Posted by camgere on November 12, 2007 at 19:11:04:
With little money or credit you want to be a middle man. So your theory is basically sound. First make sure there are buyers. You may have to tap dance a bit. “Some one just signed that great deal this morning, but I have another three in the works. Would you like to be first in line for one of those?” Then look for motivated sellers. You can wholesale, lease/option or “subject to” with very little of your own money and your credit doesn’t come into play. You can’t flip with renovations and holding costs, obviously. High cap rate areas are a blessing.
Once the cap rate is equal or higher than the cost of borrowing then all sorts of deal become possible. If you can borrow at 8% and get a 9% cap rate your financial needs are quite modest. Especially if you buy at a large discount.
You may be in a very good area of the country. Here in San Diego a $800,000 house going for $720,000 will cause a feeding frenzy.
The wonderful thing about crap credit is that you can take chances people with good credit would never touch. What, your credit is going to get ruined?
I once talked to an executive recruiter when I was young. They tell the employers they have secret access to great employees. They tell employees they have secret access to great employers. Who’s to know?
Posted by Michael on November 12, 2007 at 15:39:46:
Okay…is it the general consensus that if you are starting out with measly credit and not started investing yet, that you should put ads in the paper…one for “houses for sale” to build buyers, one that is “We buy houses” for sellers, and one that is for “money to lend” to seek out investors and their money. Does that sound right?
Posted by Adam B. on November 12, 2007 at 16:13:25:
Post ads on anything free, like kijiji. Join the local REI organization. Hand out business cards to everything that moves. Call newly renovated home ads to find fellow renovators who are also probably investors.
Posted by michaela-CA on November 12, 2007 at 15:46:36:
Michael,
if you’re in a larger city, then the amount that it costs you for that ad could also pay for a 1-year membership at your local REIA, where you could put out a flyer to build your list. You could also do a lot of networking that way. You’d get more bang for the buck that way, if you’re just starting out imho.
Posted by Michael on November 12, 2007 at 17:39:11:
What if I live in a remote area…it is a town, the county seat, but not big to speak of…closest “cities” are Morgantown, WV and Pittsburgh, PA, but Pitt is 1.5 hours away. Suggestions?