All Forum Posts by: Jeremy England

So I'm doing alot of reading on rei.  Books articles and what not.  I see the strategy of driving for dollars and direct mails and the like.  So for a deal to be good the owner must have equity right?  Unless you short sell and I'm reading that is difficult and not exactly a good deal.  So the question is why would someone with equity sell to me below what the property is worth?  

I get that they are in disrepair. But say it's a 100k ARV and they have 50k in equity. Why would someone sell to me for say 55k? Why not just market the place with a realtor for 70 or 80k and call it a day?

I understand some properties would be unable to be sold via a conventional lender due to the state of disrepair and I get that some sellers just want to get what they can and dump the place.  But is that common?  

Where are you getting most of your deals? Distressed sellers or REO's or auction? Just soaking it all in, so thanks

Regarding purchasing distressed properties, Why would a person who has equity in their property sell below market value? 

Because I 'm assuming equity is REQUIRED for the deal to be any good unless you are trying to short sell right? 

So I'm a homeowner, lets say I have a house who's ARV is like 100k and I owe 50k. I'm broke so no money to pay my mtg. A guy comes along and says "hey, sell me your house to avoid foreclosure and ill give you 55k". Why would someone do that? Why not just sell the house for closer to FMV. I get that perhaps the house is in disrepair and I can't afford to fix it to sell and no conventional bank is going to finance it because it's so bad.

Is that it?  What other reasons do people have for selling below value if they have equity. 

Don't pay another dime until the contractor finishes.  If you have to cut him loose, that's the breaks.  But he's ahead of you if you are worried about that.  I'm a novice investor, but I built homes for a while before my current job. 

Anyway, I am interested to know what happened regarding the refi?  You said you can't refi for 6 months after purchase?  I didnt' know that.  So what is your plan?

I think like 8 pct is the average rate of return on the S&P 500 since inception right?  I would think the other benefit to rei would be control.  you are more in control because you chose what you buy and how much you are willing to pay. 

If you are getting 24pct, good for you.  I don't think I'd get off that train.  As for me, I'm in index funds and am getting 11 pct. 

So you are still left with an 80k (max) debt for each property (assuming you did the same thing over and over).  So you are property rich and cashflowing but carry a lot of debt as well? 

I am a former builder, did one flip REO property about 10 years ago, that was financed with my business line of credit. I've been doing research on house flipping and buy hold investing (mostly flipping). But anyway, one thing I don't seem to understand about buy/hold. How is it that so many people are able to purchase multiple properties in such short periods? I understand getting value when you buy and all that. However, at some point, properties and repairs need to be paid for. So as I understand it the deal works like this:

Find a property (I know, easier said than done but humor me)

Get a great price well below market

Arrange financing or pay cash. This is the part where I get confused. If I pay cash for the place, well, that's pretty much ALL my cash. How will I get more properties? OK say I get financed via a HML or private money. Get the property, do the repairs put a tenant in. How is the lender being paid back? Refinancing and pulling equity out? Say I get a property for 70k and it takes 30k repairs and now the value is 140k. Am I getting a mtg for 100k to pay the lender back and a payment of say 600 a month. Collect rent for 850/mo, cashflowing 250 ( I know there are other expenses but stay with me).

So now I want another property and go do the same thing again.  But when I go to refinance, will the bank just keep refinancing the properties that I control?  Then there is the debt you incur.  Is the answer just to keep racking up mtg after mtg as long as the cashflow is good? 

Tell me what I'm missing here. 

Thanks

Thanks, that does eliminate some confusion

So I read alot about real estate investing. I was a builder about 10 years ago and did 1 flip that was a REO property and it turned out great. I financed that project with a buisness line of credit. Since then I left the business due to taking a job out of state.

I peruse the auction listings in my county and see they require the property to be paid in full by the end of the business day if you are the winning bidder.  How does a hard money loan come into play with this?  Do you target a property, research it and what not and propose the deal to the lender before you bid?  Will they fund you in one business day?  

Thanks