All Forum Posts by: Justin Hammond

@Timothy Frazier, You can set up payments through an escrow company who will take your payment and then automatically pay the underlying mortgage. As a buyer though, you'd want to just buy sub2 and take over the loan. As a seller, you'd want a wrap loan (also called AITD or All Inclusive Trust Deed) and to have payments go directly to you. As a compromise, you can have a wrap that goes through an escrow company.

Sellers are only going to sell on a sub2 if they are motivated. I usually have a clause in our contract that states that if the loan goes into default, they get the property back. It's more for warm and fuzzies for the seller than anything. 

If you're worried about what happens in the event of a death, that's more along the lines of estate planning and has little to do with your loan structure.

@Tyana Blackledge, that's similar to how I got started. I didn't have any capital either. One thing you'll have to consider is that even if you have a good hard money lender, you'll still have to have some "skin in the game" or money that you bring to the table. If you don't have any yourself, you'll have to convince an equity parter to bring that money in to your deals.

In my opinion though, I would focus on one thing: finding a good deal. If you can actually find a really good deal, you can take it a couple different directions: 1) you can wholesale it and make some money, then rinse & repeat. or 2) you can bring that deal to a good flipper in your area in exchange for a piece of the pie and a ride in the passenger seat throughout the whole thing. 

Once you find a few great deals and get them under contract, you'll really start to see options opening up. Best of luck to you!

@Samuel Iddings, Are you planning on remodeling the property or forcing appreciation at all? If not, it won't be worth using hard money. 

Let's say you buy a property for $250k, and you put $50k down. you'll be borrowing $200k. Rates can vary, but let's assume the loan costs 2 points ($4k) and 12% interest ($2k/month). You will also have to pay for a title policy, some closing fees, and maybe a BPO or appraisal. Let's say that's another $2k. For 6 months, this loan will cost you $18,000 - PLUS, once you refinance, you'll have those origination fees, title fees, appraisal/bpo, etc AGAIN. 

Investors usually do this when they are increasing the value of a property by a large margin, or if they can get private money terms that are much more favorable (like 8% with no origination fees). 

@Tyana Blackledge, Your prospective business partners not working out will probably be one of the best things to happen to you. Sometimes we feel like we need business partners when we are a little lost, because nobody likes to be lost alone. It's much more comforting to be lost with someone else. I did the same thing when I first started, and nobody was as amped about it as I was. Looking back I'm glad I decided to fly solo.

How much capital do you have, if any? Your answer to my question will have an impact on the direction I'd suggest you go.

@Jacob Lapp, I'm not sure if your area is much different than the ones I've invested in, but I would be careful about valuing the property based on the 1% rule. These are residential properties, so you should be valuing them based on comparable sales unless I'm missing something. 

I also wouldn't worry about "ripping off the seller". If they want to sell and they are willing to take less, it makes no sense to feel bad for that. If you play that game, then you can be over-paying for every property, and selling for less than it's worth.. Just let the market be the market.

As far as seller financing goes, just call them and see if they will even consider some kind of deal. If not, then you don't need to spend any time thinking about it.

How long of a term does that hard money loan get you? 6 months? 12 months? 

@Eric Bertolasio, I agree with @Forrest Faulconer. Look into private money or hard money, especially if you're looking to flip. Do you have some money saved for a down payment? 

If you want to buy and hold you can look at bringing on a few partners and buying up several duplexes in the area. Bring on a credit partner if you need help qualifying for the loan.

@Jessica Pham drop it 10% to get a buyer asap. The market doesn’t care how much you make or lose, so take your beating and move on to the next. Chin up!

@Kyle Fairbanks If you are trying to get into the preforeclosure game, you need to get a list of all the sale dates in your county (or counties you want to invest in). You should get a new list every day or week. Take that list and go knock on doors, skip trace the names to find phone numbers and cold call/text. If you can't get a hold of them knock on the neighbor's door. Rinse and repeat until you disposition every lead. That's how I got started. Keep in mind there will be tons of other people doing the exact same thing, so you'll have to out-work and out-think them. Best of luck to you!

Yes, that works