looking at

Rent right now is $415 total.
Vacant side was renting for $350 but i'd do it for $400 (other side is a tiny bit bigger)
Owner pays gas (1800/year) Tenants pay everything else
Taxes $1214/year
Insurance would be cheap. There's no weather hazards here
He's motivated (getting divorced and selling all his property in the area)
2 bed 1 bath
1460 sq. feet

All in would negative cashflow right now, but if I get him to fill the spot before I buy I would be taking in 200-300/month depending on financing and other costs

I'm not gettin my hopes up too high. If there's nothing majorly wrong with it repair-wise I might send in an offer for like 28000 or so since it would negative cashflow right now. If he accepts, great. If not I won't worry about it.

Others with the same square footage in the area are selling 55-70k

Reeveso, from one investor to another - don't give up and don't listen to the naysayers. You have to believe in yourself and what you are doing because as you can note from some of the posts - there will always be people telling you can't or wait . . . Of course, you need to educate yourself and be wise - but sometimes you have to take risks in life and learn from our mistakes. Other times, we can advoid those mistakes by learning from others. Bottom line, you can do it. BTW - I have a great broker that offer 95%/100% for 660middle/680middle respectfully. I can hook you up if interested, of course you need to budget for closing costs, broker fees, T&I.

Happy investing!!

thanks southern cal...i'm glad to hear some1 else thinks that besides me lol

The people who say some1 can't do something are the people who give up on everything and probably have tried and failed at whatever they're saying doesn't work. Either that or they are just ignorant and never tried :goofy:

I'm meeting with the real estate agent on Tuesday to look at that house and a few others so i'll get back to ya after Tuesday

I think i'm going to have a harder time coming up with money for an appraisal, contractor inspection, mortgage broker, etc. than I will getting the financing lol...but if this is a good deal i'll find a way. I'm going to put in my contract that the seller pays closing costs and hope that he accepts (which he should cuz hes motivated)...but we'll see

I can normally get a property sold if the buyer has 1000.00 cash. The seller paying closing costs is all a matter of price. If their bottom line is 100k on a property and you need 3% for closing cost you will need to pay 103k they net the 100k they need and your closing costs get paid.

yea I figured that the other option I would have is just adding it to the selling price...however, i'll try to get him to pay the closing costs first anyway. He's motivated so it might happen :)

You can get a price under list and paid closing costs it all depends on how motivated and how much over their bottom line is is listed for but the money has to come from somewhere.

yea i know...when i meet this lady on tuesday i'm goig to try and find out what he's got left on the mortgage and try to see if i can work something out

There are alot of programs for 100% financing nowadays, and for a 30k property financing shouldn't be a big issue. I could pay for all of it even with NO rent coming in

I can even apply for an FHA loan since it'll be my first house...and just do the 3% down which would be 1k..i could come up with that