All Forum Posts by: Mike Sattem

Howdy there, 1st off, you CAN use an FHA loan to purchase a foreclosed home, however it won't be at the auction, it would be listed through a Realtor. However, FHA is very picky when it comes to the condition of the property, and I have very rarely seen a foreclosed home that would qualify using an FHA loan. Additionally, most foreclosed homes typically aren't sold at discounts once they reach the open market unless they are in some stage of poor condition. So, it's possible, but you may be better off to consider all properties, instead of focusing strictly on foreclosures.

@Elena Jobson,

You can use the "Delayed Financing Exception" which is a fannie/freddie product that any typical lender can use. The only drawback is that you can only get out the lower of 70% LTV or the purchase price. So even if you get a killer deal, you will only be able to pull out, at most, your purchase price. I've done these in 30 days after initial closing, and then refinanced again after a year. Your lender will need to source your funds for the cash purchase and will need a copy of your final HUD-1 statement.

@Dustin Ruff,

It's all about the Hustle. I believe that's why so many folks use the house hacking strategy to get started. Most Americans have the ability to qualify for some type of a low money down loan (USDA, VA, or FHA), which makes getting into their first property as an owner-occ and then converting to a rental pretty easy. I spent a year in Iraq to make the cash to get started in Real Estate; it sucked being away from family, but if you want it, you will find a way.

Hi @David DeSimio,

Docusign will allow all parties to sign in person without too much hassel, and it would also automatically email them a copy of their documents for their records. It is what my firm uses, and it works out great, especially when we have folks who start renting before they are physically able to occupy.

@Brandon Frook,

Unless you are trying to shield the interest gain on these accounts from taxes, I am unsure as to what you mean by shielding them from taxes. If you are talking about the interest earned, you would need to have a massive repair account in the bank ($50K plus month to month) to even earn enough interest to create a taxable event. 

Hi @Jonathan Ramos,

It's probably not worth your time to deal with these folks. In my experience, cut bait and move on. It's a numbers game, and I have never had a seller who was consistently that far over what I was willing to offer come down. Also, after a while, you will get angry with these folks for how crazy their prices are, which just isn't a hassle worth taking on. Keep looking, and eventually you will find the seller who is motivated to make the house go away.

@Joseph Hammel,

I also allow pets as it allows me to increase my rents by $50/Mo for a dog. However, I have come to find when converting crack houses/multi's to rentals the exterior remodel is the most important in changing the perception. Even if it doesn't really need it, I always do a whole exterior paint and landscaping. Also, I always write letters to all of the neighbors introducing myself, and thanking them in advance for their patience while we rehab the building; making sure I emphasize how big the project is, and the high quality tenants that my property management company will be placing once the project is done. I have found the neighbors are a great way to start the word of mouth campaign about how the building is getting cleaned up.

@Ryan Sasscer,

You are painting a picture of where I just was. I hit my 10 Fannie/Freddie loans through using the BRRR and delayed financing Exemption, and now work exclusively with a credit union that carries their own paper, allowing me to purchase three new homes on 25 year mortgages with 5 year rate resets. In my experience, most folks start looking for bigger deals by the time they reach 10 SFR style properties anyway, so it's typically not a huge deal.

@Rod Desinord,

@Tony Gunter is on base on this. New construction is more expensive, but in my locale offers higher rents, and in most cases, allows you to delay many CAPEX expenses. I buy and rehab as opposed to new construction primarily due to financing.

@Account Closed,

Lots of pro's and cons here. If you get licensed you will be held to a higher level of ethical conduct, and some activities may be off limits to you (In most states you cannot wholesale if you have a real estate license, as it is considered unethical to buy a property for under market with intent to immediately resell, or assign the contract). But, MLS Access can be helpful if you aren't using direct mail type campaigns to find your properties. For the most part, I have found that the $500-$1,000 it may cost you to get licensed will proabably pay for itself rather quickly.