All Forum Posts by: Peter Vekselman

No matter how you look at it, the real estate market is driven by numbers. Even when you were hearing in the last few years how incredible it was, there were people still losing tons of money.

And just like you now hear about how bad the market is, there is individuals making a killing. The key is to understand the fundamentals of what makes a good deal and what makes a bad deal.

And as you go to the market place identify those deals that are backed by the sound fandamentals. Of course in different markets and at different times your strategies may change...but the fundamentals always remain the same.

Like with any other deal it is very important to find out all the details and facts to see if there is actually a deal here. This is obviously a large deal so your pool of buyers will be limited.

I would suggest on larger deals like this one to identify some big players in your market place who have done projects llike this in the past. I would approach them with a short due diligence package. Sometimes a quick one or two page summary with the highlights of the deal is all they need.

Talk to them about potentially buying this deal. I would also ofer them a good referral fee if they can potentially introduce you to another buyer if the deal is not for them. The one thing I learned in the last sevearl years is that most of the major players in town usually know one another. And if your deal is good, then they will have no problem making some introductions for you.

Good Luck!

Since almost all the banks work through agents the key becomes to identify an agent who is capable of working in the REO world. These agents have the tenacity and the where with all to work in the banks world.

Some of these agents have personal contacts in the REO departments, and have the ability to get answers that others just cannot.

I would start off by identifying through the local MLS system who tends to have majority of the REO listings. Contact these agents and ask them if they would be willing to represent you.

These agents will be key contacts for you. Not only will they save you a bunch of headaches, but many times they are also aware of deals before they hit the MLS.

And remember, a realtor can work with another realtor.

I have found the best way to learn something is to talk to someone that is already doing it (hopefully successfully). If you do not know anyone in your area personally envolved in the rental business I would find someone who owns multiple rentals and offer to take them to lunch.

During that time I would let them know what your plans are, and ask if you could do some work for them in exchange for a hands on education about the rental business. I have found there is no substitute for real life training. Make sure that they also explain to you how the numbers work, and how they make their decisions.

Hopefully this helps.

Buying real estate without seeing it can be very dangerous. You are basically using other peoples due diligence. And if you are actually letting the seller of the property present you with the due diligence then it's only a matter of time before you will make a critical mistake.

If you are buying using the internet then there is a limitation to how much due diligence that you can due. The one way for you to overcome this is by partnering up with a field person. This person would be responsible for going out an inspecting your deals and verifying all the numbers. This individual will become key to your decision making process and is worth paying from your eventual proceedes a portion of the profits.

Are you saying it is possible in certain areas to only foreclose on a second mortgage and not have to pay out the first. I have nover heard of that.

A second lien holder can sell their mortgage to a third party without any consequences. But i cant imagine they can foreclose and not pay off the first.

If i mortgage gets sold, that obvioulsy will not affect the deed.

1 If you are using a personal guarantee to get the properties then chances are very good that the mortgage company will require you to take the title in your personal name. After the closing i would then deed the properties into the LLC's.

2 There is a chance of triggering the Due on Sale Clause. But after being envolved in hundreds of deals and over 12 years in this business I have never heard that clause being enforced for that particular reason.

3 I would get the insurance under your name, and then add your LLC as an additional insured.

Hope that helps....

A second lien holder may not always be able to foreclose and take control of the property. If the second lien holder forecloses, the first lien holder must get paid first.

So if the property sells for enough money for the first lien holder to get paid and then there is still enough for the second lien holder to get paid then it makes sense to foreclose. But if there are not enough proceeds from the sale to pay off the first lien and then second, the second lien holder would only be hurting themselves.

Jim,
Your strategy of buying real estate, living in it, and selling in a few years is a very viable one. But it will take you years to build up real capital and create real wealth this way.

The fact that you only have $5,000 available to you is an issue when it comes to buying real estate. I will tell you between the money you have to bring to closing, potential construction, monthly mortgage payments, and thirty other things that may require money in a deal, that $5,000 will be gone in no time.

But there are other options.
1 Partner up with someone that has access to money but not the time to do deals.
2 Become a Property Locator and start assigning your contracts to third party investors.
3 Find some sellers that maybe willing to do some creative financing for you.

All these strategies can put money in your pocket. Good Luck!!

I agree with the concept that rentals should be set up in an LLC. You will get the most favorable tax consequences that way. And also, for tax purposes you should set up the properties you are going to buy and sell within one year in an S corp.

Make sure you have a general liability policy for your corporations. The great thing about many of these policies is that you can just keep on adding entities into them as you form them.
_________________