Posted by camgere on August 21, 2009 at 11:44:36:
Original Poster> I am more than anxious to make my first real estate investment deal. Here are things I am so confused to do so.
Refinancing vs. HELOC I have about $100,000 asset in my primary residence. I plan to buy REO property and hold/flip in a few years. It seems like HELOC is the better option from the previous post. Is it correct? What is the best way to get the best HELOC?
C> HELOCs are usually adjustable rate loans and can be called due at any time. This is a significant risk.
OP> where I live vs. where the market is good
Should I try to buy one in my town or I can invest in the market where many opportunies are?
C> If you are doing Buy and Hold I would do your first deal in your home town. Do all the property management yourself and learn the ropes. For your second deal or flip, outside the area should be OK if the reward is significantly higher. Holding until you have appreciation is a strategy.
OP> How to find realtors How can I find loyal realtors who experience in REOs? Can I ask many realtos to bring the deals for me? Or I should find only one and make buyer-realtor contract?
C> It may be difficult to use several realtors. What if they both give you one line listings of every house in a zipcode? Which ever realtor you don?t use can say they deserve the commission for bringing you the deal.
OP> How can I find what would be the best rental properties in terms of price range?
Is three bedroom/2 bathroom best rented? For first home buyers, what will be the best price range for most of them? I know this depends on the specific market. Then, where I can gather this kind of information.
C> Lower priced properties tend to have higher rent/price but also higher maintenance cost assuming you are dong Buy and Hold. CAP rates adjust for expenses so they are a great metric for evaluating houses. There are 100 other things as well: location, floor plan, neighborhood, age ?Stay out of war zones. Three/twos are my favorites. I stay away from large houses that will turn into frat/animal houses with boyfriends/girlfriends coming and going with no notice. Just try to get anyone to take responsibility for damage. It?s always ?Billy did it, he moved out 6 months ago.? If you are trying to 100% finance (HELOC and loan) you are going to need a CAP rate higher than your debt service rate. If you can get 6% non-owner occupied 30 year fixed (as well as HELOC) you would want a CAP of 7.19% to break even cashflow at 100% financing (you have to pay a bit of mortgage principle up front every month). I?ve heard of zilpy and rentometer for checking rents, but in reality (realtory?) you get what you get and it can?t be predicted exactly in advance. More experience means better estimates. All real estate is local.