I'm 28, finished paying off student loans and grad school but I've been saving whenever I get the chance. I don't have a lot but it's close to 50K in savings and my credit is excellent. Would this be enough to do anything with regards to flipping properties?

I've been working with a few first time investors and any offer that we put together that requires bank financing never seems to work. My other clients who offer 150K cash, close in a week always seem to get the property.

I want to invest in something but not sure where to begin. Either buying a multifamily, collecting rent for a couple years and then reselling it or just buying and selling houses. Or maybe going in with a more experienced investor? My broker bought one for 190 a couple months ago and just sold it for 270 last week so I'm getting a little anxious to do something. (He was a cash buyer however)

Thanks in advance for any advice.

Depends on where you are located. In some markets you can purchase decent places that you can fix up for less than 100K and spend 15K fixing up and sell for 150 to 170K nice little return.

My advice, start very small, with as little leverage as you can, and learn your lessons in a small cheep way.

Alex, all I am doing right now is reading, I haven't started buying anything, but from what I am reading it is not as easy as many people think to buy property and rent it for a profit. I guess it is possible if you are getting the right numbers from the seller, but they seem to be able to hide the cost of repairs from the buyer very easy and that is how many buyers get tricked into thinking they will make a profit renting the property.

Clint

I wouldn't necessarily blame the sellers - caveat emptor and all that. It's the buyer's responsibility to learn stuff like that, ya know?

It's the seller's responsibility to disclose any & all issues, but not his responsibility to educate the buyer on the cost of repairs!

"Waaaaa!! I was tricked!!! I was misled!!!"

Sounds better than saying "I was stupid."

You might also want to investigate some creative finance options especially with properties that are already vacant and in need of repair. This obviously only for non-REO sellers.

There will be many agents that will say this cannot be done but don't pay any attention to them. They have it in their minds that this cannot be done or is somehow shady or simply do not have the guts to pull the trigger.

I just bought an estate property Friday. I offered them an additionl $7500 above what we negotiated on the condition that they are willing to wait 12 months for payment. They agreed to carry a 1st mortgage on the property with no payments. The entire note is due in 12 months. My crew will start rehab on Thursday. The sellers get the security of a mortgage on the property, the taxes are being paid and should I default they would them have all the benefits of the repairs and updates I will have made. Once they realized that there was no downside for them it was an easy deal. The longest I have had to hold a flip was 5 months.

Paul: You say "my crew", do you employ a crew or are these contractors that you work with regularly? I've read that before you start flipping that you build a "team" of people to do all the tasks so you can start fast and finish fast. Mostly these teams are just hired guns (realtors, carpenters, painters, etc) and not true employees of the flipper.

I am also partners in a construction company so technically it is both hired crew and sub contractors.

If you don't want to flip alone then partner with someone with construction experience who can run the jobsite and schedule the subs.

Scheduling the subs and finding the right subs is the hardest part of the process.

Yes,when dealing with properties there are TERMS and PRICE.You try to win both but if it'a a good deal winning on one is sometimes good enough,if you can't get either MOVE ON.

In investing they say you can do it no money down,why to sell a bunch of books to people that have NO MONEY

CASH is KING in investing especially if you want a bank to sell it for a cheap price and they also love a fast close with no contingencies.Even on soem investment loans they won't touch a property below a certian condition.

Banks are always going to try to sell to owner occupiedto get the highest return.This is why the dumps they can't move they look for the cash investor.

Super,
You are partially correct in my experience. It does take some money or credit. You can often get control of a property for very little or no money down. My example above called for $10 down and no payments for 12 months.

The rehab budget is where you will need the cash or credit.

I have used credit cards for short term flips (3 months max).

Started getting all the cards I could when I first started investing. Now up to $425,000 in avaible credit.

It only takes 10 days for the credit card checks to clear and it usually takes that long to do the title work before you can close.

It is 18% but it is only for a few months.

Which do you use for that? They do not check for other resources usage when you apply for one?

I have used credit cards, too, but I would never pay 18% interest on a credit card. I like the ones that give you about a year interest-free, and then go to no more than 10%. I got one for $15,000 when I bought my house...with 9.9% interest, it paid off in six years. Meantime the issuer has increased the credit line to $18,000. Balance paid off a month ago, so there's that much available credit to use for something else. But now they want about 15% if I use it. When I had a card that jacked the rate to about 24% a couple years ago, I rolled the balance to a new card with 0% for a year.

I was dumfounded when I first was introduced to the idea of using credit cards for major purchases. But I have taken to heart the following ideas:
1) The worst way to use a credit card is to pay for consumables (clothes, groceries, gas) things that are "consumed" before you get them paid for.
2) Second way is to use for business expenses.
3) BEST WAY. Use a credit card to MAKE money...the goal to make more than the cost of the interest you will pay.

To that end, I have a Home Depot credit card...default rate is 21% for purchases, but interest for purchases for $300 or more are deferred 6 months or longer. I make payments during the 0 interest term sufficient to pay off the particular purchase before the interest kicks in. Actually, since the items purchased with the card are to fix up investment property, which has now been rented, the tenants are paying off the purchases. Works for me.

Yes, they do check your credit report. So they will see how many other cards you have.
I had (and still have) good credit. So when I first started this, I applied for five cards online in about one hour.
I think of first ones were Discover, Bank of America, Citi, Regions & Chase.

I don't know if each company can see the other one’s credit inquiry in that short of the time period.
I really don't know why in the world they let us have so much unsecured debt, but they do.

All of them issued the cards at pretty much the same time.
I only got about $100,000 between the five cards and a HELOC that first go around, but that was enough to purchase my first foreclosure for $80,000.

I did minimal fix up and sold it in less than 60 days for a real good profit.

They did stop giving me credit cards for a while, but by then I had formed a few LLCs to take title to the properties.

And even though my name was on credit application with the company, for whatever reason I was able to get credit cards from some of the same companies (Chase, Regions, Equity First, etc.) for the LLCs.

I also started with the 0% interest offers.

Good Luck

Just to be clear, I only use credit cards on really good deals that I know I can do minimal work and resale quickly.

And as soon as I sell the house, I pay off all of the credit cards I used to purchase it.

I really like the freedom of not needing to justify my purchase to some unimaginative, non-risk taking underwriter. Decisions can be made quickly, and payments, so long as you are paying more than the minimum, can be flexible. But as you say, it's short term money...either to fix and flip, or roll into a lower interest rate down the road. A HELOC can be used the same way. My first investment property purchase was done with a personal bank loan using cows as collateral (really! dairy cows).

I'll take the cows idea, where do you usually get them...?

At the time, I was a dairy farmer, thus cows were readily available to me. But if you want some...they are a type of asset that reproduce themselves. At that time, they were worth about $1,000 each...I'm sure they're worth more than that now.;)

Hi, I'm in NY and have been investing in real estate for over 25yrs. I'm a very aggressive investor meaning I have no problem making low offers for cash on property's. Remember this is now a buyers market and you are in control because there is a lot of product out there. With the cash you have you need to be aggressive with your offers and start with smaller deals so you can work up to bigger deals. You also need to do your homework for the area you want to buy in. Also remember you want a deal with as much equity as possible because in this market I believe the prices are going to continue to go down so you want to have enough room in a property so you can sell it quick and make a good profit.
I'm a firm believer in keep asking till you get what you want and you will get it. If you would like to talk more let me know.
Jim
Also check out this site: http://www.easymoney-123.com
There are a load of links to bank reo's

I borrowed every dime for my first investment property. I had good credit and got a normal, 20% down loan. I borrowed the 20% from a private investor I found just by talking to people, networking, and making deals with him. I promised him a 10% simple interest return. It is out there: you just have to be proactive and find it. A few years later, I was paying all cash for properties because the original ones have appreciated (borrow against that equity), and I always had a positive cash flow for the other ones. The key I’ve found is to always be on the lookout for deals and be patient when trying to find them. Just my 2 cents.

Cows sound like a great investment! I wish I could have my rental properties reproduce themselves

Credit cards, hard money lenders but you always need to have in your mind to have care cost money. Yes $15,000 will be enough to start and if you don't have them cash use credit cards. Be careful in depreciating market with flipping. If you have 30% equity today, it could be %25 in a month.

I have access to a program, 39 states, that can offer 100% financing on aquisition, plus up to 75% of ARV for the rehab work to be done. You need a 700 mid fico score and $20k liquid assets for every $100k you want to borrow, but if you fit those guidelines, it is a pretty good program to get into aquisition/rehab with no money down.

It is not cheap money, 12-15% interest and 4-7 points, but if you want to use someone elses money instead of your own, it is an option to take a look at.

You can check out the guidelines on my hard money website under the rehab loan heading.

If you only have $50K and want to get started, look into "hard money" loans. A hard money loan is where a lender looks at the deal and lends money based on the equity position of the property, not so much your credit or income.

Hard money loans are more expensive on interest and points so you need to lower your purchase offer to cover the additional interest.


As to your original question,
Which would you prefer? $100K purchase with a bunch of financing contingencies or $95K cash, no contingencies, and close by next Friday?

There are lots of ways to skin a cat, Cash is King but not the only way.

ooops! The poster above beat me to it!