OfflineHello, This is my first post, and I am hoping I can get some quick feedback on a deal I am in the initial stages of.
I was contacted by an investment company after searching for foreclosures online (I had to enter my contact info.)
The deal is this: The company purchases foreclosures from banks all over the U.S. and then sells them at a flat rate of $17,900. They are guaranteed to be worth a minimum of $60K, and the purchase price includes any renovations that were needed. The investor pays the title company, then they get to see the house stats. I live in Hawaii, so I wouldn't physically see the house. They have an exit strategy option set in place, which is a list of people who want to buy a house and will enter 10 year land contract with the investor, where the investor will get $500 per month for 10 years, then a "buyer" owns the house. Passive income for 10 years, after you make your initial investment back.
Another option is to have their established property management company handle it, and you keep the title, can sell whenever you want.
After Jan 1, the price is going up to $23,500, so I feel "pressure" to act now, and I am supposed sign the purchase agreement, and to wire money on Monday to get the deal going. It sounds too good to be true! I have tried to find something on the company, and didn't find anything negative yet. I would be using my home equity line of credit to do the purchase of two of these properties.
I think I got the main info across, and would be grateful for feedback.
Thanks,
Celeste
Investing in REOs through and an investment company
Posted on: Sun, 12/21/2008 - 05:29
Investing in REOs through and an investment company
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- by celesteb
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I would suggest you not sending any money to these people. First call the local better business bureau in the city where they are doing business. Also call the attorney general in their city to see if any complaints have surfaced against their personal name or their DBA.
It would be terrible to see someone take your money and run.
If everything checks out and you feel safe to do business them procede.
Glad to meet you and welcome to the forum. You can learn much here and meet a lot of good people.
Sissy
"THE ARCHITECT OF YOUR DESTINY IS YOURSELF"
"SUCCESS WALKS HAND IN HAND WITH FAILURE"
Thank you for your time, and yes I did check with the BBB online and they looked okay. I still feel weary and nervous about it though, perhaps it is because it is an unconventional way of investing in real estate. I am trying to break in and found this deal right away. Perhaps I will continue with more diligence! I will call the attorney general, thanks for that tip.
Celeste
This may be a legit company, but what you really want to do as a real estate investor is to learn how to do the deals yourself and be actively invloved. In this case you would be relying on this investment company to find the deals for you and not realy know what's happening behind the scenes. Does that make sense?
"If you cannot do great things, do small things in a great way.”
Napoleon Hill quote
You are totally right, they say that they work with busy professionals who are too busy to deal with all the details. I guess it was the price that hooked me, as investing in my state seems nearly out of my league, but I still need to finish Dean's books which can help get over the "not enough money" excuse. Thanks so much for your feedback. It is nice to know there are people out there willing to share their experience!
Celeste
Can you have your own property management company manage it for you? Can you just put it up for sale? If it's legitimate, it sounds like a pretty good deal. The $500/month nets you 60K at the end of 10 years, and 6K a year. That's not bad, but your ROI is almost 3 years. That's a long time in RIE. Also, the buyers get a great deal as after basically paying you 60K over 10 years, they get a house that originally appraised at 60K with 10 years of appreciation. Of course, I have a feeling they're paying you $500/month and another 10%-15% to the company handling the deal.