OPEN MINDED INVESTORS??

General Real Estate Investing
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OPEN MINDED INVESTORS??

Anna Ahhee
Real Estate Investor · Moreno Valley, CA · Member since 2013 · 35 posts · 0 votes

Are there any cash investors willing to be open minded for future home owners? Meaning that, throughout my 4 years learning about Real Estate Ive realized that there are so many programs and strategies to help home owners losing their homes.. but what about people who want to own but credit is bad?? So after thinking about this deeply, Im now putting my focus on hard working people with low credit scores and trying to create a Lease Option program for middle class communities.

Iv worked with the City of Riverside for over 10 yrs and meeting people and helping them is so rewarding. Ive helped organize the well known Orange Blossom Festival Downtown Mission Inn, Toys for Tots programs, After School programs and so many other special events as well, and these parents have more of a dedication then others when it comes to buying a home.

So if anybody wants to hear more on what I have planned. Please send me a message and I will be happy to answer any questions that you may have!

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Jon Holdman
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
12y

Maybe its just me, but when I hear a phrase like "OPEN MINDED INVESTORS" my first thought is that you really mean "suckers".

These are high risk deals. Someone on the investor side is going to want a high return so they can bear the cost of the failed deals.

I strongly disagree with "the American dream of home ownership". I strongly believe that is a crock of bologna foisted on the public by people who make money from selling houses. It is absolutely no different that car makers or stereo salesmen (think Judge Reinhold in "Ruthless People") who say "you should buy this, you deserve it." Owning a house is expensive. Houses are just expensive doo dads. Many folks are ill-prepared for those expenses. Someone with bad credit and $300 in their pocket has no business owning a house. Someone who sells a house to such a person is, frankly, scamming them. Given the new legislation, I think others agree with me.

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  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    12y

    Yes, been opened minded more than you can imagine in those respects, the issue is that you're knocking on the door of seller financing to an owner occupant, not an area for the faint of heart, especially if the have credit issues. :)

    0Reply
  • Anna Ahhee
    OP
    Real Estate Investor · Moreno Valley, CA · Member since 2013 · 35 posts · 0 votes
    12y
    Originally posted by Bill Gulley:
    Yes, been opened minded more than you can imagine in those respects, the issue is that you're knocking on the door of seller financing to an owner occupant, not an area for the faint of heart, especially if the have credit issues. :)

    I fully understand that as well, but isnt there way to create a partnership of some type with a cash investor to purchase properties and use them as lease options. Of course requirements are given, such as employment being longer of 5yrs or amount of steady monthly income., etc...
    I have a large network of clients that actually work for different City Departments and can afford $1200-1500 a month but credit wise maybe in the high 500?
    Either way I am determined to make something work out for people with these issues.
    0Reply
  • Account Closed
    Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
    12y

    Anna,

    On your clients how much do they have to put down?

    Joe Gore

    0Reply
  • Anna Ahhee
    OP
    Real Estate Investor · Moreno Valley, CA · Member since 2013 · 35 posts · 0 votes
    12y

    Between $300 - $6000

    But I know of City programs or grants that will allow them to receive down payment assistance.

    0Reply
  • Account Closed
    Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
    12y
    With bad credit, they might need 10% to 15% down plus closing.

    Joe Gore
    0Reply
  • John Jackson
    Investor · North Richland Hills, TX · Member since 2011 · 789 posts · 403 votes
    12y

    We've worked with a number of investors over the years that used us for the exit strategy.

    You can certainly find cash buyers that will buy the houses and utilize your lease option program as an exit, but it's not as simple as that.

    It sounds like you are looking at doing this from the aspect of helping people, but something I learned early on was you have to get thick skin and also learn very well how to screen people and for a lease option to work, you really need to become knowledgeable in mortgage guidelines.

    If someone has $300 to put down, they aren't going to buy a house.

    From the cash buyer perspective, they need equity and a return on investment.

    Yes, we help a LOT of people with our LO program, but for it to work you have to approach it first from how to structure the lease option properly, which means the numbers etc.

    If you first approach it from how to help people with bad credit, you will get burned, and so will the cash buyer. Stinks I know, but that is the nature of the beast.

    Before you bother looking for cash buyers, learn all you can on LO's, which there is a ton here.

    I put up a post a long time ago about how to set the numbers on a lease option that you may find useful. I think you can just search for it on BP.

    0Reply
  • John Jackson
    Investor · North Richland Hills, TX · Member since 2011 · 789 posts · 403 votes
    12y

    Also, on the DPA, I would imagine it's the same as it is here in Tarrant County, where, in order to qualify for the available grant, there are 2 MAJOR requirements...

    1) the house has to be in a specific area (normally an area you wouldn't want to drive thru)

    2) The buyer has to QUALIFY for a loan

    0Reply
  • Darrell Shepherd
    Rehabber · Smyrna, GA · Member since 2013 · 864 posts · 510 votes
    12y

    First, keep in mind, there is a reason their credit sucks. Good things happen to bad people, but dont assume the best. You should take a look at their credit and not just dismiss it.

    I used to do high rate auto loan financing and we'd look at "ability and intent to repay" more than credit scores, but never forget there is a reason banks wont lend to these people, its because statistically they dont pay. We planned on 10% losses in that business, and this is with surprisingly tight underwriting for the sky high interest we charged. These people just tend to have chronic life problems.

    I did a ton of Sub2's to L/O's back in the day. Didn't have much, if any problems in the higher end stuff, but anything under $150K was ripe for trouble. They had no problem walking away when the market tanked, too, usually with plenty of work that needed to be done and month or two of unpaid rent.

    As far as finding an investor to put down cash to finance something like that at a high LTV, I doubt you are going to have many takers. Just too much risk. One tenant that lets her boyfriend move in with his rottweiler can cause $10k worth of damage to the collateral (ask me how I know this). There may be a play buying at buying at $40k and selling O/F at 80k at 8% interest or something, but you'd need that kind of spread to make the math work for an money investor IMHO. Guys with that kind of cash tend to be very careful with their principle.

    Saying that, I know people that have formed non profits and gotten free houses to help under privileged people. There are all kinds of ways to do neat things in this business, but I think you've got an uphill climb getting someone to give you anywhere near $50K on a $50k house to someone that cant get that money from a bank.

    0Reply
  • Xing Zhu
    Durham, NC · Member since 2012 · 498 posts · 48 votes
    12y

    "Under Dodd-Frank, there is a new statutory duty that has been imposed on lenders when making residential mortgages to make sure that the loan is appropriate for the particular borrower."

    Potentially, in the future, a borrower may sue a lender for borrower's default. As a result, it would be very hard for someone with bad credit score to get a home loan anymore.

    0Reply
  • Brian Mathews
    Contractor · Round Rock, TX · Member since 2013 · 767 posts · 389 votes
    12y

    As Darrell stated, there are reasons. Rather than tie an anchor around these people's heads by handing the something a majority of them will probably lose. Why not focus on helping them fix their problem so they can enjoy home ownership rather than curse them with it. What happens when the a/c system goes out. Are they going to be capable of replacing that $5000 system and in California, probably much higher. Or will they get pissed off and walk from the house? Lots more to it than handing somebody keys to house that has no business owning it.

    0Reply
  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    12y

    Maybe its just me, but when I hear a phrase like "OPEN MINDED INVESTORS" my first thought is that you really mean "suckers".

    These are high risk deals. Someone on the investor side is going to want a high return so they can bear the cost of the failed deals.

    I strongly disagree with "the American dream of home ownership". I strongly believe that is a crock of bologna foisted on the public by people who make money from selling houses. It is absolutely no different that car makers or stereo salesmen (think Judge Reinhold in "Ruthless People") who say "you should buy this, you deserve it." Owning a house is expensive. Houses are just expensive doo dads. Many folks are ill-prepared for those expenses. Someone with bad credit and $300 in their pocket has no business owning a house. Someone who sells a house to such a person is, frankly, scamming them. Given the new legislation, I think others agree with me.

    4Reply
  • Anna Ahhee
    OP
    Real Estate Investor · Moreno Valley, CA · Member since 2013 · 35 posts · 0 votes
    12y

    Now hold on wait a minute.. First of all, I meant to write $3000 not $300, Im not that clueless!

    Secondly, I am most certainly not in any type of way trying to scam anybody!

    Third of all, thank you very much for all of your opinions and advice. I suppose this whole topic started off in the wrong direction...

    I understand each point given too.

    My biggest lesson so far is that Real Estate is nothing compared to Community Assistance or City Programs at all!

    Again thanks for all the advice!

    0Reply
  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    12y

    @Anna Ahhee - a suggestion - go to the post where you mistakenly wrote $300 and click the "update" link on the left of that post, then explain what you meant to originally write.

    0Reply
  • Anna Ahhee
    OP
    Real Estate Investor · Moreno Valley, CA · Member since 2013 · 35 posts · 0 votes
    12y

    Thanks Steve!

    0Reply
  • Bill Gulley
    Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes
    12y

    @Anna Ahhee RE isn't what with city assistance? Didn't follow that.

    Let's establish the goal here. I can think of various of ways to put a warm body in a house with $3K, doesn't mean they all will own a home.

    You said you have "clients" in RE a client on the buyer's side is one who is 1. motivated to buy, 2. qualified to buy, and 3. has the ability to buy. Sounds like you have "leads" or "suspects", that is, if you're a Realtor, doing conventional or even mildly creative transactions.

    First question, what's you goal, how much do you need to make in this? Anything? Are you "with the city" trying to help these workers or are you needing to make your living from this activity? Where are you in all this?

    You need to solve the problems that keep your "clients" from buying. Credit issues need to be addressed. Forget scores, what accounts are there that are causing problems.

    I agree with Jon, that not everyone should buy, many should rent. Financial maturity has nothing to do with age, if they make enough money to pay bills but just don't due to scatter brained living, that needs to be addressed. Classes in personal finance, credit counseling, reducing debt needs to be required. Homeownership classes may need to be required, especially for first timers.

    What support is available from the city? Any redevelopment programs? Any bond money?

    This may well be a non-profit type strategy. Either you establish a true N/P (if there are enough people involved) or work with an established N/P. Habitat For Humanity for example buys homes for rehab as well, at least that is in their national scope of housing activities, not just new construction. You can sell the home to them or a N/P and let them sell to the client. Let the N/P do the hand holding.

    Just need more info than what is here. :)

    1Reply
  • Steve Chaisson
    Nashville, TN · Member since 2013 · 86 posts · 40 votes
    12y

    Anna,

    You are on to something here, even if you don't realize exactly what it is.

    One of the keys to real estate investing is having the vision to find solutions to problems and helping to create that solution.

    I actually believe that you can help people in this area. It amazes me that our education system does not teach three of the most fundamental life skills necessary for stability and success:

    1. How to manage your finances.

    2. How to work hard and the value of hard work.

    3. How to sell yourself and be opportunistic.

    If you truly educate people with the right heart and you create the right system to do it, I believe you will find that many people are simply financially illiterate, and it is possible to help them, albeit difficult to affect an ingrained value system. You are fighting years of programming, but often times you may be the first person who has ever assisted them in understanding financial choices, and you can affect them.

    If your education system is productive, you can perhaps produce a model for qualification standards that will be attractive and safe for investors to yield an attractive return on investment. The challenge for you is the creativity of the model and the efficacy of your system in creating qualifyable purchasers. Good luck with your vision.

    2Reply
  • Darrell Shepherd
    Rehabber · Smyrna, GA · Member since 2013 · 864 posts · 510 votes
    12y
    Originally posted by @Steve Chaisson:
    It amazes me that our education system does not teach three of the most fundamental life skills necessary for stability and success:

    1. How to manage your finances.

    2. How to work hard and the value of hard work.

    3. How to sell yourself and be opportunistic.

    --Holy Hell do I agree with this!

    0Reply
  • Bryan L.
    Residential Real Estate Agent · Cookeville, TN · Member since 2013 · 1k+ posts · 948 votes
    12y

    @Anna Ahhee - It's admirable that you want to help people. I've often tried to envision my RE business as a means to help people in addition to a means to feed my family. The truth though, is that I have often been burned. Here's a real-life example that I'm going through right now. Several years ago I sold a house to a nice family using owner-financing. I used my cash and a bank loan to buy the house and then sold to them on owner-financing. After two years, instead of getting a bank loan and paying me off like they were supposed to do, they moved next door and started the o-f process with that investor. So, I sold my house again to a nice family using owner-financing. It was great for them because her mother lived near-by and she needed help being taken care of. After a year or two, my buyers got behind. I worked with them and worked with them because she was expecting a cash pay-out. They eventually got to be over $4000 behind. And I kept on waiting, and they eventually got the cash pay-out and got caught up. It was a nice feeling to know that I had helped someone. Now recently, this same family got behind again. I tried to work with them, cut their payments, developed a work-out plan, etc. And it became very obvious very quickly that they were not going to get back on track any time soon. So we had to evict. I talked with the guy and asked him to just please leave the place clean and in good shape. Well, they didn't. The house is full of crap that I will have to pay to haul to the dump. My property manager estimates $2500 for ME to get it fixed back up and ready to rent or sell. This is on top of the missed payments that they left me with. We all like to help people, but we often get burned.

    0Reply
  • Anna Ahhee
    OP
    Real Estate Investor · Moreno Valley, CA · Member since 2013 · 35 posts · 0 votes
    12y
    Originally posted by @Steve Chaisson:
    Anna,

    You are on to something here, even if you don't realize exactly what it is.

    One of the keys to real estate investing is having the vision to find solutions to problems and helping to create that solution.

    I actually believe that you can help people in this area. It amazes me that our education system does not teach three of the most fundamental life skills necessary for stability and success:

    1. How to manage your finances.

    2. How to work hard and the value of hard work.

    3. How to sell yourself and be opportunistic.

    If you truly educate people with the right heart and you create the right system to do it, I believe you will find that many people are simply financially illiterate, and it is possible to help them, albeit difficult to affect an ingrained value system. You are fighting years of programming, but often times you may be the first person who has ever assisted them in understanding financial choices, and you can affect them.

    If your education system is productive, you can perhaps produce a model for qualification standards that will be attractive and safe for investors to yield an attractive return on investment. The challenge for you is the creativity of the model and the efficacy of your system in creating qualifyable purchasers. Good luck with your vision.

    Thanks Steve! seeing that atleast one person can try to see things in a vision like mine.

    Knowing all the major risks and warning signs that are included with moving ahead is definitely my top priority!! Thats why I havent actually sold a house to just anybody because this is what I wanted to create in the future.

    From the first point of this topic, I stated I wanted to try and help people wanting to buy homes but have credit issues. Never once did I say I HAVE a program that does this now...

    So again thank you for not shooting me down or pointing fingers at me stating that Im scamming people or that I need more education. Truth is EVERYBODY could use more education in something either being Real Estate, Parks and Recreation, Banks or whatever you choose to be in your heart... RIGHT?

    0Reply
  • Anna Ahhee
    OP
    Real Estate Investor · Moreno Valley, CA · Member since 2013 · 35 posts · 0 votes
    12y
    Originally posted by @Bryan L.:
    @Anna Ahhee - It's admirable that you want to help people. I've often tried to envision my RE business as a means to help people in addition to a means to feed my family. The truth though, is that I have often been burned. Here's a real-life example that I'm going through right now. Several years ago I sold a house to a nice family using owner-financing. I used my cash and a bank loan to buy the house and then sold to them on owner-financing. After two years, instead of getting a bank loan and paying me off like they were supposed to do, they moved next door and started the o-f process with that investor. So, I sold my house again to a nice family using owner-financing. It was great for them because her mother lived near-by and she needed help being taken care of. After a year or two, my buyers got behind. I worked with them and worked with them because she was expecting a cash pay-out. They eventually got to be over $4000 behind. And I kept on waiting, and they eventually got the cash pay-out and got caught up. It was a nice feeling to know that I had helped someone. Now recently, this same family got behind again. I tried to work with them, cut their payments, developed a work-out plan, etc. And it became very obvious very quickly that they were not going to get back on track any time soon. So we had to evict. I talked with the guy and asked him to just please leave the place clean and in good shape. Well, they didn't. The house is full of crap that I will have to pay to haul to the dump. My property manager estimates $2500 for ME to get it fixed back up and ready to rent or sell. This is on top of the missed payments that they left me with. We all like to help people, but we often get burned.

    Thats is big hard lesson to be learned and Im sorry for your losses. If these people wouldnt take for consideration how much you have already helped them out then who in the long run is going to pay for this?? Of course you at the moment because you have all the repair costs and fees to pay to fix this house back up to Housing Codes, but eventually you will complete another successful deal that will bring you double you money back.. right? And these people will still be stuck in whatever problem they may have put themselves in again. So lets look at this in a different way... maybe spiritually, knowing atleast you tried to help one family??.. or charity??.. WHATEVER you want. Just not giving up.

    As a child, everybody fell of their bike riding the first time, but does that mean they didnt ever ride a bike for the rest of their life? Something to think about.. hummm??

    Thats why I named the topic Open-Minded and not Please give me you Cash..

    Thank you for telling me your experience with this and I will be on my toes with you in mind...

    0Reply
  • Anna Ahhee
    OP
    Real Estate Investor · Moreno Valley, CA · Member since 2013 · 35 posts · 0 votes
    12y
    Originally posted by @Jon Holdman:
    Maybe its just me, but when I hear a phrase like "OPEN MINDED INVESTORS" my first thought is that you really mean "suckers".

    These are high risk deals. Someone on the investor side is going to want a high return so they can bear the cost of the failed deals.

    I strongly disagree with "the American dream of home ownership". I strongly believe that is a crock of bologna foisted on the public by people who make money from selling houses. It is absolutely no different that car makers or stereo salesmen (think Judge Reinhold in "Ruthless People") who say "you should buy this, you deserve it." Owning a house is expensive. Houses are just expensive doo dads. Many folks are ill-prepared for those expenses. Someone with bad credit and $300 in their pocket has no business owning a house. Someone who sells a house to such a person is, frankly, scamming them. Given the new legislation, I think others agree with me.

    Im sorry that you feel that way, but may I ask how you got strated? Only because maybe somebody helped you out in some way and you forgot where your starting point was???

    My suggestion for you would be volunteering in a Community Program such as Toys 4 Tots or an After- School Program that educates others on how it feels to have nothing and for others to give them no hope..

    0Reply
  • Anna Ahhee
    OP
    Real Estate Investor · Moreno Valley, CA · Member since 2013 · 35 posts · 0 votes
    12y
    Originally posted by @Steve Chaisson:
    Anna,

    You are on to something here, even if you don't realize exactly what it is.

    One of the keys to real estate investing is having the vision to find solutions to problems and helping to create that solution.

    I actually believe that you can help people in this area. It amazes me that our education system does not teach three of the most fundamental life skills necessary for stability and success:

    1. How to manage your finances.

    2. How to work hard and the value of hard work.

    3. How to sell yourself and be opportunistic.

    If you truly educate people with the right heart and you create the right system to do it, I believe you will find that many people are simply financially illiterate, and it is possible to help them, albeit difficult to affect an ingrained value system. You are fighting years of programming, but often times you may be the first person who has ever assisted them in understanding financial choices, and you can affect them.

    If your education system is productive, you can perhaps produce a model for qualification standards that will be attractive and safe for investors to yield an attractive return on investment. The challenge for you is the creativity of the model and the efficacy of your system in creating qualifyable purchasers. Good luck with your vision.

    Your so right! Our economy is where it is right now because of all the PROGRAMMING designed.. so obviously we need change somehow to make crime rate rates go down!!

    0Reply
  • Karen MargraveBusiness Member
    Moderator
    Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
    12y

    @Anna Ahhee First off, welcome to BP! Please don't take the responses personal. It's great that you want to try to use your profession to help people. However; when it comes to real estate investments, it comes down to return on investment. If there's money to be made, someone will step up to the plate and do the deal.

    If properties can be purchased for below market, and there is some incentive for an investor to sell to those with low credit, you will be able to put the deals together. I'd suggest you get a specific deal; and post it on the Marketplace.

    Other than that, maybe you can garner support from the business community in your area to sponsor a self help clinic that would bring in credit counselors, etc. to help those with low credit re-build.

    Unlike many others, I understand that not all credit issues after the crash were brought about directly by those hit the hardest. Many businesses went under due to the irresponsible policies of the federal government. If you were a state, city, car manufacturer, etc. you got a bailout. Many small businesses went out of business, and their employees were laid off, all through no fault of their own. They don't need a bailout, but something that addresses the hit on their credit!

    But.. I digress. Anyway, homeownership isn't necessarily the best first step, and may in fact end up being an anchor that keeps someone trying to move forward down.

    0Reply
  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    12y

    @Anna Ahhee , your plan to enable people with poor credit to buy homes was already tried - the result was the credit crisis, mortgage default and foreclosure crisis of which we are still recovering.

    As result of above, we have Dodd Frank Act, SAFE Act, and Consumer Financial Protection Bureau, result of which is that people without good credit can not obtain home loans.

    Here is the lowdown. Based on risks associated with lending to sub credit people for owner occupied residences, the rate would have to be in the 12-18 % category. Do you think those people can afford to pay 12-18%? Do you think they should?

    The past has proven that people who pay high interest rates because of credit issues do not obtain the long term benefits of home ownership - building equity, inflation protection, tax write offs. The solution for these people is simple - rent until and if you become responsible enough to handle credit and debt.

    Private Mortgage Financing Partners, LLC
    WebsiteView Page
    1Reply
  • Account Closed
    Dallas, TX · Member since 2013 · 4k+ posts · 744 votes
    12y

    Don,

    It is a shame that the government is shoving the Dodd Frank act down everyone throat.



    Joe Gore

    0Reply
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