Trying Sub2 W/out Much Cash
I'm just starting out in sub2 investing with not a whole lot of cash. I wanted to get some other peoples takes on this. I am marketing for sellers with an ad, postcards, signs, and basic word of mouth. My question is, if I come across a seller that has too much equity for me to payout (over 2k) and take sub2 what are some other options I can take to still make some profit. I was thinking of getting under contract and assigning to another investor for an assignment fee. Does this make sense? Any other creative ways would be helpful.
neutral
neutral:
Yes, assignment would be a fine way to make some cash for future investing, as long as you do your homework especially well. Remember that now you have to look at that property and the numbers from your investor/buyer's point of view: is it a good enough deal to warrant buying the assignment from you? Do you know how to close this kind of assignment deal? etc.
You could also try just birddogging the deal to another investor, albeit for a smaller fee: I've come across several deals that don't fit my investment strategy of sub2 and I passed them along for $500 and $1000 fees (fee will depend on the investor you're giving it to and how they pay for these kind of leads).
This is another reason to investigate the GROUPS section of this site and get yourself hooked up with a local REI group: you can find all the investors you want/need at these things. Plus, if you stand up and tell people what you're doing, you can have the rehabber/buy-holder/lease-optioner type investors pass you their low-, no-equity deals that would work with sub2.
Andy
Another angle is to build up your buyer's list. Find out what they can do in terms of a cash payment to get into a deal. It might work out that you find a place that will take 5K but you have buyers who can handle the 5K. They you just work the middle with the money passing from your buyer to your subject to seller. You are not out the cash for more then a few seconds if you get the timing just right. Likely you will need slightly longer but you should get the point.
John
[addsig]
I was thinking that what I should do is call all the bandit signs I see around my area and ask what they are looking for (I'm assuming most will be rehabbers.) Also, I will tell them that I'm interested in deals with little or no equity and will pay a finders fee if the deal materializes. Is $500 sufficient? In return I will be able to refer them deals that don't fit my program.
So lets say I find a deal where the seller is motivated. Lets assume the property needs some work and is valued at 105k after 5k of work. The mortgage balance is 50k. If I can get property under contract for 65k I could then write out an assignment to sell contract for 5k. Motivated seller would get 15k out of his equity, I would get 5k assignment, and rehab investor would get a deal at seventy cents on the dollar. Does this sound accurate.