All Forum Posts by: Steve L.

They're both different models. Charles, is right. Flipping generated chunks of cash and holding is a long-term game.

It depends what is right for you, and the condition of the market you live in. But if you learn to buy right - either model will make you a lot of money.

If you get a conventional buyer... there is no seasoning issue. If you price the property right, there are still a lot of buyers in this market. So in my opinion, selling the property is the easy part. Price it right and keep lowering your price until it sells.

FHA which most buyers are nowadays have seasoning issues (3 months). Just factor that into your carrying costs...

What is your exact question? Typically end buyers do not purchase with hard money, but they purchase with a traditional mortgage.

Hard money is typically for investors to purchase a property and fix things to allow it to qualify for a traditional mortgage.

So as an example:

Purchase Price: $88,000
Repairs: $20,000
Purchase Escrow: $1,000
Insurance: $1,200
Property Taxes: $500 (for rehab)
Gas,Water,Electric $900 (for rehab)

Sale $160,000
Cost $111,600
Sales Commission $9,600
Closing Escrow $1,000
Total Costs $122,200

$37,800 pretax profit

That is if you do a deal with all cash - otherwise there is financing costs involved. Not including any unexpected costs...

With a "mass low-balling" approach I got very few offers responded to. Even on the properties I have listed, I see these investors that come in at half of asking and I just turf the offers.

Find a property that the bank is willing to be flexible on (trashed, many days on market, etc) and negotiate until you get it.

Michael,

How much experience do you have? How much money have you put in yourself. It is a tough proposition to raise money unless you have some skin in the game.

Try friends and family, or one of the social lending services first prosper.com, lendingclub.com.

Good luck

We typically offer $5,000 to banks. This shows we are serious. I know people that offer $100, but typically agents will not accept that.

How would you be doing anything illegal? We do this all the time. Why does the bank care? They want the property sold and off their books. The only person that has to know is the escrow officer.

I used to be a member in the Los Angeles network. Most of the motivated seller leads where people upside down, providing very unrealistic values of what their property is worth. Some of the wholesale deals made a bit of sense.

We did not renew our membership, but we do post our wholesale deals to their network (that part is free).

They send a weekly email for free, with a portion of their deals:

"Below, you will find info on 5 Los Angeles area wholesale deals from the last 7 days alone. There are 33 currently available wholesale deals in the Los Angeles area.

All values (ARV, Repairs, etc.) for the property below were submitted by the seller, so please do your own due diligence to verify. Contact the seller below if interested.

Plus, see below for 73 Los Angeles Motivated Seller Leads from the past 2 weeks alone."

We often make offers contingent on $X amount of yearly NOI. If the seller cannot prove that NOI in diligence we have an out.

But really people should be buying properties with the best TRUE cap rate, if you buy right you will have positive cash flow.

Mike - can you explain how someone would determine what a property would cashflow without first getting to the estimated NOI? Short of a property having assumable financing, what the existing owner cashflows is not what a new buyer will cashflow.

For property comparison and pricing purposes a cap rate is a much better tool in my opinion. But positive cashflow must exist...