How Do I Find A Deal & Make An Offer...?

Question

Hello Everyone,

After spending the past month or two reading and listening to all of the information I could absorb on BP, I've decided that Wholesaling/Buying & Flipping is the way I need to go. However, for flipping I unfortunately have no choice at the moment but to use a HML, with the future intent of buying my first home as a multi-family unit under an FHA. I'm left with a few questions though that have been answered in a couple posts but I still don't clearly understand. So, I was hoping someone could make this into sense for me.

1) At DoHardMoney.com they offer 24/7 proof of funds, and a letter of intent. What exactly is a letter of intent? As I have come to understand it is my offer (backed by the proof of funds) that I give to the agent or seller to sign and begin the closing process. Am I mistaken?

2) Every HML seems to ask whether or not the property is under contract? What effect does that have on whether or not they approve the loan? What if I want to have an offer prepared before getting a contract from the seller? (I feel some sellers may not want to negotiate with someone waiting on a loan to go through).

3) I'm not sure where to find my first deal! I'm looking at the MLS but of the properties listed how am I to know what the owners situation or foreclosure status is (amount owed/default status?) to consider making an offer to fix and flip or to get a contract and attempt to Wholesale the property?

4) Should I go through preforclosures and look for properties and schedule a viewing then send an offer, or should I send a pre offer, or should I contact the owner directly or just show up? 
	
	I felt like I knew everything to do, but now that I started thinking about execution, I've got a million questions.

Best Regards,

Jason Eyerly

James Martin · Answer

• Find a mentor
• Help them make money
• They will in turn be able to educate you on how to find and execute a deal.

Jason Eyerly · Answer

@Ryan I have a letter drafted for this purpose, so I will consider sending these out. Thanks for the advice!

@Mary B. Excellent information, thank you so much! I'm hoping to find a deal within the next 2-4 weeks to start making moves on, with any luck.

@James Martin Thanks for your input. Unfortunately I will have a hard time finding a mentor because I am back and forth between IN and NYC. 
	
	I do have the advantage of having a business partner who is a general contractor in both areas I am in and is amazing at what he does and very cheap. We have an agreement to split the profits 75/25 for all of his work. As far as finding a mentor, I'm not sure I could make them money unless they are interested in investing in the financial markets as well, being that real estate is brand new to me, as opposed to being a trader for 3 years.

-Jason E.

Mary B. · Answer

1. Its your offer on how you intend to proceed to close.

2. You must have the purchase agreement signed before any HML (that I've every heard of) will start the lending process. Without a contract the funds won't be distributed. Its your proof of a deal existing. Unless you have a good history with one already they want the purchase agreement as a prerequisite to getting the loan.

If you have a private lender ready to put up monies for a deal they generally don't require that you have a deal under contract immediately.

3.  Do you have an investor friendly agent to work with? If not get one or two for that matter. MLS is one of many ways to find great deals. The more DOM (days on market) the better from an investor's standpoint. However there can be some great deals that have just graduated from pre-foreclosure to foreclosure that haven't had many DOM. It's up to you and what the numbers say.

Put together some questions that you will have ready to ask the seller or r.e. agent. i.e. How many owners are there? When can you visit the property? etc. Ask away and you'll have your answers. Some times depending on the question(s) the agent may need to get back to you.  i.e. Is this a flood zone?

4. If its a short sale you must deal with the agent. You may visit the property and the owner is there without the agent but as for submitting your offer make sure its to the agent. The bank approval letter is very necessary. The seller may be ok with your offer but the bank has the last word. Always perform due diligence. If you prefer to submit an offer first without seeing the property that's your perogative. Yet make sure you have an exit clause in your purchase agreement. You should have an exit clause in all of your purchase agreements regardless. For the most part you will be using the agent's version when you're ready to submit an offer on new MLS or pre-foreclosure properties. Be upfront and tell them that you are an investor and share what your plans are especially if you want to wholesale the deal.

Kudos,

Mary

How Do I Find A Deal & Make An Offer...?

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