Two Wholeselling Questions
I am trying to get into this biz and I never have attempted something this hard in my life. With so many rules, my head spins just reading.
That being said, I have essentially narrowed down the art of flipping. Tell me if I got this right:
1) My realtor finds a house structurely sound but in need of fixing.
2) The house is selling for 139k. The fair market value for a home like this after rehabbing is around 220k. The repairs needed are going to be about 35k. So, I will be spending 180k with all the fees and the legal crap.
3a) I find an "investor" and get him to buy the house for 200k. Try to find an investor who isn't trying to "no money down" me. Essentially, try and get all cash.
3b) Find a regular buyer (who can't get get a home "conventionally), write up a mortgage, get a down payment, take it to the title company and then sell off the mortage to a mortgage buyer.
Is that right?
Now, on to question number two: WHERE THE HELL ARE THESE GREAT HARD MONEY LENDERS WHO REQUIRE ONLY NEAR NOTHING TO GET YOU GOING IN ANY PROJECT?
I have tried 4 or 5 of them and the excuses at to why they can't help me with any deals are either they stopped lending out money to do flip deals or my projects are too small for them to even bother. So, I asked one of them what if Ihad land that I wanted to develop into an apartment complex? I needed to come up with half the money. Is there anyone out there who could guide me to a lender I can just stick with and contact to do deals with on a regular basis? To be honest, these 6 months of running around is not only expensive ( I take time out of work to research and drive) but also very disappointing.
Well, there it is. Any advice on the first? Any help on the second?
The simplest way to get into wholesaling is to lock in a property at a good option price and then assign it to an investor. You'll usually rake in 5k or so. You can also conduct a double close in that you "buy" the home for a low price and then sell it to an investor in one transaction, the difference in price being your profit. Realtors are not needed at all to find these homes, you can do it yourself. Also, if it costs 35k to fix a home with ARV of 220k, what makes you think anyone's going to buy it from you for 200k?
Keep in mind that your profit will never be greater than the investor that you flip/assign to. If you try to structure it that way, you'll never get a deal done. Figure in repair costs, the investor's desired profit and other expenses before you settle on a firm price to buy and then sell. You profit is always made when you make the initial buy offer, not when you sell the home. That's just a formality.
Technically, this is not the outline of a true flip.
This is a rehab deal, you are adding value by fixing up the house.
A true flip works by buying at a bargain and selling at retail.
Directing you to a lender would, by my understanding of the rules here get you banned for a week for board hustling.
I think that real advice about your situation would require more information abou who you are and what you know. It is quite likely that the time youv'e taken off work was more valuable than the money you are likely to make on the real estate transaction (certainly true so far.)
1st part:
I never personally profit from dealing with investors. Most can find the same deals in my area. I find I can make more money and alot of it by buying houses, fixing them up, and selling them to owner-occupied buyers. I can get top dollar for them.
2nd part:
I have read alot of posts about hard money lenders on this website and you are the first to say exactly what people who try to get hard money in my area say. I never use OPM. But investors tell me they don't give money based on equity alone. I have felt that that was always misleading to the new person.
The hard money lenders I know still want to see income, they want appraisals, they actually want more documents than the banks or brokers.
Lori
[addsig]
It all depends on the hard money lender. The one I use has NEVER pulled my credit. He does require appraisals, and house inspections, but if you can buy low enough, you can get into a house using him with no cash out of pocket, as he rolls them into the loan.