Posted by Eric_Tx on January 05, 2003 at 11:56:34:
First off I would like to say Anne, Thank you for pointing out errors or mis-interpretations that could be taken from my origional post.
I need to clarify myself. Do what ever you need to do to get that first deal behind you. However that does not mean using the last penny in your savings or putting your credit rating on the line, or going out and trying to screw somebody. It does mean if you have questions, ask them to investors who are out there doing these deals. Read everything you can on the subject that your interested in. EDUCATE YOURSELF!!! If you have have to partner your first couple of deals with a seasoned investor to get the experience. We are partnering our first deal right now for this very reason. Anne is correct in saying this is not a get rich business. It takes hard work, lots of time in continuing your education, and most of all patients. Hope this clarifies my meaning in the above post…
Posted by rolando satx on January 05, 2003 at 01:46:24:
i’m having second thoughts about going through on my possible first deal. i found a house thats for sale at 35k but i got it down to 30k, houses in that neighborhood run from 50-60k. it looks in good shape but needs minor work. what else should i find out about the house? if i’m dealing with the owner and not an agent, then where do i get the purchase contract? do i use the one that’s in back of “Flipping Property” by William Bronchick? This would be my first deal so i’m kind of scared of not being able to find another investor to buy it off me…any advice?
Posted by Kristine-CA on January 05, 2003 at 14:03:57:
Well take a deep breath and realize that this might not be the deal of the century. But there will be others if this one doesn’t pan out. But what’s the rush? Does your seller have a bunch of people knocking down doors, or what? It is very nerve-wracking to put properties under contract, especially when you don’t know the market well enough to feel confident that another investor will take over your contract or buy from you. Ask me how I know. I still get that doubt everytime I get a contract. Even when I know that I can sell it for additional $$ tomorrow.
Some questions I would ask about your deal:
The comps: 50-60K is a big spread when you are talking about low-priced properties. In fact, that 10K could be the difference between a deal and no deal. So study up on the comps–not the asking prices. Do you know the rents in that area and the needs of rental investors who would might be interested? Are totally renovated homes going for significantly more so that it might be attractive as rehab? How many homes are rentals in that area and who owns them? And how much do they pay for homes? You can check out (email me if you don’t know how) what other similar non-owner occupant homes sold for and compare prices. One thing that you may find is that a few investors own a lot of properties in the neighborhood and that what they paid is lower than the 30K you are contemplating. Good to know.
The repairs: This really depends on the end buyer. A buy-and-hold landlord will be looking at different things than a rehabber/reseller. What does it need to rent well? What does it need to sell for top dollar? Then there is the owner/occupant. What does it need to qualify for FHA loans if an owner/occupant wants to buy it? Chances are that this house doesn’t qualify for FHA which is why it is FSBO. Where I am this is really important info. It means your only buyers are investors. So there has to be enough room for two investors before it sells to the end user. Gets tight with properties under 50K.
Regarding the contract: I still think its a good idea to use a known purchase contract in your area (probably a Realtor Assoc. form). However, if I didn’t have access to an re attorney, I would go down to the recorders office and check out some docs on recent sales. Remember, your docs are the ones that a) you are assigning, in which case your assignee had better approve of the contract(s), and b) that if you don’t find an assignee, that the contracts had better suit your plans.
Take all the time you need to figure this stuff out. What kind of time frame were you offering the seller? Perhaps you can offer an option to purchase with the same time frame, especially if you were thinking 60 days or less. Get as much time as you can. Right now, 30 days is rarely enough time to close if any lender funds or appraisals are involved–especially if you don’t have a relationship yet with an escrow provider.
Congrats on getting out there and making offers. There is no replacement for what you will learn from this point on, regardless of whether you close this one or not.
Posted by Eric_Tx on January 05, 2003 at 09:11:22:
Being a newbie myself, a gentlman where I live once told me that if the numbers work on the property and work well, the money will come, and so will the buyers if you intend on wholesaling it. After meeting others in this business and joining a local REI club. I believe it. Getting past the dreaded first deal seems to take forever. My suggestion (and thats all it is since im still new) would be to talk to Tron and let him help you through it as he has offered. Get that first one behind you whatever it takes…
Posted by Tron Woods on January 05, 2003 at 07:01:40:
I can help you with that situation it is easy call me at 318-512-9330. and I can help you and help you get it sold to. Where are you located at? You can e-mail me at goingstrong2000@hotmail.com and leave your number and I can call you whichever way you want to do it.
Posted by Anne_ND on January 05, 2003 at 10:44:04:
Eric,
Do you really mean “get that first one behind you whatever it takes…”
What if it takes all your savings, your credit, your good name?
I’ve seen this advice from newbies before and frankly, it stinks.
If the idea is to make money, generate cashflow, build equity, then my suggestion would be to take a loooong time to educate oneself in your local market, who are the players, who are the buyers, what are the pitfalls. It may take nine months to buy the first property. Done properly, creative real estate investing is NOT a get-rich-quick scheme. Say that to yourself three times every night before you go to bed.