Newbie Needs To Know If This Formula Will Work To Get Started!
Hi!
I am new here, and would like to know if an idea I have to get started would really work and if not, why? (Don't you just love this site!)
Here's my idea: 
Find a homeowner in preforclosure
Enter Agreement to purchase property
Get Hard Money Loan based on (2nd Appraisal Value
Pay Seller portion (what %) or all of their equity?
Seller signs over title to me - I record.
Come out of deal with cash since loan is based on appraised value
Pay the seller's mortgage with hard money loan until I sell the house.
Does this really work, am I understanding how to do this?
Could someone here, please, please reply? Thanks!
I would really appreciate your expertise on this one! :-o ]HMsBeee@aol.com[/EMAIL][ Edited by trixie1 on Date 03/21/2004 ]
Thats what you do in a nutshell but you are trying to simplify business to buy low and sell high! If you are thinking this is easy money you better stay out of real estate investing. This is much harder work than you may expect. Many of us find the work fun and think it is worth the reward but it is not for everyone.
GOOD LUCK
Thanks myfrogger!
I understand that this isn't as simple as I stated. I have read a little about creative finance ,and found out that I was very interested in learning more. I think this would be the ultimate challenge to succeed in this type of investing!
Again, thank you, and I will let you know about my progress! ...my first step is going to be getting a LLC
Quote:
On 2004-03-21 13:50, trixie1 wrote:
Pay the seller's mortgage with hard money loan until I sell the house.
ont size=-1>[ Edited by trixie1 on Date 03/21/2004 ]</font>
I don't quite understand this sentence. Do you plan on paying the original mortgage off?
Tom
Tom:
This is the area where I need help.
Would I assume the mortgage and pay the sellers mortgage from the cash i receive at closing? or do I pay of the mortgage with the cash from closing?
Good question, Tom.
Back to my book
Trixie1,
I think you may be a little confused in your process. What are you getting the hard money loan for? Usually a hard money loan is for buying a property at 65% FMV or less because hard money lenders charge high points and high interest rates. If you are planning on getting a loan in your name anyways, then this is what I would do:
1. Find a motivated seller.
2. Enter into an agreement with seller.
3. Have the seller deed you the property and pay the seller some money for their equity once they have vacated the house.
4. Record the deed.
5. Do a cash-out refinance to pull money from your equity.
6. Sell it, rent it, or lease/option it.
It does sound easy, but you have to make sure you know what you are getting into with any property. You will need money for marketing and to pay the seller for their equity. There are ways of buying a house with little or no money, at least none of your money. One idea is have the seller's hold a note for their equity and when you do the refinance it will cash them out. There are many ways of looking at this, so make sure you are clear before proceeding. Good luck.
Tanya
trixie, you're right basically. but, the one thing you want to focus on is this part ...
>>since loan is based on appraised value >>
this is where i run into the most trouble with hard money guys. what you want to do is find a lender to give you the money based on the fair market value and then pay the owner some of thier equity from the cash back at closing. when you go to closing they'll (lender) send the money to the title company who is closing (not to you), then you'll get dispersed over funds back to you. then you may have enough (after protecting yourself with holding/marketing/whatever funds) to pay the seller something on his equity.
good luck. continue to read and read, then do something and you'll be ok.
:-D
Thanks Tanya and Jackman for your information!
I will continue to read on the subject.
Currently I am reading "Buy It, Fix It, Sell It PROFIT! by Kevin C. Myers and "Financing Secrets Millionaire RE Investor" by William Bronchick.
I was intouch with a Private Mortgage Broker this a.m. (all ready to go), and to my dismay, was informed that inorder to qualify for their hard money loan, I would need two (2) ways out ( which does make sense, but no help to me now) -I would need to be able refinance my personal property in the event that I got stuck with the house. Since I was just laid-off from my job last week, and my husband only receives Social Security, that means that our debt ratio wouldn't qualify us for a refi.
I thought that private lenders loans were based on the AR appraisal only.
Anyway, if any of you have any information on how I can get started, without working a 9-5 (and Tanya thanks again!), I would greatly appreciate it!
null :-D :-D
Sounds like you need to buy this property "Subject To" (the existing financing). This way you don't need to get or qualify for a loan at all. Check the Subject To forum for how this is done, and read John Locke's articles on how this is done. Read, ponder, learn, and look before you leap, though! Some people make it sound easy (and maybe it is after dozens of deals) but there's a lot to learn. Good luck and have fun!
If you are looking at getting a hardmoney loan than they will normally want to be in the first position. So that means any liens will have to be paid off. I have yet to meet a hml that will give you money to reinstate another mortgage.
But you could hook up with other people that have money to reinstate the loans. Like doctors or dentists, people in a high paying profession that may not have a lot of time to invest themselves.
Tom