All Forum Posts by: Moises R Cosme

Shayanna, 

Here is an outline & some tips:

1. Start with the local registry of deeds; call them and ask them if they publish a list of foreclosures.  If they do ask them how you can go about getting it.

2. Once you get the list, sign up for whitepages.com this is an easy service to sign up for and use; it will allow you to get phone numbers to addresses.

3. Develop a script to call these people and talk to them about their situation and see if you can meet with them to discuss a sale of the property to avoid foreclosure.

4. Send these folks a handwritten letter as well.

5. Another source of distressed property:  Zillow.com, filter for 'Bank Owned' property.

Additionally, I am a huge advocate of working backwards...  I am now a full time investor, but before making the transition I worked on developing a process for how I was going to handle deals; building a 'back end' has made me much more efficient.  I hope this helps!!!  Feel free to message me if you think I can assist further.. Have a great 4th!!! 

Steven, 

1. I advocate for getting an Attorney

2. Wholesale transactions vary state by state, in MA the purchase & sales agreement is between the Seller & the nominee (the end buyer)

3. The wholesale fee, is a fee paid directly to the wholesaler by the nominee and is typically payable as a POC item on the settlement statement

We just completed a wholesales  - 1 purchase & 1 sale - and it is an area of real estate where there is not a lot of clarity, as a result the wholesalers themselves often don't have an exact process. 

I highly recommend Michael Lantrip's book series, you can find his books on Amazon.  Mr. Lantrip is an Attorney, Accountant & Investor.  The books follow the following format:  (a) topic, (b) explanation of the math/tax reg, (c) an exercise that walks you through applying the formula or concept and (d) a link to an online resource that you can use for future reference.  

I realize that your question is very specific, but I believe that I am a better investor because I have general knowledge.  I also highly advocate for having an accountant that you work with consistently instead of trying to innovate strategies on your own; an accountant that you develop a relationship with, will take your entire tax situation into account when advising you on the best option.  

Ben, why would you have CapEx if you are renovating the property? What is the property worth after the renovation? The numbers you use look sound, but the after renovation value is the critical factor in ANY purchase we make in my organization. Based on the numbers you provided here, your after rehab value needs to be at least $104,000 (PP + Renovation + Points/.75) .75 is the target combined loan to value. If I were looking at this project I would actual want to factor in the monthly payments you will make to the hard money, since those payments would be interest only and would effectively represent an equivalent capital investment (in my opinion).

In sum, my organization would NOT make the purchase if we did not feel like the property would be worth at least $104,000 when the renovations were complete.  

Warren Buffet became a billionaire after age 60; late 40's is like mid thirties these days!!! 

Congress passed the HEROES Act a few weeks back, I think some version of that gets through the Senate in August.  I agree, I think the $600 stimulus payment is critical to keeping things on track; I am a landlord and to this point everything is running smoothly, but I understand that cash poor consumers have a cascading effect on the economy.  

I hope the Senate comes to its senses; low interest rates do not equally benefit all consumers.

As an update - received all my rents by noon EST today via RentRedi... I love this app!!! 

George, I am glad you got this resolved; the mortgage process is super stressful, its a wonder that someone has not come up with a better solution. 

Tyler, 

I think this will be helpful; its my answer to another forum post:

If you had to start all over again, what would be your strategy? I would have bought a 3 or 4 family with an FHA loan and used the left over money from my down payment to do a small flip; I then would have kept the money from that flip rolling into as many flips as I could do within 2 years. After 2 years I would move out of the 3 or 4 fam and purchase another multi family (you qualify as a first time home buyer for mortgage purposes every two years) and done the same thing as above. After another two years I would have bought my house to live in, by this time I would have at least 5 rental units and would have financed my down payment for my primary residence through the flips. I would borrow as much of the money as possible every single time in order to get maximum tax benefit out of interest payments.

Would you start with a turnkey property?

Begrudgingly, I would be willing to start with a turnkey property as described in my answer to question 1. I am generally opposed to paying full price for a property, but if I had to do it all over again I would use my money much more efficiently by getting a low money down loan & using rental income to pay down my mortgage and subsidize me. All money is to some extent binary.

Would you start with a BRRRR or Flix and Flip strategy?

I would stay away from BRRR until I had some experience with lenders; check out the forums, there are posts on a daily basis from people that tried BRRR but do not know how to refi out. Check my answer on number one for the balance of this question.

Would you start with Wholesale?

Only if I didn't have enough money to put the 3.5% down to get the first multi family. I actually did not have any money at the very beginning, so I became an Agent to generate income - I became a successful Agent and used the earnings to do my first deal.

Market area:
Would you try staying local for your 1st deal or go OOS?

Local. Stay local until you understand how markets function generally. General knowledge is underrated, most people give weight to excessive expertise... I think general knowledge helps you filter; by filtering you can make better decisions. Having a general knowledge of how properties are rated helps you stay away from a 4 family on your first rehab; 4 family properties are generally considered commercial properties & have altogether stricter and more expensive standards. I have seen lots of inexperienced investors jump into deals that look good on paper, but if they had working knowledge of markets they would have stayed away from the deal in the first place. An business acquaintance is suffering through this right now and the consequences of the decision are going to be significant.

Anytime Shawn!!!  I hope you crush it!!!