Buying Homes from Other Investors....Risky or Not?? - Posted by Paul

Posted by Rick Wheat on August 18, 2000 at 07:42:22:

you on one of the two issues. That being that you “MAKE YOUR PROFIT WHEN YOU BUY”, and realize the profit when you sell. If more investors understood that concept, there would be a lot less horror stories. And the Due Diligence part is absolutely correct.

However, I don’t agree with you that a good investment property has to be one you’d live in. I have bought or sold around 200 investment properties over the last few years. Most of them are houses I wouldn’t choose to live in. Frankly, my wife would probably throw my skinny rear-end out the door if I suggested she move out of our residence at the Beach. The crime isn’t worth the time.

In other words, I don’t think you should make the mistake of placing yourself into the property when determining if it is a good investment. People have all kinds of likes and dislikes. As long as a certain market would be interested in purchasing it, I would consider buying it to sell it to them.

GOOD LUCK!!!

Rick Wheat

ps - I sell most of my UGLY houses to Investors. I’ve grown tired of keeping up with the “scallawag” contractors to rehab them.

Buying Homes from Other Investors…Risky or Not?? - Posted by Paul

Posted by Paul on August 17, 2000 at 09:54:29:

At my monthly investment club meetings, there are always other investors offering property for sale, no money down, owner financing, etc. On the surface these seem worth pursuing but another investor told me not to pursue these, they’re too risky and many are trying to take advantage of the newbie investor. I’ve held off on these “deals” for now - I kinda feel like buying a home from another investor is like buying a new car from the auto dealer…in that you’re going up against an expert and are probably gonna get screwed. What’s everyone else’s experience with this been?

A deal is a deal - Posted by Jim IL

Posted by Jim IL on August 17, 2000 at 16:37:41:

Paul,
For me, the advantage in buying from another investor is the fact that an investor is more likely to understand what I am trying to accomplish.
My due diligence does not change on any deal, no matter who the seller is.
So, if a deal makes sense to me, who cares who I am buying it from?
Money is all green in my world.

And, you never know, you may wind up finding an investor who only takes a deal so far and leaves plenty on the table for you.

I just sold a property via assigning a Land Contract to another investor. He was delighted, he only had to pay me an assignment fee and NOT get a new loan just yet.
He was seeking cash flow, and I wanted some quick cash.
I was happy with my profit and all went well.
Now, this other investor wants to look at some other deals I have and is more than happy to pay me assignment fees.
Apparently he is not very good at, or does not have the time to negotiate good deals with seller financing.
So, I’ll tie them up on good terms and assign them away to him for quick profits.
Sure, I may be throwing a few long term dollars away, but right now with a new family, QUICK CASH is a good thing.
And, you never know, I may just buy some of them back from him some day.
Investors often toss properties back and forth, it is done all the time.

That is why one of my goals when buying on Land Contracts and L/O’s is to create a good monthly cash flow. This makes these deals marketable and allows me to keep them somewhat liquid.

Happy investing to you,
Jim IL

P.S. Yes, I do keep several for cash flow reasons, but they are usually homes I have purchased “Subject to”.

Re: It depends… - Posted by Eric C

Posted by Eric C on August 17, 2000 at 12:43:12:

Hi Paul -

Just thought I’d use some of David Alexander’s trademark dots…

I’ve purchased property from other investors and in fact, I’m working (well, kinda) on an apartment complex (48 units) that’s owned by an investor.

However, I’ve sold many properties to other investors. Right now, I’ve got one customer (a contractor) who purchases from me because I will finance him (he does have great credit though) and then he rehabs, remodels, and resells at a good profit.

His bank called me the other day about a payoff on a house I sold him last summer. It seems that he’s going to do an investor refinance and cash me out. Nice. The bank also wanted to pass on the message from him that he’d like to purchase something else from me. This would be property number 6 or 7, I can’t remember, but all in three years or so.

I do happen to have a property that is just his speed. Amazing coincidence, don’t you think?

We’re both doing well. Thanks for asking.

Yours,

Eric C

Re: Buying Homes from Other Investors…Risky or Not?? - Posted by David Alexander

Posted by David Alexander on August 17, 2000 at 11:10:52:

Your due diligence and written agreements shouldnt change.

Risk is exactly what you make it.

David Alexander

I don’t mind… - Posted by soapymac

Posted by soapymac on August 17, 2000 at 10:23:57:

getting screwed once in a while…as long as I get kissed in the process…and my process would include all the due diligence of a normal acquisition.

It does NOT make a difference who the seller is. You have two questions to answer after doing the due diligence:

  1. Would I live in the place?

  2. Do the numbers work “going in?”

Answer “yes” to both? Then who gives a rip who the seller is?

Cordially,

Roy MacLean
“soapymac”