OK by popular request we will start a string on Deal Done... Let us know IN BRIEF, what your most recent or most interesting deal was.. I'll start with a post...

Located a Distressed Seller, Pre-Foreclosure with Sale date set for 3 business days and a weekend away.

3 Bedroom 2 Bath 1516HAVC 2020 sf total
All Brick Built 1983, nice location

Pay Off $81,250 + Nominal Closing Cost

Repair requirements
Roof $3,200
Interior drywall $3,000
Interior paint $1,200
Flooring $1,400
Ext Paint $750
EXt landscape $1,200
Misc $1,000
TOTAL REPAIR Cost = $10,350

ARV estimated to be between $128k and $132k conventional sale or $136k to $138k Lease Option

Friday took deed on Sub 2 with intent of full Cash payoff due to short lead and opportunity.

Closed on Tuesday and wired payoff where Court Sale was scheduled for the AM of Wed.

Now half way through repairs and no surprises.

Should Net around $30,000 in 3 to 4 weeks

next....

Nice little deal Reality...

I have got one for you... I recently had a looloo of a deal fall through... I was working on a Golf Course purchase with one of my buyers... He was getting a pretty good deal on a Golf Course in North Carolina with some Development lots with it thrown in... Well he was bringing in approx. $1.5 million in cash (private investor) and needed the seller to take a $500,000.00 note (normally most golf courses are purchsed with a whole lot more owner financing than that...)... The seller got greedy and wanted to know the what for's and why's of the Buyer's financing... which to a reasonable point would have been ok.. But the seller was being way too nosey for his own good...

The Seller got an attitude because the buyer's offer was almost one million less than what he paid for the place... A few weeks after the seller refused my buyer's deal, the seller put the place on the auction block... The highest bid for it was about half of my buyer's offer, the Seller had to sell it for that price because he did not place a reserve amount on his auction contract...

Speaking of silly and stupid, educated and stubborn people...

Arghhhhhhhhhh....

Oh yes.. here is a sweet little deal I found for one of my Miami investors... A multi-use building on a "reborn" street in Miami... The property had 2- 1,100 Sq. Ft. 2 bed, 2 bath Apartments up... A Storefront downstairs in front, and a 1-1 downstairs... When renovated (approx. $30,000 to $40,000.00), the property would rent Section 8 @ the following 2 2-2 apts, $850.00 per month, 1 1-1 Apt $650.00 per month, and the storefront for approx $800.00 a month (probably a little more depending upon the type of business...)... Now I found it, put my Investor's offer in to the Seller for $48,000.00... The property was purchased and renovated in less than one month, he got it section eighted and flipped it for $175,000.00 by the end of the second month...

Whoopee..

<
The dilemma with flipping a property within the first year is, you end up paying taxes as ordinary income as opposed to capital gains.

I'm 6 mos away from being to flip one. The difference between capital gains and ordinary income would be $150K.

"Patience is a virtue, just not one of mine."

just bought a 3 br for $46,500 price included closing costs last month. spent $7k getting it very nice, appraised now for $90,000.

I decided to keep it for a while and actually move there myself for a year or 2.

[This message has been edited by Wes Murphree (edited 05-26-2004).]

Hey everybody...

Some good deals thus far... Come on folks let's hear some more... All of us love to talk about the good and the bad deals around us...So keep the string going...

Duane

I have heard the loophole to the capital gains tax is to take a line of credit out on your property. The settlement company on reports the profit. They take the mortgage balances and pay them off. Leave a little equity in to pay fees and take a line to cash out.

Am I wrong?

Ashburn VA Real Estate


Northern Virginia Real Estate

------------------
Michael C. Glass
REMAX Select Properties
Licensed to Practice Real Estate in Virginia
20 Pidgeon Hill Drive, Suite 201
Sterling, VA 20165
703-444-5900 (O)
703-723-2379 (D)
703-444-5921 (F)
http://www.moveupwithmike.com

Tell Me and I'll Forget
Show Me and I'll Remember
Involve Me and I'll Understand

Being able to Interpret and Manipulate Knowledge is Power!

Distress Seller in Foreclosure 12 days from Court Ordered Sale.

Property is a 3/2 built 1997 1400sqft
Mortgage pay off including Legal Fees and back payments $42,985

Repair cost Est at $3,800 for carpets and paint.

After Repair Value $72,500

Selling Lease Purchase
Purchase option payment $4,500 non-refundable
Purchase Price Set for 24 months out is $78,900
Lease is $625 / mo

Cash flow $625 x 24 = $15,000
Sale in 24 months $78,900
Option Received $4,500
Returns $98,400
less Purchase - $42,985
less Repairs - $3,800
less Closing Cost - $3,000
Total Return in 24 months $48,615

ROI = 102% (tax write offs off set taxes or more)

Hey Reality...

Great deal... Nice little $48,000 profit in a pretty short time...

Hey everybody.. let's keep this up... Some good deals are floating...

I've just finished the financing for a Hard Money commercial loan. A bad credit owner of a 100 room motel, owed 150K on a property that appraised for 4 million. Somehow he kept the 150K mortgage up to date, although he was unable to keep the motel open. He rented out the banquet rooms on a regular basis, but needed to renovate the guest rooms before reopening fully.

We did a $1.8 million stated income hard-money loan that allowed the owner to renovate the hotel, hire and train staff, and reopen for business with some operating capital available.

I was able to pay a $9K referral to the referring individual. Front start to finish this took us about 4 weeks.

------------------
W. Jeff Weatherspoon
Monarch Financial Services, Inc.
Commercial Lending Division
843-602-3322
843-497-9381 fax
monarchfinancial@sc.rr.com

[This message has been edited by jwxspoon (edited 06-01-2004).]

Hey Jeff...

Congrats on the deal... It sounds as if you are pretty creative... If you get a moment, please drop me an email as I have a few things that might need "creativity"... LOL...

Hey everybody, let's keep this creative financing post going... If we can get some more posts on it, we will start another one... This is a field of endeavor that alot of Agents shy away from because of their unfamiliarity with it... I fiind that it can be a very profitable method of finding, working, and doing deals... As both an agent working with clients and for myself...

Great going everybody...

Duane

"This is a field of endeavor that alot of Agents shy away from because of their unfamiliarity with it..."

Duane:

You hit this right on the nose. I'm new to the real estate industry and would love to get into bigger investments someday. I must admit reading these posts/deals that are going on excite, confuse and scare me all at the same time!

This, of course, due to my inexperience, which I hope to change in the next few years with training and visits to this site.

Keep up all the great posts!!!

Your time and experience is greatly appreciated.

Robyn
(a newbie)

Hey Robyn...
If you can, go to all the different real estate investor meetings in the area... Find another agent that works "creative" deals and ask them if you can "tag along" and read... Keep reading until you are blue in the face... and then Read some more... In this field of endeavor, knowledge is pure unadulterated power... The more you have the more power you can wield... Good Luck and please don't be afraid to ask questions... Just remember that the real estate industry is a living, breathing animal... It can rear up and bite as well as sit next to you and console you while you pet it's head...

Duane

My little niche is I only buy 2 br that were built as a 3 br, with a certain TSF. Return back to normal set up. Repeat as often as humanly possible. I recently bought latest one for $92k, return bedroom < 1k, time <1 month, new appraisal at $130k. Not alot of money, but such easy work.
Renter intends to buy soon, less than one year and I intend to roll into 1003 exchange to avoid capital tax. I will be exchanging up for a mixed use building in a college town a few counties over that is currently undervalued. Nothing flashy, just quietly building net worth for semi-retirement at 45. Yikes, that is only 10 years away, clock's a-ticking.

You and your buyer should'a gone to the auction..

Hi Realty Check,

Very nice deal. Let me ask you about an ethical dilema I've been thinking about (this is not a critique, just an honest question). Is it morally right to make $30K and not give anything to a seller?

Perhaps I'm not thinking about investing as a business (but as a charity), but did you have these throughts in the beginning? If so, how did you deal with them?

Btw, I'm a total newb with no serious deals under my belt and I'm also an Agent.

My personal take on that question is whether or not the homeowners are taking any risk. If I'm taking all the risk and the homeowners are taking none, then I doubt I'd give them much more than moving expenses.

OTOH, if they're walking away from $200k in equity, I'd be hard pressed not to give them something. I think it's all situation-dependent.

In Realty Check's example, he's expecting to net $30k, but only after investing almost $90k (he said full cash payoff + closing and repairs). To risk $90k to make $30k is only a 30% return, and he's assuming all the risk. What if it turns out there is an underground oil tank that's been leaking for 20 years? What if the sellers decide at the last minute to dump Quickrete down the drains (I've seen it)? What if the septic system needs to be replaced?

If any of that sort of thing happens, there goes a huge chunk of his profit. All of that needs to be taken into consideration. When all is said and done, if Realty Check decides to throw the seller a thank-you, more power to him.

Mine wasn't a big deal, but it was from MLS, which is amazing in my area because 95% of MLS deals are bad. The listing was for a lot in a very hot area for 95k, but you had to read the text carefully to see that it was actually two half lots (45x60 and 55x60 or so).

I learned about the deal Friday at 4pm. The agent said she was leaving at 5pm to present offers because she already had well over asking. We wrote an offer for $115k, sight unseen for a non-contingent cash close in 7 days with the thought to flip once we close.

Friday afternoon of the closing, there was a cloud on the title, so the closing was delayed. We wrote an amendment to extend to Wednesday. I found a buyer that Friday, just before the seller signed the extension and we did an assignment for 15k plus my fees. New buyer closed for us and we got paid on Wednesday.

Hi Ya'll,

I'm very interested in investing as a career. I was just wondering how you get the money to buy and flip your first house. For example: If I find a 3br, 2bathroom for 50,000 that needs about 10,000 worth of upgrades, where do I get the money to do that? Do we take out loans or is finding investors easier?

Now, If I do sell the house in 1 month for 100,000 hypothetically does the title company or the bank refund me the money or what?

I am a college student and would love to do this a career and would just really appreciate any assistance.

Thanks

Got to www.reiclub.com and you can read as many articles and listen to endless audios as you want to.There are countless other websites also.

Though I'm a newbie myself, I can tell you that the hardest part of RE investing if FINDING a deal. In other words, your job is to find a house that will sell for 100K after you do the repairs.

As part of finding a deal, you'll have to figure out the repair costs and with these in mind, make an offer on a house.

In your example, if you find a house that is listed for 50K, and presuming it needs 20K of work, you'll have to determine if it will sell for 100K after you are finished with your work on the house.

As part of the step above, you need to determine the holding costs and figure those in your profit. If the holding and closing costs are 10K, then your profit will be around 20K

(50K purchase + 20K rehab cost + 10K holding/closing costs = 80K)

100K net sales price - 80K = 20K profit

You'll get your check from the title company.

Thanks for the break down of system. I really appreciate it. My only other question would be can someone just go out there and buy a property and do what we've stated above? Are you involved in flipping properties?

Also, if the house cost $50,000 and I assume that the repairs cost $20,000, would I be able get a $75,000 loan to cover the price of the house as well as the renovations?

Thank you

In my understanding, to get 75K loan (50K purchase and 25K repairs), you will have to go through the hard money lender. These lenders specialize in rehab loans - the percentage is higher than that you'd pay for a conventional mortgage and the term is usually 6mo-1 year, however, they'll lend money based on the future value of a house.

You can expect to pay close to 15% interest, however. Some lenders will expect a monthly fee and some may be able to roll the monthly payments into your loan balance. As you can see, your 25K profit may evaporate rather quickly if things don't go as planned, that is why this business is not without risk.

From my understanding, conventional lenders will only lend based on the appraised price, which in most cases is pretty close to your purchase price. So you may be able to save on the interest, but you'll have to come up with costs for repairs.

So... to break it down for you even more, hard money is quick (usually 1 week closing, will give you money for purchase AND for repairs), but will cost you dearly. Conventional mortgages require that a house be in semi-livable condition (in other words, if the home is in a rough shape, some lenders may not lend you money for it), it takes longer to close on a loan 20-45 days, and you will not get money for repairs (though you might with some), however, your rates will be much better.

I'm looking for rehabs myself but am a newbie. My goal is to sell a few foreclosures, build the cash reserves and THEN start rehabbing.

Most non-Agents should really start wholesaling. That is, find 100K ARV house for 40K, sell it for 50K to a rehabber and make 10K in the process. Find 7 houses and now you can start rehabbing yourself.

Not really true...

You can get conventional, hard money, or owner financing on almost any deal if you know where to look. While some HML do charge higher rates, most are just a little over what you can find conventionally but with less paperwork and shorter terms.

In a true investment your purchase price should be well below AS-IS market value... that is the goal of an investor... buy below market value and market value is where an appraisal should come in giving the real investor an equity position at purchase. Most investors have the ability to have repairs performed below standard cost providing another point of potential profit.

Depending on the exit plan, hold or sale, other factors come into play on the total ROI.

You are actually thinking in the Traditional real estate mode with the added HML applied at the Usury end. Real investors think far more creatively in purchase mechanisms and many of us never actually put money out of pocket for the initial purchase, removing the need for any form of loans from any source for that element of the investment transaction. OPM (Other Peoples Money) is the key to many transactions and not talking about HMLs.

My most recents deals:

purchase fixup costs
30k
33k
38k
26k
30k

My most recents deals:

purchase fixup Sold Gross Profit
30k 10k 62k 22k
33k 4k 62k 25k
38k 5k 62k 19k
26k 5k 62k 31k
30k 14k 62k 18k
157k 39k 310k 115k

Total gross profit $115,000 my net will be around $100,000-$105,000

These five properties were all bought in the bad areas of town, in the slowest real estate market we have had in 17 years. I do none of my own work, and havent owned any of these homes for more that 5 months,

This week I bought a 2 unit for 30,500 and sold it a day later for what will be a 9,000 or 10,000 profit depending on whether I can assign it or if I have to do a back to back close. I liked this deal because I actually had my selling paperwork done before I had even completed my purchase paper work.

$9,000 net profit for looking at a home for 15 mins, and if I have to close, I will do so with my buyers money.

Eric Medemar
www.TheMillionairesBlog.com