OfflineHi, my name is Kevin. I am a full time student at the University of Central Florida. I don't have a job. I don't have credit. And before Dean's book, I knew nothing about real estate.
--- BUT ---
After reading Dean's book, i feel fully prepared to go find a house that is a gold mine, talk to a banker, ask for a loan, repair the house, rent it out to good tenants, and sell it during the up market (god knows when) for a huge profit. Now when i say huge, i mean huge.
MY AREA:
I live in a beautiful town with a butt load of money. Normal family house's around here are purchased for no lower than 300,000.
My Background:
Luckily, I was born with a great family that are financially set. My mother, a full time pharmacist at a hospital. My father, a retired periodontist.
My Plan:
After talking with my father, he has decided that i know enough for him to back me up 150% on any move I make. With that relieved, I was quickly on the prowl. I first purchased a free trial of a foreclosure finder online. I found a list of foreclosures around my beautiful town. The next day my girlfriend, father, and I went around looking at which house would be "The House." We found a bad house in a great neighborhood, that much of my friends from high school lived in. The asking price was ONLY $120,000! Like I said earlier, the houses when the market is up around this area, would no way on earth be sold for that low. Now, with it being an REO (the bank realtor's are dealing with me), and it being on the market since November, I BELIEVE I could persuade to purchase the house for a low payment of 100,000 after listing the number of negatives with the house. Now with the help of my father, the next step would talk to the bank for a 103-107% financing, assuming they are still lending those out and they like my father's 760 credit score. After purchasing the house I believe it'll be smooth sailing for fixing up the house with the extra money from the financing and using a handyman, and renting it for positive cash flow while I'm studying my butt off in college 3 hours away.
My Question:
Are their any suggestions involving the house, my father, the loan, ANYTHING that could make this plan a reality. Please comment fast, because like I said, I'm on the move and not afraid to fail.
I now have a real estate agent looking for a hundred houses in my area that are under the categories of preforeclosures, foreclosures, reo's, short sales and all the above. From there, my agent will bid 30-60% lower from the listing price to see if anyone is desperate enough to accept. The plan is still the same, just another way to find the cheapest house.
Hey Kevin
First I am glad to meet you and welcome you to Deans great message board.
I know you will be warmly welcomed here by everyone.
You are starting investing at a great age. If I could go back in time and be 18 again that is exactly what I would do...start buying up all these great deals that are just about on every street corner nowdays. People are so willing to deal with you cause their houses are loosing value everyday and they want to dump them, but of course it being real estate it will always make it's comeback and double maybe triple in price as time goes on. You cannot fail with real estate.
I hope your major at UCF is marketing and business management. It will greatly help you everyday of your life for the rest of your life.
Sounds like you have wonderful supportive parents. They are willing to step up and help you achieve your dream of having a lot of great investment properties. You are doing the right thing in offering low prices. I offer 50% (sometimes lower) of the current value. So if a house was worth $100,000 as it sits needing repairs etc...I would offer 50% ($50,000) and if it was really messed up I would offer even less. So you are right on offering as low as possible.
Start searching and see what a house of that size (BR & BA)is renting or leasing for in that neighborhood/area. When you see a For Rent sign call it and act as though you are inquiring. You will eventually find out rents in the area of your house. Also go to the Tax Assessors web site and look up properties on the street where the house is located. They do drive by appriasals and list the drive by appraisal amount on the Tax Assessors web site.
Hey...also check out this site... www.rentometer.com
Do as much of the repairs as you can to save money...unless you don't have the ability then hire a good contractor that you can trust. I have an idea...get you buddies from school to come over and give you a hand getting your new investment property ready to rent. They would have a blast! LOL!
Before you put a renter in your house try to check them out for good rental history, maybe pull their credit score, references, etc... Renters are notorious for tearing up rental property over a period of time unless you can find some good ones. Don't rent to friends or family or you will become "the bad guy" if they end up not paying and you have to evict.
Let us know how it goes for you.
Sissy
"THE ARCHITECT OF YOUR DESTINY IS YOURSELF"
"SUCCESS WALKS HAND IN HAND WITH FAILURE"
thank you for your support. people have been telling me that I'm not likely to get a no money down loan even if i have good credit and damn sure aren't going to get a 103-107% financing loan. can someone tell me what my chances are? like i said I'm working with a 760 credit score.
You should not have an issue with a 760 score. Don't let know one tell you otherwise. Call a bank and get your pre-approval. Countrywide or wells fargo will take your info over the phone.
"If you cannot do great things, do small things in a great way.”
Napoleon Hill quote
Also talk to a mortgage broker. They are the ones who will search until they find a loan for you. 760 is a great credit score. You should have no problem at all.
"THE ARCHITECT OF YOUR DESTINY IS YOURSELF"
"SUCCESS WALKS HAND IN HAND WITH FAILURE"
First off, if they want $120k and you feel it is worth $120k, offer $70-80k. If $120k seems too much, then offer less than $70-80k. Heck, you can even do like the previous posted said and offer $50k. You can ALWAYS increase your offer or counter up, but there is no countering down if you offer too good a offer.
As for financing, yes, with a great credit score you should be able to get 100+%. Shop around... different programs out there for this.
If you want to pull cash out, go in, buy the place dirt cheap, spend $10k making it seem twice as nice, get it reappriased and refi at the price that can be anywhere from 20% - 100%+ of what you paid.
Don't spend that money you pull out on a car, flashy stuff, anything personal for that matter... NOTHING (don't heed this advice and you should reevaluate the business you getting into because you will end up in trouble).
Take some of that money and use it to further improve the property where needed, (depending on if renting or flipping). Use the rest to invest in more properties. Rinse, repeat... once you have developed your own style/formula just keep expanding.
As for financing, yes, with a great credit score you should be able to get 100+%. Shop around... different programs out there for this.
If you want to pull cash out, go in, buy the place dirt cheap, spend $10k making it seem twice as nice, get it reappriased and refi at the price that can be anywhere from 20% - 100%+ of what you paid.
Don't spend that money you pull out on a car, flashy stuff, anything personal for that matter... NOTHING (don't heed this advice and you should reevaluate the business you getting into because you will end up in trouble).
Are there really 100 or +% loans available out there, if credit is at 800+?
Take some of that money and use it to further improve the property where needed, (depending on if renting or flipping). Use the rest to invest in more properties. Rinse, repeat... once you have developed your own style/formula just keep expanding.
Are the really still 100%-107% loans out there if credit score is around 800?
**** **** dean just commented on my question.
Take some of that money and use it to further improve the property where needed, (depending on if renting or flipping). Use the rest to invest in more properties. Rinse, repeat... once you have developed your own style/formula just keep expanding.
.The 10,000 is coming from the 100%+ financing, right?
.Nothing from my own personal money, right?
."Use the rest to invest in more properties", what rest? Did you mean the positive monthly cash flow from tenants and the money from flipping it?
?
Kevin,
No, the "rest" is how much the bank could give you after you RE-FINANCE (or re-fi for short) on the property.
dgadmin wrote:
"If you want to pull cash out, go in, buy the place dirt cheap, spend $10k making it seem twice as nice, get it reappriased and refi at the price that can be anywhere from 20% - 100%+ of what you paid."
If you buy the property for $50,000, for example, and spend $10,000 fixing it up, you have invested $60,000. Now that the property looks nicer, have an appraiser stop by (for a fee). They will give you a new appraised value. For instance, he/she may say it's worth $250,000.
Now, you take out a new loan for, let's say, $175,000 which is 70% LTV (Loan to value), or as big a loan as permitted. In this case, you are approved for $175,000, which is 70% of the value of your equity (value of the property). The lender WRITES YOU A CHECK FOR $175,000! You pay back the $60,000 to your investor, pay the lender closing costs, appraiser fee, etc. (let's say $5,000). Now you have $110,000 ($175,000-$65,000) from the lender in CASH to pay back to them on a monthly basis. This is the money you "pull out." My numbers are VERY generous, using sistreat's and dgadmin's and your numbers. That $110,000 of "instant" equity is 169% of what you paid.
dgadmin wrote:
"Take some of that money and use it to further improve the property where needed, (depending on if renting or flipping). Use the rest to invest in more properties. Rinse, repeat... once you have developed your own style/formula just keep expanding."
As long as your monthly rent pays your new property costs (remember PITI-principal, interest, taxes insurance) and repairs, advertising, etc., you break even. If your rent is higher than your new property costs, that is monthly PROFIT (cash flow)!
Make sense Kevin? Spend lots of time on this website looking for info. Search for "re-fi" or "pull cash out" etc. and follow those threads. It will be time WELL SPENT.
Anyone else- I know I am simplifying here, am I missing anything?
P.S. to Kevin- you can also click on the names here and look at personal info. You have inspired me to update mine. Sorry to disappoint you, but dgadmin is not Dean Graziosi. It is this site's administrator. (That is still quite an honor to have him on your post, though!)
Andrew
"Be very careful, then, how you live- not as unwise, but as wise, making the most out of every opportunity..." Apostle Paul writing to the church in Ephesus
I have always been told when making offers if you don't get a no on your first offer you didn't offer low enough... Just keep that in mind...
Shaun