Re: Newbie needs that last push over the hill… - Posted by Ed Garcia
Posted by Ed Garcia on December 27, 2000 at 24:28:44:
Wayne,
What you haven’t told us is, how you structure your deals? I don’t know how you and your employer structure your average deal. Do you buy at 60%, 70%, etc. ? If your buys have good equity position, then hard money is 65% of market value, not purchase price. Credit, is not a factor. So in essence, you could buy at 100% financing if done right.
Back to deal structuring. Now lets say that your buying a little higher than 65%. Lets say your buying up to 75% of market value. Now you can buy, financing 65% of the deal with seller carry back for the other 10%. The numbers can be played with, it’s the concept that I want you to understand.
Wayne,
In my workshop, I teach that there are at least 9 different ways you can do a deal with poor or bad credit.
Now before I give them to you, I want you to know that I’m really supportive of learning deal structuring. The first thing you need to do is, “investigate your deal” to know what I call( where the bodies lie) another words what is the sellers main objectives or motivation. That allows you to have an idea of what approaches are going to be compatible with the sellers needs, allowing you to do the deal.
Here are the 9 ways that I’ve mentioned.
(1) PARTNERHIP: Find a 50/50 partner. It don’t have to be 50/50, it can be what ever you can negotiate.
(2) FLIP: the best way to flip is to find a potential buyer first and then find a property. You can do this by running an ad on a property to see what kind of action you get. Once you have a potential qualified buyer, you’d be surprised how easy it is to find them a house.
(3) LEASE OPTION: Many times you can buy and sell with a lease option. We call this a “Sandwich Lease Option”. Jim, I’m not going to go into any great detail, you can find this information all over this forum.
(4) SELLER CARRY BACK: This is one of if not my favorite way to buy. Now the best way to utilize this system, is to do a second seller carry back in order to give the seller some cash in the deal. If money doesn’t exchange hands, many times the seller doesn’t feel that they consummated a sale.
(5) HARD MONEY: Hard money, is an equity loan made at approximately 65% LTV, based on the equity of the property only. Credit is not a consideration.
(6) HARD MONEY/SELLER CARRY BACK: Again, You can have the seller carry back a second and refinance the first, giving the seller some money. You can do variations of this system.
(7) SUB PRIME FINANCING: Many National lenders will provide financing at 70% with poor credit and won’t verify money down.
(8) SUB PRIME/ SELLER CARRY BACK: Again this combination can provide money to the seller, rather than ask them to carry the whole thing. Also there are local independent portfolio lenders that will lend as well as mortgage co’s and I always recommend seeking them out. National one’s would be Associates Finance, American General, Beneficial etc.
(9) CREAT YOUR OWN MORTGAGE: In our work shop, Terry Vaughan covers this, and shows you how to discount it and market it.
Wayne, I hope this post is helpful to you and has stimulate your thinking, as will as encourage you to stay with it. The only way you won’t be successful in this business, is when you stop trying.
You’re already making money in this business, now you just have to find a way to keep most of it for you.
Ed Garcia