Jim, Active Military in Vancouver, WA, trying new things!
James R. CopelandPro Member
Investor · Port Hueneme, CA · Member since 2017 · 73 posts · 34 votesJim, Active Military in Vancouver, WA, trying new things!
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Audio Engineer and Investor · Cebu City, Cebu · Member since 2013 · 7k+ posts · 881 votes
9yHello @James R. Copeland, welcome to the site! Here are some good places to start: http://www.biggerpockets.com/meet - find and connect with other BP members that are in your area.
http://www.biggerpockets.com/alerts - Set up keyword alerts to be notified of the topics that interest you.
And, of course the
http://www.biggerpockets.com/forums - ask any question about real estate!
See you around!
7 Replies
- Audio Engineer and Investor · Cebu City, Cebu · Member since 2013 · 7k+ posts · 881 votes9y
Hello @James R. Copeland, welcome to the site! Here are some good places to start: http://www.biggerpockets.com/meet - find and connect with other BP members that are in your area.
http://www.biggerpockets.com/alerts - Set up keyword alerts to be notified of the topics that interest you.
And, of course the
http://www.biggerpockets.com/forums - ask any question about real estate!
See you around!
- Investor · Port Hueneme, CA · Member since 2017 · 73 posts · 34 votes9y
Thanks! Any tips for what a good keyword would be to get alerted on?
- Investor · Scottsdale, AZ · Member since 2016 · 1k+ posts · 885 votes9y
@James R. Copeland Hi Jim from Vancouver Washington not Vancouver Canada. Here is a comparison of some types of real estate investing. Hope it helps.
In this Spreadsheet I am comparing:
OPTION: 1 Conventional Financing for "Buy & Hold" for a Rentals
OPTION: 2 using "Subject To" and Reselling to a Tenant Buyer
OPTION: 1 As a Rental, the Kitchen and Bathrooms needed updating requiring about $5,000 of work in order to be ready to be a Rental. From the Renter I would get first month’s, last month’s and deposit. I would have to have a loan from a bank with 20% down or about $45,000 to qualify.
OPTION: 2 Selling it to a Tenant Buyer requires no rehabbing on my part. The Tenant Buyer will do (or not) the rehab to their liking. From the Tenant Buyer I get an Option Payment of $25,000 and a rent payment when they take possession. There is no deposit. Here I simply take over the existing loan and payment & need about $15,000 “Cash on Hand” to cover expenses & reserves etc. I can sell the property for more because he doesn’t have to qualify at a bank and will pay a slight premium.
Let’s see how the numbers work.
OPTION 1: OPTION 2: When Seller Uses RE Agent & Your’e Using Property For a Rental When Buying Subject To & Selling to Tenant Buyer Pro: Doesn't require specialized knowledge Little competition "Adequate" cash flow - Nothing Exciting Can be little $ down You get appreciation if property goes up Can do Unlimited number Get down payment (Cash $) immediately Great Cash Flow No Bank Approval Needed No Maintenance or Repairs Con: Have To Have $45,000 Cash for Down Payment Have To Have $15,000 Cash For Reserves (just in Case) Have To Have $15,000 Cash for Closing & Carrying Costs Due on Sale Clause Have to Get Bank Approval Must learn the technique Can only do 4 -10 properties depending on bank Competing with everyone else Requires 20% Down & other requirements If AC breaks - you fix it If roof needs replacing - you pay for it If toilet clogs - it's on you If house gets trashed - you un-trash it You take loss if property goes down in Value Tenant Can Trash The House When Seller Uses RE Agent & Using Property For a Rental
When Buying Subject To & Selling to Tenant Buyer
Asking Price MLS $225,000 $225,000 Balanced Owed $223,969 $223,969 RE Agent 6% $13,500 $0 No Agent Involved Seller Brings to Closing ($12,469) $0 So No fees Asking Above ARV $0 $0 Seller Walking Money $0 $0 Sometimes Used If I Use Conventional Financing If I Use Subject To Asking Price MLS $225,000 $225,000 Amount Down - 20% $45,000 $100 I Give $100 Down New Loan Amount $180,000 $223,969 I Take Over Loan Title Report $600 $600 Closing Costs $1,250 $1,250 Monthly Payment $1,151 $1,225 I Take Over Existing Payment - Investor · Port Hueneme, CA · Member since 2017 · 73 posts · 34 votes9y
Wow @Account Closed, I've heard of a lot of Real Estate stuff, but that was all Greek to me!
So as I understand it, you're talking about taking over an existing loan for somebody (foreclosure situations? pre-forclosure?) and immediately putting a new tenant in there who intends to buy the property? How the heck does that work? Why wouldn't the buyer just buy the house if they were willing to do all the work to begin with? I'm very intrigued but think it still hasn't "clicked" yet.
- Investor · Scottsdale, AZ · Member since 2016 · 1k+ posts · 885 votes9y
@James R. Copeland Heh, heh, heh. Yes, it takes a little explaining. First thanks for your service. Where do you serve and in what capacity? My son-in-law is a Naval Capt.
Second, don't go after pre-foreclosures in Washington State. They are severe about it. I can explain why later. But, now to the task at hand, Subject To is finding people who want to move or need to move: job reassignment, job loss, they want to "move back to their home state", they don't like realtors and people traipsing through their house for showings, they don't like the uncertainty of being on the market, they have gotten military orders for a reassignment, etc. It's filling a niche for moving quickly.
By taking over their loan and their payment, they can move on with life. I then find business people who have a good income but since they are not W2, banks won't deal with them. I mark the house up to reflect the convenience they receive by being able to get into a house without the hassles of a bank, and they are willing to give a down payment of $10,000 to $25,000 which I get to keep. Pretty cool, eh?
- Investor · Port Hueneme, CA · Member since 2017 · 73 posts · 34 votes9y
Very cool! I'm definitely intrigued. Did a little poking just to check into "Subject To" and found that apparently banks sometimes take issue with the practice, which I don't quite get why. You'd think a bank would be happy to take money from whoever will give it to them!
As for me btw I'm Active Duty Coast Guard, have been for 13 years. Typically my rating is IT, but I'm currently serving as a Recruiter. So if you know anybody who's applying for a job with us in the Pacific Northwest, chances are I've run into them or heard their name around the office ;)
So there's 2 things in that strategy that I'm guessing are vital and take time to build up:
1. Marketing! Guessing to do something like that you have to market yourself as the "go-to" person if someone needs to move in a hurry.
2. A network of buyers who are not W-2 (meaning non-salary, contractors, non-traditional employed people with deep pockets or something along those lines?) that also know who you are and will buy houses from you because you'll circumvent the banks somehow. Do they need to be cash buyers? Who are these buyers and how are they buying?
Thanks for taking the time to school me, this is a side of real estate I haven't come across before.
- Investor · Scottsdale, AZ · Member since 2016 · 1k+ posts · 885 votes9y
@James R. Copeland Coast Guard is great stuff. I've been pulled over for safety checks and always been treated politely and professionally.
Finding the buyers is easy. But, finding the right properties that "cash flow" is a little tougher. I've built a buyer's list. BP gets seasick if I get too detailed in a post but you can always email me. Most people who have a "problem" property don't know what their options are nor do they know who to contact. They think they are just stuck. Finding them is the task. I've made it my mission to be very, very good at finding them.
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