Real Estate Investing Niche???
Looking for some thoughts/insights into the following letter I received in response to a local ad:
"I have recently developed a very profitable real estate investing niche. I need partners to help me expand....Using a variety of methods, I will locate for us properties selling for drastically below their appraised value. I will purchase the property, and then assign the home to you. You will carry a first mortgage which is drastically less than the appraised value of the home, and I will pay the 10% down payment and all closing costs for you. On the same day of the closing of your purchase, I will buy the home back from you, and wyou will make an instant profit of $5,000.......Simply put, I can only buy so many houses at one time under my own name and credit. I buy and immediately resell undervalued properties. By doing these deals together, I can purchase far more homes. In return for helping me to expand my operation, I am willing to pay you $5,000 for each deal that we do together....All you need is a credit score of 700 or over, and the willingness to make some easy money..."
My observation would be the last word in the following sentence. Appears they do not have the credit rating but have the know how. Seems your response would depend upon your needs and credit rating. I would only proceed with caution.
"Simply put, I can only buy so many houses at one time under my own name and credit."
dwheroux,
Glad to meet you.
Here is what they are saying. We are using your credit to purchase the property and we are paying you $5K to use your credit.
They are not buying the house back through conventional methods, in other words the loan is going to stay in your name and you will deed them the property.
If they purchased conventionally every house back from the people who used their credit to purchase the property, they would still be in the same position "Simply put, I can only buy so many houses at one time under my own name and credit."
If you feel that $5K is enough for someone to have control of your credit for 30 years possibly, is it worth it to you, I would not, would you?
John $Cash$ Locke
Quote:
On 2004-05-24 18:11, JohnLocke wrote:
dwheroux,
Glad to meet you.
Here is what they are saying. We are using your credit to purchase the property and we are paying you $5K to use your credit.
They are not buying the house back through conventional methods, in other words the loan is going to stay in your name and you will deed them the property.
If they purchased conventionally every house back from the people who used their credit to purchase the property, they would still be in the same position "Simply put, I can only buy so many houses at one time under my own name and credit."
If you feel that $5K is enough for someone to have control of your credit for 30 years possibly, is it worth it to you, I would not, would you?
John $Cash$ Locke
John,
I agree with you on this subject. But here is where I'm confused, I thought you approved the" subject to" method of purchasing properties?
Which is basically the same thing. Correct?
I wouldn't buy anything that I could not afford or qualify for. So please explain why it is okay to take someone's home and put it in your name, but not the mortgage. But it is not okay to let someone use your credit. I read all the time that is how to do a no money out of pocket deal. So you would advise all these people who are down and out not to let someone pay the mortgage current, deed over the property, and keep the mortgage in their name?
Lori
I personally would advise the person wanting credit to go to a HML, and the down and out person should file a bankruptcy and clear up his credit and start over with a fresh start.
[addsig]
Lori,
The difference is these people are using others credit and don't really care what happens to the property once they sell it with a contract. Subject To investors do care what happens. We make sure it is a win/win for everyone not a one way street.
Do you think that only down and out people are willing to do Subject To deals? Do you know something that I don't know about Subject To investing?
90% of my deals the people were not behind in payments, they were not down an out, they needed help for various reasons and I helped them. This is why you are conventional in your thinking and find it hard to understand. However you would not find it hard to understand if I brought you 500+ deals to re-finance, your tune would be a little different.
You have been working the slums of Pittsburgh to long to get the deals you get, I have seen your deals for $11k, $15K, these aren't areas I would partiularly care to work in, plus put poor folks in these war zone, crack areas because you can finance them, wake up an smell the roses, not every one is down and out.
Look you make your six figures a year as you like to point out off the backs of the real down and out people.
John $Cash$ Locke
Quote:But here is where I'm confused, I thought you approved the" subject to" method of purchasing properties?
Which is basically the same thing. Correct?Lori,
You are correct. John is a proponent of buying Subject To. John does not recomment being the seller in a Subject To transaction.