Beginner With Three Subject To Deals Completed
I have done the hard part I was able to get three sellers to sell to me. I got some pretty good deals too. One propery I only came out of pocket with $3500 to help seller find anther place to live and the other two I was able to buy with no money. My only problem is trying to get money out of the properties. What is the best way for me to go? I just brought the houses this month and my credit is horrible I have been trying to find someone to go through to refinance or get equity out the three properties have at least $45, 000 in equity in them. can anyone give me any advise on what to do, who to go through for refinancing with cash out or getting equity out of properties that you have not owned for 6 months.
thanks
Any help would be great[ Edited by lakesha on Date 06/12/2004 ]
Congrats on the deals...now think of a good exit strategy
Consider selling on contract or using a lease/option. You might be able to sell on contract and get 5-10% down.
Thanks myfrogger,
I am working on getting a couple of lease options working but how does to contract part work?
In no way am I trying to slam you at all...read line again.
But before you even thought about the houses and deals, you need to have figured out what your exit strategy will be. I can go and get 10 houses a week but if I don't know what I am going to do with them, it's worthless.
Pick up one good sub-2 book and one good lease-option book and read them 2 or 3 times. Learn your market and find out what people are buying and willing to pay. Find out fast homes are selling, talk to realtors and see if they have any homeowners who couldn't get financed that they'd be willing to send to you for a referral fee, etc.
Good job, but always remember to have two or three exit strategies when taking up a deal, things will go a lot easier for ya'.
Best,
[addsig]
First, well done so far.
It has been said before that you make your profit when you buy. You receive your profit when you sell.
In the situation presented you might have equity on paper but it could be worthless if you can not convert it.
Quickly read up on the subjects presented by the prior post so you can not only get an exit strategy you will execute it in a way that works and stands the test of time.
Good luck,
John
PS. As you likely know, work on the credit so you have one more option in the future. If you can find good Sub-2 deals you will be generating the cash to do some credit improvement.
[addsig]
If your credit is bad. You need to be thinking OPC ( other ppls credit). As stated above line this up on the front end, don't make it an after thought. You must have a plan and a plan B, at a minimum.
Thanks everyone,
I am in the process of working on my credit and finding a family member or a friend with some good credit to assist me.
Thanks for your help
Hi, I have not done a sub2 deal yet but am in the process of trying to get one together. One question i have is why does everybody do lease options or CFD. I dont understand why you just dont flat out sell the prop. ? Put it for sale by owner and sell it and cash out? Will the New buyers bank not lend on these props. for some reason. Im a little confused. Thank, Ryan
I think the answer to you question depends on whether you want the money in a lump sum and now or whether you'd rather have a little every month.
If you want the lump sum then you want to think sell. Do what you can to spiff up the house and make it show well and get it listed with a good real estate broker and you're on your way.
Otherwise lease the houses for more than the mortgage payments and use the profit each month to get your credit straightened out.
Mark
okay great, so there is nothing stopping you from selling? the Lending will lend on the prop. even though you have only had it for a short period of time. i was under the impression that they may not lend becasue they think that the price may be inflated and therfore is was hard for new buyers to get financing. Thanks, Ryan
jumperdk1, You exit via CFD or L/O to make it easier on you, and to get your deal done quickly so you can move on to the next one. Plus you have lots more potential buyers, since usually only the ones with good credit and tolerance for mounds of paperwork play the Realtor and bank loan game.
If you want to cash out right away, then you're competing with Realtors, and selling to people who expect to deal with all the paperwork, inspections, appraiisals, and TIME. It can take months to do a conventional close, and its full of hassles. People who pay cash or with bank money expect the royal treatment, and lots of handholding.
People who come to you ready to deal on terms tend to be more agreeable to your prerogatives, and if they aren't, someone else will be. If you sell with a balloon requiring a refi at two years, then all of the appraisals and inspections can happen on their time, not yours, and all the while your monthly checks are rolling in.
great thank you so much. well the reason i wanted to cash out quick for the first one is just a lack of cash. i strait out quit my job in order to do this full time and there is no going back to a job for me. its going to be this way or no way so i wanted to get a decent chunk of cash to start me off good. right now i have 4000 cash to start with and im hoping that is enough. i also have income coming in every month from a duplex i bought conventionally that pays for most of my bills. thanks for all of your help, Ryan
Rent from a duplex that pays most of your bills? Now that's some PCF, or just someone with next to no bils!! Congrats!
haha, yes i have little bills. cell phone, car insurance, and food, i am only 19 yrs old dont forget.. thanks ,Ryan
Jumper, I think we're on the same page buddy. So far you've asked three questions I was going to ask (in different posts). I also have about 4k cash to work with. Have 2 duplexes and am 25. Just thought I'd share that with ya.
Later,
Ryan
Oh, by the way. Don't worry too much about not having an exit strategy going in. Too many people never get started in this business because they want to have the whole deal put together before they start. You did good. You found a bargain, you controlled the property with little or no cash. Thats soon enough to figure out how to get out.
I would just like to add that I too am 20yrs old, I bought my first home at 19yrs. I have sinced been preparing myself to leave my job and never turn back.
I bought my first with 32k of equity and i'm looking to refinance to a interest-only codi,cosi or cofi mortgage. It Increases my cashflow while I pursue leasing out my grandparents property in Spain and my mother's in London, England. These two notwithstanding I am basically in the same stinking boat of working with meager credit and less still - capital, cash,dinero. About 5 months ago I could have done with speaking to someone else my age who was venturing into this; just at least to share experiences.
Since then I have learnt a multitude of things not least from my inital loan officer(who i keep in frequent contact with), referred attorneys, doctors real estate brokers and salespeople. its all about getting knowledge where you can - the Small Business Adminsitration, you'd be surprised to hear aswell. If you do intend to build a property portfolio hold some for a few years whilst leasing then cashing out at a appreciated value you benefit from evading capital gains tax. Or, if you set up a company or structure your company as a corporation (easier than you may think) your benefits become two fold in that there are tax benefits [s-corp] and protection of personal assets in the event of bankruptices, or inability to pay creditors. I shouldn't think anyone would rely upon the latter, because if done right, with shrewd thinking and prudent action creditors should be tripping over themsleves to throw you some capital.
Not to ramble on too much but if you guys ever want to share some knowledge on credit building, leasing options, prospective property procurement, and so forth ....please feel free to give me a buzz. My e-mail address is provided in my profile and I think I have also left my phone numbers there. Nonetheless, good luck in whatever you're doing its great to see others my age taking the fearless plunge into securing their financial futures'.