Huggins95

Just wanted to tell anyone willing to listen that I am very excited about my decision to take the first step. Definitely first I will be reading the books, taking detailed notes, and trying to absorb as much information as possible. I know with the proper preparation in this area it could eventually be very rewarding. Any advice for a greenhorn would be greatly appreciated. Good luck to all, and I look forward to building positive relationships with many of you.

Jeffrey

Good luck with the REO deals you are currently considering. Another tip would be to network with as many people as you can and look into local real estate investment clubs in your area. Reference back to Dean's books for more great ideas and keep positive. Good luck on all your deals! Believe and Achieve! - Joe

Hey Joe thanks alot for responding to my post. You had mentioned in your response that we need to purchase 50%-60% below repaired fair market value. Naturally I will have to make purchase on property before any repairs are made so how would I know what the repaired fair market value is? Would I need to call for an inspection on property which will list all repairs, and then get bids from contractors, and then deduct that from my market value price? My partner and I are looking at a property now that definitely needs work, but does have potential if we can get at the right price, hopefully created alot of equity turn around borrow against that equity for repair cost, and still have positive equity in property. I think that I am understanding this correctly let me give you a scenario to see if am on the right track. Let's say that the bank on a REO is asking 100,ooo dallars, I come with a bid of 50,000 dollars which is the 50% under market value that we discussed, now I have created 50,000 dollars worth of equity. Let's say we pull out 20,000 dallars for repairs which still leaves us with 30,000 dollars worth of equity. Now let's say that me and my partner want to pull out 10,000 dollars a piece just because we need it. Now we are sitting at 10,000 dollars worth of equity, and leaves us with amount to be financed at 90,000 dollars. Now Im thinking that the best way to go with the financing is strecth it out on a 30 fixed if possible to achieve the lowest monthly payment as possible, turn around and rent as you said but make sure rent covers all hidden fees such as insurance, taxes, and most importantly the morgage, but also we need the positive cash flow montly aswell as we have already disscused. Next question is how do I go about getting the true fair market value on this property before repairs, Im thinking an appraisal on property, that way getting info on comparable comps in this area, once I get this info I can go ahead a submit my bid on property minus the 50% of course, plus I will need to figure in repair cost as you mentioned aswell. I am thinking that you need to figure in repair cost within that 50% and still have substantial equity to work with to make this or any property a catch. Figureing in repair cost outside of the 50% would make the deal almost impossible considering my offer would be extremly low. So Im thinking correct if I am wrong we need to find properties that we can get @ the 50% to 60% with factoring in our repairs within that 50%-60% and still have again the positive equity which will continue to build considering the market as you mentioned will turn, or pull out for cash in pocket if we choose? Didnt know if I could search records elsewhere to find out value hopefully you can assist me with that. Again Joe thanks for all of your input I am so anxious to close on our first property, but I know that I have alot more time to spend with Dean and his amazing books. Almost forgot what do you think about the short sale method dealing with FSBO's in the pre-foreclosure?

Jeffrey

I read through the above post and I believe I will address each question, if I miss something, let me know.

Each real estate market is a little different, the more potential profit margin on a deal the more options you will have to either assign it, flip it, or buy and hold as a rental. Thus, a key to any market is to get to know the market you want to buy in. Talk to a few realtors and get comps of homes that have sold in the past similar to the REO home you are interested in.

Also, see how long the homes are on the market. Then you may be able to get a feel for your local market. I believe if you can get a home for 50%-60% below the fair market value, it may give you plenty of margin whjen deciding on an exit strategy.

I guess another way to look at it is Purchase price + repairs should always equal less than 75% of the FMV. This may ensure a quick sale or assignment if you list the home below FMV. To get an idea of repairs, you can contact contractors to inquire about costs for windows, roofs, etc. The more information you gather about rehabbing the better idea you will have on after repaired value (ARV).

Your local county assessor may be able to give you an idea of home sale prices in your area. Most assessors record the sales price and date of sale (Sales Disclosure Form).

I have purchased any short sale properties dealing with FSBO's in the pre-foreclosure. However, I know several people on the DG website have had success. I hear you may have to wait a little longer to get an answer from the bank, but sometimes it can be worth the wait.

Lastly, I would suggest try several; items and see what techniques may work best in your area. Then each month try another new one. I still reference Dean's books for ideas to try new strategies. Good luck with real estate investing. Believe and Achieve! - Joe

Hey Joe thanks for the info it was really helpful. Sometime this week I will be meeting with Loan Officer to dicuss loan options for the REO properties. I'm thinking that in this economy there might not be any programs with no money down, but never know without asking. If money down is required just want to get a feel for what the % down might be, I'll just create a scenario with figuers to hopefully accomplish this. Just wanted to know if you had any thing extra to add that may help me out.

Thanks,

Jeffrey

Good luck with the REO search in your area. You may want to contact several loan officers in your area to determine what type of programs they may have available. The normal conventional type of mortgage usually requires 20% down. However, there may be a "construction loan" that you could inquire about.

A bank may work with you to finance the acquisiton and repairs of a property as long as the numbers support the property. Another way to get an REO almost like no money down is find an equity partner that can put up the requried down payment. A final thought on 100% financing is try to find local small banks in your area that handle their own REOs. If they have been on the books for a while they may entertain a deal and finance their REO property at 100%.

Just make sure you run the numbers and know your exit strategy or if you plan to buy and hold the property that the property will cash lfow itself. Good luck on these REOs. Believe and Achieve! - Joe

just stopping by to welcome to to this site.

God Bless