All Forum Posts by: Robert Leonard

@Bao Nguyen You didn't say who you are "hearing these stories" from, but it's probably an exaggeration if not totally made up.  Properties that sell at the sheriffs sale usually have significant legal fees added to what's owed.  The idea of a 100k property selling for 10k is extremely unlikely to ever happen.  There are a lot of factors in what banks do at foreclosure sales that involve the process of collecting on mortgage insurance.  It's not all logical or easy to understand.  A small percentage of the sales are opportunities to get a good deal, but it's not a place to buy if you don't know the risks involved.  The investors there are in the shark category - they know their stuff.

What are the details of your 55k offer on a 61k property? Is 61k the asking price or your estimate of value? How long has the property been on the market? Did you make your offer through an agent? Is the seller HUD, Fannie Mae or a bank? There are a lot of different banks and government agencies that sell REOs and no two of them are identical for their processes or what you can expect from them.

@Lance Borden I would not hazard a guess at this one.  There are too many variables that can cause significant price swings.  I think you should look for contractors that advertise as "plumbing and HVAC contractor" to minimize the number of people you have to round up/coordinate for estimates and to do the work if you buy it.

@Alex Hamilton  I would try

https://www.visiolending.com/loan-products

I'm not affiliated with them and I don't get a kick back, but I've used them.  It is real hard money rates, but they can probably help you keep this property.

As described by @Braden Smith is the way I've seen it go in my market too.  A good "clean offer" with no seller paid closing costs or contingencies is what usually wins.  That is cash of course.  If a property is kind of a dog, that's been sitting on the market for a long time working it's way down in price reductions, there may be a little leeway there?  But your best bet is to just factor that into your price and keep your offer "clean."

Welcome to BP @Roberto Treviño ! 

The Baton Rouge "REIA" meetup.com/thering meets tonight at 6:30! If you can't make this one, it's free to join the group and you'll get notified before the next meetup!

@Shawn Walters If you sell and have a blast making a lot of money on those sexy flips, what will you do with the money that will give you residual income?  Can you make enough to live off of the rest of your life?  What happens if you get tired of flipping houses or if market conditions make it less feasible as a main source of income?

It sounds like you may want to consider trading to properties that will be more profitable.  Nothing against having some fun, get some of that, but don't throw out the baby with the bath water.

@Bill Zepeda  As long as you avoid the Federal Fair Housing Act - Protected Classes, financial screening criteria are up to you.  Unless your state or municipality has some type of additional requirements (mine doesn't) about financial considerations, you set your criteria and how you apply it.  The main thing is that you have to apply it consistently to all applicants.

http://portal.hud.gov/hudportal/HUD?src=/program_offices/fair_housing_equal_opp/FHLaws/yourrights

@JOAN DICKIE I could not disagree with you more.  You are way over simplifying it when you conclude that "a REA is a wholesaler."

A wholesaler is a principal to a contract to purchase a property. That's very different from a listing contract.  Wholesale means something much lower than retail that can be bought by an investor and sold for a profit at or near retail price.

My clearest example of how a wholesale works is "the accidental wholesale."  If I found a great deal on a house for sale and I run into a buddy and say "I just got a great deal on 123 Main St, for $50k, I'll close on it in 2 weeks!" My buddy then says "I'll give you 60k for it." Then I say, okay and agree to assign my interest in the property to him.  Whether that's in the form of a $10k assignment fee or a double close is a technicality, but the end result is the same - it's a profit on my interest in the property, not a commission.  What wholesalers do is go out and try to find this type of deal on purpose.

That is dramatically different than what an REA does as an REA has no possibility of taking ownership of the property with a listing agreement. 

Welcome to BP @David H. !

It's been a while since I went there, but if you go to memphisinvest.com and share your name and email address, you will get access to Chris Clothier's short video that explains how to build a "bank book."  I hope it's still there, it is gold.  If not, PM or email me and I'll share my notes with you.

With your bank book in hand, pay visits to your small local, regional banks and credit unions. Ask to speak to a commercial lender (that's usually the title of "portfolio lenders"). The LOC offers several advantages over a cash out refi. As mentioned, you don't pay interest while the funds aren't being used. Seasoning rules to cash out on properties that you purchase with LOC funds are different. As detailed to me by one lender, if you purchase a property with cash from cash out refi, seasoning rules apply and you can only cash out based on purchase price. However when a property is purchased with LOC funds, you can cash out refi based on appraisal with no seasoning requirements. That can be huge.

Disclosure: I have no affiliation with any company or website mentioned in this post.  Just sharing some of my own experience.

Congratulations!  Success feels so good, it's habit forming.  Here's to keeping that habit up!