I recently purchased a Ron LeGrand course on Lease Options and Wholesaling. I am new to Real Estate Investing, and I wonder if this is for real? I have gone as far as to contact some sellers about junker houses in order to wholesale flip them to other investors (rehabbers)....but that's as far as I got.

What is your opinion of Ron LeGrand and his courses? Do no credit and no money / little money down deals really exist?

If not - I want to do this the right way. I'm a stay-at-home mom of four, and I've considered getting my Real Estate License and saving everything I earn to start investing the right way.

Your opinions and advice are greatly appreciated.

Yes it's for real,getting your liscense won't do much for investing,it will actually hurt you in some ways as you won't be allowed to do certain things taught in these investor courses.The upside is you save the commission,if you were mainly doing investing stick to a 100 percent commission company with a trans fee if you want to be an agent.

Investing does work,it will be about 10 times harder than the book makes it out to be to get deals.why do they make it sound easy,so you will buy the course.

A little trade secret is all of these so-called investor gurus all learned it from someone else then developed there own program to sell to everyone.Does there example of making 70k or 60k on one deal really possible,sure they did it,but you will find that more of there deals are the 15k to 40k variety profit depending on your market.

If you are willing to work hard you can make much more money doing this than a regular job.

good luck

Thank-you for your response :-) I really appreciate it.

My best suggestion for you is to become a member of your local REAIA (Real Estate Investors Association) Hopefully you will be able to find one in operation and a tip on how to find it: Do a GOOGLE search enter: REIA in _____ (identify your State) and there should be at least one or more search results.

Usually your first visit to a monthly meeting is FREE (call for a guest pass). Find out how beneficial their membership might be to you as a "newbie" and ASK LOTS OF QUESTIONS of the seasoned pros.

I am very active here in Charleston SC with SCREIA which has three active Chapters including Myrtle Beach and Beaufort. "Newbies" are at risk of buying a "dog" property from some wholesalers who wants to unload on some unsuspecting person.

Also, form a strong relationship with a reputable private lender (example: www.sanjoseinvestment.com) who can provide you with short -term purchase and Rehab loans and an equally strong relationship with a local mortgage broker who specialises in INVESTOR permanenet fiancing which you will need if you intend to retain a property for rental income.

You will typically need to have pretty decent credit with most lenders wanting a mid-FICO of
620 or better for the lowest down payment and a decent interest rate (for perm mortgages). Even many private short-term lenders want to see
similar scores especially if they know that you will be ultimately seeking a perm mortgage once your rehab work has been completed.

In today's real estate climate PLEASE do some local area research from a realtor. Many markets are now in a cool-down mode which translates into lower selling prices and longer listing periods. If you are buying for the specific purpose of Flipping for Profit following rehab just make sure that the property you are thinking of buying can be sold QUICKLY and at a price that will make it wortwhile.

Like super said it's at least 10 times harder (I think even that is being kind) than the books claim. Finding these deals isn't complicated but it is hard work and can be extremely discouraging. Most people I've known gave up after making a dozen or so calls or running an ad for a couple of months.

I think it is ill-advised to get into creative investing unless you are psychologically prepared to make at least 200 cold calls to get your first deal. It may not take that many for you, but that is a pretty safe number based on my experience and that of many other long-time investors. Of course it gets easier but in the beginning you blow a lot of deals which is why the number is that high.

The good news is that once you land a deal or two and start getting the hang of it you can make a ridiculous profit for the amount of time spent. Around $10,000 for 5-10 hours of work is pretty much standard for a variety of contract flips. Unfortunately that's the only part of the story the books tell you, what they don't tell you is that you have to spend hundreds of spirit-breaking unpaid hours to get to the point where you can make that kind of money in that amount of time.

Here is some information on the finance side. If you can find a way to avoid the need to finance in the future I would try to do that. You can usually do this after 2 or 3 depending on how much you rely on the income.

620 Stated Income Stated Assets 100% 80/20 On Investment with around 8 lenders. Limited cosmetic and no structural damage. Average condition required on appraisal.

680 No Doc 100% 80/20 Investment. Pristine condition.

Then yes 620 but mainly a 660 would be needed for the rehab stuff I have. Also 203k through FHA if you can do full documentation of income.

Flip you first one and 1031 then put into next one and who knows maybe you will have enough money for #2...

Thank you for responding to my question. I REALLY appreciate all of your advice. I'm used to cold-calling, but I GREATLY appreciate the real-life expectations of finding the no $$ down deals. Now that I'm more prepared, mentally, for the hours I will need to invest to find the deals, I am going to go for it. I am also saving everything I can to do other types of deals too.

Again, thank-you all for your guidance and advice.

Lease Options for short term flips is not a very good process. Other much better and safer processes exist to do effectively the same thing.

In any "acquisitions" by LO you do not hold the title. You are putting your money and labor into someone Else's property. Depending on what state your in... such as Texas, North Carolina and a few others, the use of LO's is very frond upon by the States Attorney Generals. Many non licensed people have attempted to use LO as a work around to buy and sale real estate with out a license and not actually have title or deed to properties.

Many problems can result if as you get near the end of your rehab... the "owner" decides he wants to void your LO... and off to court you go and guess who wins?? It is a 50/50 deal most of the time but in some jurisdictions it will be the own ere walking away with all your work for less than what you put into it.

I would never recommend putting money into any property unless you controlled the deed... you own it. A far better technique is Sub-2 and many ways to effect sub-2's exist but I like the Land Trust.

I do like LO's when I am selling a property but never purchasing one. That way I can be in-charge and have far fewer potential problems after having invested money in the property.

Never get hung up on any one single form of creative real estate techniques for investing. Most deals require or better fit another process. You just need to learn the pros and cons of each process for the specific deal at hand... and know more than just a couple of processes. Once you do... I don't think you will have much use for LO's for acquisitions except in very rare cases.

>>>>>>>>>>>>>
Yes it's for real,getting your liscense won't do much for investing,it will actually hurt you in some ways as you won't be allowed to do certain things taught in these investor courses.The upside is you save the commission,if you were mainly doing investing stick to a 100 percent commission company with a trans fee if you want to be an agent.
>>>>>>>>>>>>>>>

Could someone please elaborate as to what you cannot do with a real estate license that others can do without one, or discuss some of the disadvantages of having a RE license and being an investor.

I see a lot of pluses, such as MLS access, extra income, getting to know areas by farming, and making a lot of contacts and referrals. I'd like to understand more about the down side.

thanks

Nice post as always Realty Check. Risky LO and a lender considers them a purchase too.

The much more risky Land Contract allows a challenged buyer to do a refinance using full appraised value after 12 months in most cases.

Each situation has a diffrent twist and risk card.

RC do you pull credit on your LO's?

i agree with realty check
i would use a land trust as the primary vehicle when acquiring properties. this is just a safer way to buy subject to the existing mortgage and other payments.

you can manipulate many of the different seller financing techniques such as lease options, wholesaling, wraps, land contracts/contract for deed, equity share etc. when you facilitate the land trust, have the seller put title into their own trust so it wont trigger the DOS(due on sale) with the lender. then have the seller privately assign beneficial interest to you as the investor or your LLC. you might also want POA(power of attorney) just in case the seller suddenly disappears. now you have control over the property and you dont have legal or equitable title. the trustee holds equitable and legal title to keep all parties at arms-length. youre also shielded from liens, judgements, creditors, charging orders, probate, marital disputes, etc. youre also hidden from public records. whether you flip the property or not, the end result would either be a refinance, a new loan, sell your beneficial interest for cash, or collateralize your interest to acquire more properties.

if youre going to go this route, make sure you structure it property to really protect the asset, otherwise you'll create a "dry" trust which is subject to lawyers piercing the trust and other litigations.

im not a lawyer but using a land trust, layered by an LLC and other anonymous techniques is a great way for asset protection and a secured investment.

Normal Tenants application includes Credit Check, Criminal and Eviction check. We also verify employment and review the past two years of Tax Returns.... and pick up a $5,000 to $10,000 Non Refundable Options fee that would be applied toward purchase if a closing occurred during the Option period.

While I actually do want the closing to occur, many other investors are just as happy or even happier if it fails then they do the process again, collecting another Option Fee.

As far as real estate license helping or hurting...

A real estate license and association with a brokerage as an active agent can ONLY HELP.

While any field will have people who promote quasi legal processes that anyone should avoid, having or not having a license will not make any difference based on the integrity of the person themselves. The key is your own integrity and full DISCLOSURE. As long as you fully DISCLOSE you lessen your chances of ever having significant problems as a Realtor or non agent.

One problem an agent could have that a non agent does not have is the brokerage rules and procedures. Most brokerages are set up as traditional real estate companies, list, sell all using traditional processes. These companies generally do not understand creative real estate investment techniques and since the pay off in commissions is often delayed... they have little interest and often discourage or do not allow agents associated with them to preform these activities... not because of any law but because they want agents listing and selling and generating commissions they better understand.

An investor agent that becomes an independent broker has far more advantages over any non licensed individual ever could attempt to have.

Who else do you know that often has information about a mortgage payment late 45 days? Who knows of payments 60 and 90 days late or when the lender/ asset management first starts foreclosure activity? Who do you know is often directed to make contact with the defaulted borrowers to arrange reinstatements, loan modifications, private sales, Short sales and deed in lieu? Who has the best opportunity to have the REO listing if the lender/ asset management company takes the property back at the sale? Who knows what the Strike Price will be for the foreclosure sale?

I perform these activities every day and associate with others that perform them all over the nation. No unlicensed individual could ever hope to have this wide spread amount of information from the majority of lenders in an area... not just one and at every stage of the process.

Having access to the MLS, clients bases and real time market knowledge are really only the initial and minor benefits of being a licensed agent over an unlicensed person.

AND... no I do not sell How TO courses and this area of real estate is a very poor starting point for new agents.

i agree

i just renewed my license a month ago and im still having trouble finding a brokerage that understands and implements creative financing.

when i got into real estate 2 years ago, i studied alot of creative financing before learning traditional real estate and getting my license. when i signed up with my brokers i would ask questions that pertained to out-of-the box thinking and my brokers didnt like that. eventually i got kicked out of 2 brokerages because i had an investor's mentality versus a traditional buying/listing mindset. they want me to list and sell homes and NOT to invest.

overall im glad they kicked me out.

Thanks a bunch for the responses. I'm in a good position, as I am with a small brokerage that is pro-investor and I have the freedom to do as I please, as long as I keep everything up front and honest.

There is one disadvantage to being an investor/agent, but it depends on your marketing plan: Soliciting actively listed sellers is a violation of the CoE.

I mention this as a possible disadvantage because I know one large investment company that gets nearly all of their business by marketing to and negotiating directly with actively listed sellers.

I do this as well because I've found that presenting no money down creative offers through my own buyer's agent or the listing agents is an exercise in futility, and I don't want to miss out on all those deals just because most agents are traditional. If you're very lucky you MIGHT get 1 in 1,000 accepted. Compared to 1 in 50 accepted when you contact the owner direct.

The only thing is that when this comes up the seller often gets a twinge of loyalty to their agent. So I recommend that they pay their agent at closing just like they planned. Unfortunately some sellers still go to their agent and get talked out of it, but that's the nature of the beast. I spend very little time on each prospective seller so it's no big deal.

realdealer... it is not a twinge of loyalty...

It is called a contract and possibly intergrity... which as a non Realtor and non licensed person you may not understand.

You also appear to miss understand the actual rule on solicitation...

You can not solicit another listing and can not interfere with that listing but you MAY provide additional services.

I receive referrals from other brokerages in many cases where they find their seller is in a situations such as upside down on mortgages, and in the default / foreclosure process.

In these situations I make arrangements with them for either referral fees or simply perform the LMC activities as a Fee based activity with the brokerage still handling the listing. Actually most simply refer the listing and do not request fees in an attempt to assist their clients in situations they are less knowledgeable in handling effectively.

Since my purchase takes place long after the listing has expired, the seller paying their agent anything is a courtesy. But we can debate that in another thread.

My comments as they relate to the topic are simply that it's necessary (in my experience) to deal directly with the owner when making creative offers. As great as it would be to do deals through agents the reality is that 99.99% of agents would rather get nothing than be involved in a creative deal.

It never did make sense to me until an investor/agent explained the whole reputation issue, and the fact that agents don't know the law, so anything they didn't learn in class is automatically assumed to be illegal.

Unfortunately I'll have to agree with that in many cases. The Licensing classes are totally inadequate even for traditional real estate activities. Licensed does not mean qualified nor does REALTORŪ.. it is only a starting point and an ending point for too many.

Is it allowed for a realtor/investor to do wholesaling, tax leins/notes, etc.?

also assigning contracts... maybe that's what wholesaling is???? when you do that don't you get the fee from the client for assigning the contract AND from the seller of the property because you presented the buyer? Are you saying that as long as you disclose to the buyer... what??? how much you bought the property for or what???

just as long as your the pricipal buyer, you can either assign/wholesale/flip your contract to the end buyer or you can assign your escrow or do a simultaneously close/double close. make sure you do your disclosures.

find a title and escrow company that understands creative investors.

Your brokerage may and often will have limitations on what type real estate activities you may become involved with... In most states, As long as you are associated with a brokerage, they have a responsibility for any real estate activity you become involved with... even sale or purchase of your own properties or any other real estate related tasks. Tax liens and notes may fall outside the brokerages control... but you need to make sure your broker is aware and has no problem with your activities... before the fact.

i agree,
i got kicked out of 2 real estate firms, one of them was REMAX. it was a good decision because they wouldve held me back on alot of opportunities.
i was learning non tradtional financing and investments to set myself apart from the competition within the company and the local agents. when i talked to broker's and other agents, they usually think im speaking a different language or theyll say something ignorant like it's illegal/unethical. another thing i found out was that most agents dont invest or they just dont know how. i was definately surprised by that since their broker's wont allow them to do personal investments. they insist on making their broker's rich with traditional buying/selling. i mean how many retailer buyers are out there? theres alot more buyers who are below sub prime, with cash and arent qualified for conventional financing. who's servicing these leads? traditional realtors wouldnt know how to deal with these kind of leads and would simply pass up the opportunity onto a loan officer/broker to fix their credit up to industry standards. if you can take a delayed or partial commission using seller financing strategies then you might see more leads in your pipeline. you can find alot more buyers if they dont have to do bank qualifications or credit checks. ask for 5% downpayment plus 2 months upfront and pay yourself with that money and use the rest for reserves or a contigency fund.

if youre going to learn these strategies, many brokers would see it as a liability. be prepared to find another broker. you will need to find a creative investment broker who implements these strategies on a daily basis.

when i get my broker's license im definately going to recruit investment agents only. first thing id teach them is finance since its straight numbers and money. then id teach them how to use money partners and credit partners. then how to do asset protection using LLC's and trusts and so on.

im always hearing that you must treat this RE industry as a business. i believe that a broker should teach their agents on how to set up corporate entities whether they have E&O or not.

Strategies my hinny!
To say the least, I am
Shocked and Appalled

Impressed? Not one bit!

So what are you teaching - Fraud 101?

There is a definite reason why you were asked to leave your prior Brokerages - DUH! :rolleyes:

::sigh:: ill take that as an ignorant statement unless you can prove me otherwise. please tell me how creative financing is fraudulent? seller carry back, discounted notes, short sales, lease options, wraps, contract for deed, land trusts, pre foreclosures, wholesaling, retailing, etc. please dont mention anything about violating the due on sale clause or equitable interest because i will surely give you a legal statute on this.

btw: you can also see commercial Realtors using these types of strategies in regards to master leases, options, wholesaling, land trusts, seller carry backs.

yes because we didnt meet eye to eye. both of my prior brokerages were managed by 60 year old brokers who probably cant accept a paradigm shift. theyre stuck in their old ways/systems which im not complaining about. conventional RE is what works for them - not me.

btw: i checked out your site, and since youre a principal broker, do you allow your agents to do personal investments? rehabs and straight rentals are easy to do and any monkey can do that. im talking about those creative financing i mentioned above? do you have any investments yourself? (exclude any rehab/rental deals since this thread is based off on acquisitions using no money or credit deals). im hoping for a real good answer here.

2 years ago i thought i needed a licensed to even become an investor. then i found out you dont even need a RE license to sell FSBO or buy a property without agency representation.

i dont know. maybe its just me but sometimes i feel i dont really belong on this website. it was nice as a newbie to find a sense of direction in this industry and theres a few posters on here that i can relate to in regards to investing. to be honest i am taking your response as a personal blow because im passionate about learning creative investments. it took me 2 years to build up my knowledge base and resources and it gets tiring to even try and defend myself to brokers/Realtors. its better that i stay within an investors website with like minded people/investors. i only contribute to give new agents another avenue for out of the box thinking or even if one encounters a creative transaction i can definately give 3-5 more different angles to help solve the problem.

no offense with this but its like when youre tired of all the whining residential buyers and emotional sellers, you then decide to move on to commercial side. thats how i feel with traditional realtors. i hesitate to even talk to local realtors because they will automatically start whining on legality and ethics. its even funnier when i ask them to back it up because i know they can't. i know their brokers didnt teach them what i know so i sometimes end up educating them to prove my point.

yea this is probably my last post in this investment forum. ill probably visit from time to time to read up but i wont post anything else since some of you might think its fraudulent/illegal/unethical blah blah blah. ive heard it all and im done with it. ill be hanging in the commercial forum where the big boys play.

donna i think you need a paradigm shift

peace

Alvin Reyes
Founder/REI Consultant/Realtor
Paradigm Capital Group LLC
www.pcginvestors.com

if you want to talk about investments and entry/exit strategies email me at areyes@pcginvestors.com or drop a PM

Donna,
You are way off base on this one. What Alvin is talking is not Fraud at all it is simply creative financing. I use creative financing whenever possible in my personal investments. Alvin is right on when he says that most agents and brokers do not invest in real estate. You would think it would be the opposite but it seems that most agent will gladly make others wealthy but fail to invest in real estate themselves.

Donna,
Instead of throwing out Fraud 101 and such how about defending your position with some facts?
You will have a very hard time finding any statute or ruling to back your belief.

People often fear what they don't understand,it's a common reaction.

When you know the facts through knowledge,experience,and education the fear will go away.

I agree for a broker there is more liability having investors as agents,compared to a normal listing or selling transaction there is more that someone can mess up and the ramifications are bigger.

I am with a broker that specializes in investing.We have over 1,000 agents and it's not a problem however she runs a really tight ship.Anyone caught doing anything illegal is terminated.There is a huge difference between creative financing and committing fraud and most don't know the difference so they stay away completely and say everything is illegal which is not true.

Alvin,

Please come back one more time to answer this question.
....Have you made any money from real estate yet?

Yes, $30k on my first deal

Pulling out $40k HELOC or refi cash out on my personal residence to leverage out into an 8 unit apartment or 2-3 SFR outside of CA

im also currently raising 20% downpayment from private investors to venture into a condo conversion here in los angeles. im not using my credit nor my money on this deal. i plan to wholesale to investors or retail to the public.

I am really interested in learning more about this creative financing. Please point me in the direction. WHERE can I get knowledge about the different creative investment strategies that you mentioned so I can learn well, learn quickly and learn right?