Whether you are new or experienced in real estate you should have a seller proof offer or LOI. Do you want to acquire the property on your terms or theirs? Do you have enough information? Have you done your homework? Have the intel?
Here are some steps you can take to guarantee you not just acquire the property but you have no issues with closing on it?
- Have you consulted with your Private or Hard Money lender or their broker? Before making the offer?
- Do you have the required funds on hand or with a seller carry to take to the closing table?
- Do you have a solid as is and ARV appraisal?
- Are there any issues with the title?
- Do you have hazard insurance?
If you have those here are some things to think about including in the offer or LOI?
- Multiple offers in the same document. A low ball all cash with 2 separate seller carry. You can pay a smaller down with interest only and a balloon allowing a sale, a reposition or a refi in a specific timeframe or maybe even no down with a larger seller carry and balloon. This really works well when buying from a tired landlord who may still want a monthly check.
- Include contingencies for inspection and financing.
- If this is for multi family you will need 60-90 days for financing, due diligence and inspection of the property. Ask for 99 days before the money goes hard. Close in 120.
- Have you obtained a Collateral DNA Report yet?
Your LOI should also be written so it's easily received, concise and professional. You want them to think you're an expert who has done this 100 times. For simpler SFH transactions you want your approach and offer to be respectful regardless of the seller's circumstances. You cannot afford to look like you're low balling the property even if you are. They're problem or reason for selling isn't yours but still write your offer showing respect for them. Make them believe you are on their side.
I like your post about a strong LOI.
I am new and would like to get absolutely ready to start making offers with real estate agents. I'd like to know how can a new investor get a lender in line if I have not had experience or cash. What are the steps I need to do to be lender ready?
Also, what is the difference between a hard money lender, a Private Money Lender, and a private individual that is willing to lend money to a trusted developer? Thank you very much.
I always recommend networking with those that already do this. You'll find that the Multi Family community of investors is very newbie friendly. They want to bring new people in especially if you have a skillset or can add a value to their existing team.
I really enjoy working with new or less experienced people. I find it enjoyable when I see someone get their first deal accepted, then funded then they become an owner/operator or a flipper.
I think it's important to stress that there is a lot of information out there for free by being on BP and using google or bing but you should look for people who are willing to teach your or mentor you. Sometimes there is a cost to that. But that cost is less costly when they've made the mistakes and you don't have to.
Hit me up anytime!