My First Investment
Hi everyone, there's some good info on these forums. I'm about to buy my first investment property and want your opinions.
3bed/1.5bath asking 40k, comparable in neighborhood 80k. Needs about 10k worth of work, drywall, carpet, etc. Nice area of small town. Its being offered by a company that buys houses at pre-foreclosure/owners are finanacially strapped. I asked what's in it for them and was told the company puts in 3k on each sale and their trick is to turn over lots of properties. Sounds too good to be true I thought. This company also does HM lending, they say no points but 14% interest.
I got about 8k saved up to start. Good credit no problem. I want to fix it up fast and flip it. I stopped by this week to look at the property but there were tenants in it and they wouldn;t let me in??? The sales guy told me his company is just under contract with the real owner until they sell the place. I guess a double flip? Supposely these properties go fast as this guy has told me and for me to reserve one I need to give him a deposit 1k, then finish everything else in closing. I first found this guy in the local paper classified section. Please tell me if I'm too paranoid, I'm new here, but it seems this is too good to be true?
so here's my questions.
1- it seems like a good deal, or am I missing something here?
2- what about financing should I use my own money and find regualar financing or try a HM lender.
Please forgive my ignorance here, but this should only happen once.
Thanks everyone
Seems decent. Make sure you know your market. Make sure that you know you can sell the property for $80,000 quickly. A fast nickel is better than a slow dime.
Other than that I would use their financing and then your own money to pay for the rehab. Interest rate isn't a problem because hopefully you can turn this property over within a month. Hire out all the work and get it done as quickly as possible.
There are lots of materials for purchase on this website that will give you a more complete picture on what to do. Good Luck!
If you are not putting your money into escrow or giving it to a licensed real estate agent, I've got a bridge in Brooklyn I'd like to sell you.
The reason it's ok to put up a deposit is that it is going to someone who is licensed by the state. In fact, in Calif the state backs those funds and if the person who took them skips the state steps in and makes it good.
The numbers on the deal look about right. There should be enough in it to turn a good profit when you've rehabbed it. Double check the numbers. get your own CMA (Comparative Market Analysis) done to verify the ARV (After Repaired Value), and get good estimates for repairs. You might consider using their available financing if they would loan you the purchase and repair costs. Quick turn around, and you've done a good thing.
Good luck,
Jeff
once again im a dollar short and a day late on my posts (inside joke to myself) so i must continually agree with the posts above, but, must reiterate getting this deposit chaneled to escrow..check this outfit out, im skeptical about all dealings especially with all the false gurus out there with their associates..
regards-pat
Thanks for everyone's comments, I'll let you know how it goes.