All Forum Posts by: Kyle B.

@Account Closed

That seems like a ridiculously low profit margin. Of course, if you can consistently get $5k per house flip, that could be a great business model. I just think it would be extremely difficult to predict ARV of your flips within $5k on EVERY rehab you do.

Not doubting this is the case, just curious about how they view these investments. What kind of market are they flipping in? Assuming they are able to sell these flips quickly. Interested in hearing how they make this business model work (to the extent that you know).

Thanks!

@Devonte Dinkins

Do you need a private loan for the down payment on an FHA loan? I can't really answer where you should find private lenders. It is just a matter of networking and coming across as a knowledgeable investor to work with. You may be able to get connected with people like this in your area through BP. I also recommend attending local real estate clubs.

Also, are you currently working? Any portion of your income you can put away in savings can create a great base for you to start investing. In addition to finding private lenders, I'd make it a goal to save enough money for a down payment on an FHA loan. Hopefully you're in a situation to be able to do that.

Short answer is... get out there and network. There is no easy answer for finding money for your deals. It's a matter of getting out of your comfort zone and taking action. Best of luck!

@Devonte Dinkins

There are a variety of ways to raise money for real estate investments. If you're looking for buy and holds, you can typically get traditional financing from a bank given you have good credit and enough of your own money for a down payment - ~25%.

Then there are private lenders, who consist of either individual people looking to invest their money or smaller groups/companies looking for a short term investment for high returns. There isn't one way to go about it, but generally, these private lenders are used for short term loans given the higher interest rates they charge.

Why don't you share someone of your objectives for real estate so we can give you more specific advice. Real estate lending is a very broad topic, so at this point, we can only give you very generalized information.

@Vanessa Blais

People will be interested in you when you have a great deal to offer them. I would recommend shifting your focus from finding financing to finding great deals to offer other rehabbers. At the same time though, begin networking with other investors so you know who to go to immediately after finding a deal... your local real estate club is probably your best bet to get you going and BP would be a good resource in that regard too.

@Vanessa Blais

Have you considered partnering with another rehabber, where you get a certain portion of the profit for finding the deal? You aren't going to make as much money as you would if you received a 100% hard money loan, but you will minimize your risk to nothing (none of your cash in the deal) and you'll be able to learn hands on from the rehabber you're working with.

@Bill Rogers

When a bank is ready to sell an REO, they will either list it on the MLS or sell it via auction. So your best bet is to get connected with a realtor who can send you all the MLS listings. You can also search various auction sites, although there is typically more risk involved with auctions so may not be the best entry point for a newbie (I'm fairly new and have only bid on one auction property so far).

You might run across a vacant property and find out it is bank owned. You can take a stab at contacting that bank about purchasing the property but typically their system is very structured, where they have no interest in selling before listing it with an agent. If the property is owned by a smaller community-type bank, your odds of acquiring the property before they list it may increase - I've heard of this happening.

@Chris Harris,

You can of course make offers on properties that individual homeowners are trying to sell. Keep in mind thought that the vast majority of these people are not going to be interested in selling their properties at a steep discount. Most properties purchased on the MLS to be rehabbed are bank owned foreclosures.

You have to really think what value you are bringing as a wholesaler when your idea is to wholesale properties on the MLS. Any worthwhile rehabber is looking at every good deal that comes across the MLS. Where a wholesaler brings value is through finding great deals no one else has access to... and these leads require time and money to develop, whether it be marketing to absentee homeowners, probate, etc.

Wholesaling MLS properties isn't impossible (I've seen it done before), but I don't think it's a good way to build a sustainable business model. But bring a great off market deal to a cash buyer, and they will always be waiting to hear about any additional deals you know about. Hope this helps.

@Darren Nichols

Most likely that house was once listed on the MLS but taken off for whatever reason. If Freddie Mac (or any bank for that matter) does indeed own it, they will eventually put it back on the MLS to be sold... or possibly they are going to try and sell it via auction. It wouldn't hurt to call the previously listing agent to get some color on the property. They can tell you why it's no longer on the MLS and if it is planning on coming back anytime soon.

@Roy N.

Agreed. So many people come onto BP with the idea of getting started in wholesaling... I'll admit I was one myself. When in reality, if you have the skill set to find and negotiate a great wholesale deal, that is really 99% of the equation for rehabbing. The only big hurdle remaining for rehabbing is finding the financing - which shouldn't be hard to get if you have a great deal (whether via loan or partnership).

I can see where a wholesaler could be successful, but this would probably be someone who is rehabbing and comes across a deal they do not have the capacity for, even though they know it's a great deal. Very rarely have I heard of a successful wholesale deal from someone who purely does wholesales. I believe there are a few people like that on BP though, so it is not impossible. I'm guessing these people could easily rehab the property if they wanted to though.

@Drew Farnese

It probably won't lower your call back rate, but will most likely lower your odds of closing a deal. If someone is motivated enough though, I'm sure you can make it work. I don't have any experience in this regard though.