Nothing Fancy – Just Another REO Purchase

This home was a standard REO home listed for $55,000.  We originally offered $35K and came to a final compromise of $38K with the bank.  Once again, our offer was accepted over other higher offers solely on the basis that ours was a non-contingent cash offer.

This is the 10th property added to our rental portfolio all of which are in the same neighborhood.  This property was purchased with all cash in order to keep things simple and provide leverage in our offer.  Based on the 50% LTV after repairs and large equity positions in our other properties, our commercial lender allowed us to cash-out 100% of the purchase price and and provided 100% of the repair funds.  So at the end of the day, we had no cash invested in this deal.… Read the rest

Foreclosure Viewing Instructions: Remove the Front Door Yourself!

Most experienced real estate investors and rehabbers have figured out a way to bypass being accompanied by a real estate agent when viewing vacant homes including bank owned properties.  Some investors have real estate agent friends that get the lockbox combos for them, while others sweet talk or persuade the listing brokers into offering up the combos.  This may not be legal in some cases, but it is a fact in our business.  Some agents listing vacant properties including REO’s, will actually instruct investors to bring a power drill with them to remove the front door to gain access to the house as long as the door is screwed shut upon leaving.  This is understandable given the number of real estate investors just kicking the tires and rarely ever buying anything.

Viewing… Read the rest

Short-Term Loans

A hard money lender makes short-term loans based on the value of an asset, in this case a property, with little regard to the borrower’s credit and/or finances.  Hard money lenders charge higher interest rates than standard banks due to the high risk nature of these loans.  Unlike traditional banks, hard money lenders can provide funds quickly, usually in 10-14 days, to purchase and rehab distressed properties.  These properties can be in need of significant repairs or be in various stages of foreclosure. This makes these loans popular with first time real estate investors that have little working capital or poor credit scores.  Look to use hard money loans to rehab foreclosures as your means to purchase and rehab your first couple properties.

Rehabber Loans

Hard money lenders will only provide loan terms of 4 – 6 months at… Read the rest

“So what’s your rate?” she asks…

You can see that twinkle of anticipation in her eyes, almost hearing her heart pounding as she awaits your response.  You look at her confidently but it’s a front; deep down you’re stomach is churning, there’s a lot riding on your answer and you know it all too well, you’re experienced and you have been here before…

Nervously you think to yourself, “If I quote her too high she’ll leave me for someone else… but if I quote her too low, can I really be the Mortgage Broker she expects me to be?”  If you play it just right you know it can lead to more… a completed loan application perhaps??  Possibly a customized Good Faith Estimate??  Your mind begins to go into overdrive…  She looks so intent… Is she the type to sign… Read the rest

A busy rehabber and real estate investor does not have the time to view every foreclosure that comes on the market and work out the detailed costs of every purchase.  That approach is not an effective use of the real estate investor’s time and resources.  You will miss out on many good deals trying to analyze the cost of every rehab prior to submitting an offer.  Let’s make life as simple as possible here.

Follow these steps to start submitting multiple offers on foreclosures, REO’s, and HUD properties without ever seeing the property.  Learn to submit offers based on price points and spend that quality time with family and friends instead.

1.  Learn the neighborhood

The first thing an investor must do is learn the neighborhood inside and out that is going to be targeted for flipping homes.  … Read the rest

First, Why Buy REO’s?

Because REO properties or bank owned foreclosures, will be the easiest properties to acquire and locate and therefore the best properties to start your real estate investing career with.  REO homes have already been through the foreclosure process, they have been returned to the bank, and are being offered with clear titles with no negotiating necessary other than the price.  Real estate investors interested in starting a fix and flip or fix and hold business should focus their initial efforts on construction cost control and marketing of their affordable housing rather than spending three to six months using creative techniques to find a property for $5K to $10K less than what is already on the MLS.  These savings will quickly be lost when the unprepared investor winds up blowing their construction budget or holding on… Read the rest

Rehab Financing Made Easy – Develop a Strong Relationship with your Local Community Bank

Find that investor friendly community bank located in the neighborhood where you will be buying and fixing foreclosures.  Be upfront, truthful, and communicate openly with your bank’s lending officer.  Develop a strong relationship based on open communication and most importantly consistent on time payments. Keep the lending officer abreast of your work so they get to know you and eventually the bank will treat you as a preferred customer.  They will be more willing to work with you in hard financial times or with special requests.  It makes smart financial sense for lending institutions to work with their borrowers during difficult financial times rather than enforce their strict guidelines with no flexibility.

3 Month Payment Deferral

Here are two examples… Read the rest