Deal of the Month #8 - Ugly House Pretty Profits!

I believe this as I know you are honest but it seems to good to be true to purchase for 60K and refinance at 190k almost immediately. Any way you would be willing to tell us what it was listed at, how long it was on the market and how many counters you had to do in order to get this price.

I understand banks don't want to hold properties but geez! I must be targeting the wrong area as I cannot imagine purchasing a deal this discounted in my area (but you have inspired me to try a little harder).

Thanks for taking your time to put this out there!

What I understand is Dean bought the house with cash or a normal loan (with down payment), cleaned it all up initially and then refi'd it for a lot more because wasn't a train wreck at that point. Then... with the money from that loan which was in excess of what he owed or paid for it (think 2nd mortgage) used that to pay off the initial mortgage (if there was one), and used that money to do the major overhaul.

I will try to get more details but I bet it makes perfect sense if you watch it again. This is how a lot of people here that are buying (not assignment only) are getting tremendous deals buy getting houses that have been thrashed (cosmetically), sometimes even occupied by vagrants for periods of time, that your average buyer wouldn't touch.

Remember, the key isn't in the listing price, it is in the offer. For the sake of argument (because I don't have first hand knowledge of this property or conditions) let's say this house is "good condition" is worth $170k. Let's say the condition when it was foreclosed wasn't very good. Then assume it was totally trashed on the inside and out while it was on the market. The bank could have been asking $100k for it and every person that saw it only saw "OMG! What a mess!"

Well, eventually listing agent for the bank is going to start telling the bank "This place is BAD, $100k isn't going to happen" and someone throws in a offer others doubt would be accepted, and they get it. If you look at the stories from everyone in the forums one of the big reoccurring themes of the great deals is them putting out a offer everyone they know says is too low to be accepted, yet it gets accepted, and everyone else is in amazement of what a great deal they got.

The deals are out there, you just have to be looking hard, making lots of offers... not thinking like a home buyer, but a investor.

Thanks, Dean, for another great video and lesson! Bad-lookin' REOs in great locations are my favorite! I LOVE seeing the potential and then watching them turn out even BETTER than I had imagined. And if you are in the position to pay cash (either outright, borrowed, or from equity in another property), you can pick up deals that others don't qualify for, and then refi to get the max out of it. Then do it all again, multiplying your net worth! (And it's even better when you've got someone else making your payments!)

Rina

This is my favorite strategy. Buy low, clean,paint,refi and rent out. Cleaning and painting are the two best returns you can get for your rehab dollars. Many times a bank will list a house 20 percent below fair market value just because it needs cleaned and painted. Then most people look at the house and run because they can't see past the mess. Then when you go in to put and offer in at 30 percent below asking price they take it because they haven't had any other offers.

60K to 190K..dang, I feel like a loser with my last deal. I guess its good but nothing close to this, assessed at 140K (will be fighting that) and I bought for 76K..reallistically though..not sure what it would appraise at right this minute..110 in our current market, perhaps I will find out by trying to re-finance like you all do but rates seem so darn high.

I am getting many calls to rent it at $995 so that is good (should close by the 31st and then I have a little work), it will cash flow nice but I cannot imagine a deal like the above in my farm area.

Rina and CBR..when you are refinancing after paying cash initially..are you refinancing as an investment property or owner occupied? and what kind of rates are you getting? and in what time period do you re-finance, like after a month, two, etc?

Sorry for all the questions. Just trying to position myself best so I can think about what I can do next. Thanks all!!

Nothing to scoff at, I would say! And cash-flow is forever (well, maybe not forever, but you know what I mean. lol)

When refinancing, I have to do it as investment property because I've already got them rented out, and actually being able to show a signed lease helps, especially when it's a business loan. The ones I've bought & refi-ed this year have been within just a couple months, but that was a few months ago. I don't know what the banks are saying today. I'm guessing I'll find out soon, though, with some deals pending. I've got some cash investors now willing to back me, so I might use that cash to make offers on REOs and then flip or refi within a short amount of time. It depends on what kind of deals we (me & my investors) come up with. No money down is still the best, but I see that defined in many ways.

The last few loans I got were between 6.5 and 7%, 30 year. The current "business" loan is 7.75? (I have to check to be exact) with a 3-year balloon, with a penalty if I refinance with another company. I plan to sell before that, though (no penalty for paying it off).

Rina

I received a lead from a local bank who is a little more friendly to investors so I guess I need to call them. (I ran an ad on Craiglist that I was Real Estate Investor with 780 credit score looking for a local bank who could work with me to ge me reasonable rates). I think it was another investor who responded with a couple suggestions of who to try. He also wanted to know if he could send some deals my way to look at..sure, why not..

I appreciate the information!

I think local is the best place to start. Once they "know" you, they're even MORE willing to make it work, and go the extra mile to find you financing. After all, you're making THEM money, too!
But, for people just starting out and not able to get traditional financing, there are SO MANY other options (I don't want to discourage anyone else reading this)
I, myself, am looking forward to finding my first "seller-financed" deal. And I've done a couple bird-dog deals which were really cool! But still, I do like the buy & hold strategy best in the long run.

Rina

just got my book,I don't no anything about real estate.I lost my job and i need something that i can be financially independent again.I don't have any money and my credit is not at the best,so this is what i'm having to face.when i saw the infomercial i said i got take a chance and hope this can be my opportunity to change my situation around.I need help anyone please reply.

How cheap can you buy those homes?

Greetings,
Having completed reading Dean's book,Profit from Real Estate Right Now! It has given me new hope
and an expectation of a brighter future. But besides the core players: Seasoned real estate
agent, innovative mortgage broker,and a real
etate attorney who specializes in Assigning contracts, coupled with a Title company. Will we
need to have a notary public, to document our
interest in the "killer deal."
It's a pleasure to be in the company of those
with a single purpose,that is, to solve sellers
and buyers, housing problems.
Note: If anyone has already addressed this issue,
please excuse the repetition. Thanx