what do I do next??? - Posted by Tony

Posted by Ronald * Starr on June 27, 2001 at 13:16:47:


I would not recommend trying to do that. There is too much work involved to do it for so little pay.

When you bid on HUD homes you have to have the money in hand or be preapproved for a loan for enough to buy the property.

Don’t look for properties for sale. Develop your own leads. Direct marketing with cards or letters is very effective. I also beleive HUD does not allow assignment of their purchase contracts, although you should verify that rumor, if you decide to try to buy HUD homes.

Understand, too, that the “market value” of a property is nebulous range, not a digit set in concrete. Think in terms of a value range spread over maybe 10% of the apparent value. Then, a “discount” of $10K may be meaningless, depending upon the value of the property.

Good Investing*******Ron Starr********

what do I do next??? - Posted by Tony

Posted by Tony on June 26, 2001 at 24:49:40:

I have been studying RE for 2 yrs and am closing on my 4th property this month. I’ve been learning as I go, and since I have very little equity anywhere, and overall am just breaking even, I want to try to pay off some of these mortgages (1st and 2nds on each property) and build reserves for future opportunities. I’ve thought about vacant land (I live in a rural area of AZ), but haven’t noticed any postings about purchasing, dividing, or selling acreage. Does anyone know where I can learn about all that? And, what are your suggestions on capitol gains deals? I have quite a bit of spare time, but am not a very profesional rehabber yet. Any ideas would make my day!!!

Re: what do I do next??? - Posted by Ronald * Starr

Posted by Ronald * Starr on June 26, 2001 at 15:14:53:


You’re doing well, I would judge. Typically the net wealth of real estate investors does not go up much at the beginning. Maybe even down, because of the transaction costs that sunk into buying properties and are not recoverable. Having 4 properties already is fine. Expect to take about 10-12-15 years to achieve financial freedom with real estate. Unless you really are a ball of fire and have no other life.

Just sitting with properties for the long term is fine.

Paying down the loans early is a personal choice. Try to think through why you want to do it and what other alternatives you might do. Generally, I would rather pay the loans down minimally unless they are lines of credit, in which case I will pay whatever I can on them, knowing that I can borrow it out again easily if I need it. Otherwise, I would rather keep my cash liquid to pay for some bargain I run across. Having the money tied up as equity in properties does not appeal to me.

Some people do very well with vacant land. It is a bit of a tough racket since the only incme is usually from selling. Rarely will you have rent. You might have some mineral income if you have oil or gas on the property, but I think that is unlikely in AZ.

You have to buy very low and then sell at or near market value. Is there any demand for vacant or “raw” properties in your area? Talk to a lot of the real estate agents. Check sales records in the assessor’s office. What kinds of properties sell?

You can buy bargains at probate sales, foreclosures, tax sales, and tax liens, and just solicting owners from time to time. See Roy Stubblefield’s web site on tax liens. See Jack Reed’s excellent book 'How to Buy Real Estate for at Least 20% Below Market Value" website johntreed.com .

Then sell on easy terms. It works a lot like “Lonnie Deals” in mobile homes. Except there will be a lot of people who buy for the future and then will default on their loan to you. Be prepared to foreclose and resell the properties to somebody else when you get them back on the foreclosure sales.

Since you say you have time, study now. Study real estate investing books. If you can take a course at a community college, you might want to do that.

Scope out the real estate situation in your area, county. Look for records of bargain buys in the country records and then try to figure out or find out how the buyers did it. Talk to the sellers if you can.

Look for a need and fill it. Look for a niche – there are riches in niches.

Learn what works where you are and what you like to do. Then you will continue doing it until you are as rich as you want to get.

Good Investing*****Ron Starr**********

Re: what do I do next??? - Posted by Kris

Posted by Kris on June 27, 2001 at 01:54:13:

Regarding below market homes, what about hud homes? I’ve posted this scenerio on the message board already. There are some hud homes here in so.cal that are going 10k-15k below market value. Is it feesable to be able to purchase one of these homes and then flip it to an investor for 1k or 1.5k, leaving them with 8000 to 13000 profit provided the’re isn’t much to fix up there. If there is much to fix up? couldn’t a person figure in that cost to fix it up as well?

I’m just trying to figure out a way to do this. Any suggestions?