Guess its back to the drawing board! - Posted by Ryan_ma

Posted by Ryan_MA on June 04, 2002 at 20:16:45:

Thank You!

Guess its back to the drawing board! - Posted by Ryan_ma

Posted by Ryan_ma on June 04, 2002 at 14:27:53:

ok SO i wanted to get a 2 family own occ house. I wanted to live in the other unit so I can save my rent and get a few hundred extra a month to get a reserve growing to fund additional re investments.

I work full time , have no $$ for a dp ( will in a year or so) 25 years old. I tried to get a 100% ltv to finance the 2plex. I find out that i can only qualify for half of what i need. 80k vs 175k needed for a decent 2plex in Manchester NH. Needless to say I am a little bummed it didn’t fly. So i need to focus on flipping a few to start my reserve up. I have read Bronchicks Flipping Props, I understand the concepts and understand the technicalities slightly - I am going to buy the course for futher study-

I am just questioning this:
With no cash is it really possible to flip a property - what if i sign a purchase contract and can’t find a retailer? do I bail out, can I bail out?
Then, I can’t buy it to hold a little longer - cause I can’t finance it. Definetly can’t rehab it at all for a better resale.
I don’t want to ruin any repuation I may start for myself, by bailing out of deals.

Is the normal/safest/easiest process to just assign my contract for a fee? IS this a comlicated process?
It just seems it is to hard to get going without any money!!! AAAAGH I feel stagnant- any insight from those that have been here before

Re: Guess its back to the drawing board! - Posted by wpage

Posted by wpage on June 04, 2002 at 15:50:27:

Ryan Flipping properties is not for someone without money.You can get yourself into trouble by signing offers with no intention or capacity to follow through should you not be able to assign or sell the property. My suggestion would be to look at lease options. These are easier and less risky to complete. BTW they are also a bit more difficult (but not impossible) to find.You could start by lease optioning a place to live and go from there. good luck

Re: Guess its back to the drawing board! - Posted by Christopher - FL

Posted by Christopher - FL on June 04, 2002 at 16:20:27:

I’m a little confused. Most of what I’ve read about “flipping” properties seems to show it as a good way to REI with limited cash reserves.

Take a look at this success story as an example…

Strictly optioning (without the lease part) limits the risk by having no obligation just the right to buy in a certain time period at a certain price.

Perhaps I’m confused about something (totally possible).

Christopher Sink

Re: Guess its back to the drawing board! - Posted by Tim Fierro (Tacoma, WA)

Posted by Tim Fierro (Tacoma, WA) on June 04, 2002 at 16:17:04:

How is L/O less risky to complete than a flip?

Flip: You don’t perform or can’t get out, you lose the earnest money if applicable you had in the deal, or you have used a weasle clause to get out.

L/O: If you don’t find a buyer (or T/B for a sandwich) before the payments start, you are going to be out cash to pay for those monthly payments. You did mention ‘without money’, so the investor has no way to meet the lease payment, yet is on the hook for the lease payments.

I am all ears for the reasoning of how a L/O is less risky than a flip in the recommendation for someone without money to do. Granted, most of the courses sold preach that you can do this with no money, but I am curious on your take with this.

Re: Guess its back to the drawing board! - Posted by wpage

Posted by wpage on June 05, 2002 at 10:44:22:

Christopher I have read the above success story at: From this article it sure looks easy to complete a flip and it is for someone that has some experience. Obviously this was not the first time that this person was doing a flip. He understands the whole process, including how to create mortgages, discounting of mortgages, vendor take backs, property values, ITV’s, LTV’s, the screening of potential buyers, credit checks, and the double closing process from A to Z. For every success story like this I am sure there are 100’s or 1000’s that have gone wrong with a beginning investor. Sure you can have weasel clauses in your contract to just walk when things go wrong.
I worry about the poor seller who is already $4000. in arrears and hoping you are the miracle man that will not leave them holding the bag when everything is said and done.If you go into a contract with the intension of just walking if things don’t work out then you are giving false hope to these poor people in distress. I know that’s not your problem and you did not create their problem. However, on a moral ground one should not be entering into contracts unless they are able to complete the purchase should they not find a buyer to whom they can flip the property. If you want to do flips maybe it would be better to have a back up plan such as a partner/investor or a hard money lender lined up for funding should you not be able to complete the flip. This is not to discourage you because that is not my intention of this post. I am just trying to encourage you to be cautious and realistic when you do not have money to lose. good luck

Re: Guess its back to the drawing board! - Posted by wpage

Posted by wpage on June 05, 2002 at 11:06:56:

Tim I read your posts often and you are obviously an experienced investor and have some knowledge to do flips. I, too, have the experience and resources to get through trying to do a flip, even in the worst of situations. However, I am concerned for a begining investor trying to do this with no money and no RE experience. There are so many things that can and do go wrong in any RE transaction. It sounds simple when everything works out but going into a transaction with the idea of just walking (weasel clauses)when you are not able to complete the flip is not the way I want to invest. I always go into a flip with financing in place should I not be able to find a buyer. This is the prudent and honest way to do RE investing.
As to my post to Ryan!! My reasoning with him doing a lease option, as opposed to a flip, was that he wanted a place to live as well as being able to make some money. My idea was that he could l/0 a home for himself to live in,(which was his original objective) probably without any money down, and if his contract were structured properly maybe he could have a couple of months grace period before he has to start paying rent. This would give him control of a property without having to come up with a down payment and relatively no risk except for a rent payment. After all he does have to pay rent for a place to live. In this way it would give him more time to find a buyer without the rush of trying to do a flip and all the worries that might entail. just my idea