Rehabbing( flipping) vs. rentals

Rehabbing( flipping) vs. rentals

Can someone experienced help me decide what is best to do at this point. I currently have 4 rentals and my area is great for rentals and not so great for resale at this time. However, my family could really use the cash from flipping some properties as opposed to buying more rentals. I'm kinda torn because I would really like to build up my net worth and cashflow through keepers, but it's difficult when we are building up properties but still technically broke. If anyone has been in a similar situation please give your advice.

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do you have equity?

Do you have any equity in the rentals? If you have 4 or more you might be able to qualify for a commercial loan. Refi for up to 70 or 75% depending on your lenders. You can get cash from doing that if need. I am not sure how your credit is but they base it normally on your net operating income. I have a sheet of questions to ask your lender if you would like it. Just PM me Smiling

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equity

right now we are sitting with about 150k in equity, but I was kinda wanting to leave that in there so we have more leverage for future buying. The thing is I'm a little scared to try and flip just because I feel like it's a bit of a gamble as opposed to rentals is a sure thing, it just takes a long time to see the money.


Flipping or holding

What I do is wholesale flip REOs and distressed homeowner properties while doing a fix/flip of my own here and there. So you have quick cash and bigger paydays when the fix/flips sell. I double close the REOs using transactional funds and assign the contracts on homeowner properties.
I think sitting on the $150,000 is a good idea and to continue using it to build up your buy and hold properties. In the meantime wholesale and do fix/flips. Or all 3!!!
I have a great source for the transactional funds you need to wholesale flip REOs it is http://www.mdtf.com
The key to wholesaling is finding the cheap properties that need work and having a buyers list AND knowing where to advertise!!

Good luck!
Michael Mangham
MD home Acquisitions LLC

__________________

Knowledge is power, but execution trumps knowledge. Tony Robbins

http://www.mdhomeacquisitions.com Seller site
http://www.mdhomeacquisitionsbargainhouses.com Buyer site
http://www.mdhomeacquisitionshousehunter.com Bird Dog Site
http://www.mdlodeals.com Tenant/Buyer site


Flipping, MARK, OOPS!!

Sorry wrong website in my post! it is http://www.mdtfcam.com

Michael Mangham
MD Home Acquisitions LLC

__________________

Knowledge is power, but execution trumps knowledge. Tony Robbins

http://www.mdhomeacquisitions.com Seller site
http://www.mdhomeacquisitionsbargainhouses.com Buyer site
http://www.mdhomeacquisitionshousehunter.com Bird Dog Site
http://www.mdlodeals.com Tenant/Buyer site


michaelmangham

I'm glad you cleared that up! I looked on the first web site, and being from the medical field, was wondering what this was about.
I have read these posts and do agree. Hang on to the properties. Like Matt said, if you need instant cash, just go assign a property.
I have looked at 2 houses in auction and found out today, that both are being put on that freeze.
Talked to a FSBO today and he won't come off his price. FMV is $275 and he wants $235 firm. Tomorrow I am looking at a property assessed at $145 and for sale for $44,000. Needs some work and updates, but in a good neighborhood and structurely sound. This would be my first deal.
So "markl" try something like that. I am hoping to offer low and possibly get a private lender. Hoping to make some quick cash to pay my bills this month.
So try assigning or a rehab, you can sell the rehab.
Sandi


cheap properties

how do you find the cheap properties that need work? Have you ever attempted to wholesale, got the property wrapped up on contract then couldn't find a buyer and have to put it back on the market? I had that happen a few times and it didn't go over very well! Also when you wholesale the reo's do you offer through a realtor?


markl finding properties

I found several through REMAX in Wis in my area, this realtor only does bank owned and foreclosures. Because I am broke, I look at cheaper ones they send me, knowing I can offer low. A friend who is a carpentar, looked at a foreclosure with me through the realtor. FMV $212 for sale for $140 and needs lots of work. He put in an offer today of under $50,000.
Before I knew how to do contracts, I saw a house for sale by owner. I stopped and talked to them. They wanted to get rid of it, and were no longer living there. I wasn't very smart and took pictures of it and put it up on a bulletin board in our little town.
An investor called me and asked me where it was. Saying he would give me a finders fee. I had no contract with anyone, however the owner gave me some antiques dresser for nothing and I sold them for $600. But this investor lied to me. He offered them $60,000 they were asking $94,000. We sold a week later with an open house for $74,000. When I called him and asked if he was going to take the house, he said no, and told me he would be out of town for a couple weeks, but assured me again that if he took it, I would get a "handsome" finders fee. This investor lied to me. So I just never persued it.
2 months later at my rummage sale, another investor and I started talking when I mentioned I wish I could do real estate. I told him about that house and he told me that Mike flipped it in less than one week.
I lost my job at a hospital because after an accident with a horse, I couldn't lift patients. At that time, I needed the money so bad and trusted another investor. But what I am saying, is see how easy it would have been.
If you are looking for a cheap house, put out fliers, call FSBO the worst they can say is no. But like the one I had found, this owner jokingly said, he'd burn it down if he had to, which told me, this was a house to offer low on.
So guess I should give myself this same motivation. But when you do it alone, it is scarey.
But call some realtors and don't be afraid to offer low. They will ask for more if they don't like it. But stick to low!
And wish you the best!
Sandi


Cheap properties

The distressed REOs I find are always through a realtor. I always have a 7 to 10 day inspection period in the contract. If I can't find a wholesale buyer in that time period I give it back and get my earnest money back. I have only had to do this 1 time however because I don't buy unless it is a killer deal. Buyers will buy in that case. I buy through a realtor but I don't wholesale sell through a realtor. I go straight to my buyers list. Don't let fear stop you, get your POFs and transactionl funding in place then offer on all the good REOs you can find. Have the inspection contingency to protect you from losing your earnest money if you can't find a buyer! You can do this on short sales also!

I work directly with DISTRESSED homeowners, tired landlords, etc. I use my own purchase and sale agreement and assign these! Once again you need to purchase right!

You need to buy really close to 65% of ACTUAL ARV AFTER repairs!! If you are going to be successful wholesaling.

Michael Mangham
MD Home Acquisitions LLC

http://www.mdtfcam.com POF and Transactional funds site!!!

http://www.mdhomeacquisitions.com Seller site
http://www.mdhomea.com Seller site
http://www.mdhacq.com Seller site
http://www.mdhomeacquisitionsbargainhouses.com Buyer site
http://www.mdhomeaqcuisitionshousehunter.com Bird dog. door knocker site

__________________

Knowledge is power, but execution trumps knowledge. Tony Robbins

http://www.mdhomeacquisitions.com Seller site
http://www.mdhomeacquisitionsbargainhouses.com Buyer site
http://www.mdhomeacquisitionshousehunter.com Bird Dog Site
http://www.mdlodeals.com Tenant/Buyer site


Michael, cheap properties

What do you put to get out of the contract in 7-10 days. Do you use contingent on inspection or a partner.
My realtor just called me and said the property I was looking at tomorrow just sold today. 2 others I looked at I found out today were both put on hold through Fannie Mae.
But I am going to look again tomorrow for other properties.
I do think a POF letter ahead of time will give me a better chance??
But what is your contingent to get out so quickly?
Thanks
Sandi


Sandi

I use inspection as the only contingency. 7 to 10 days. These days if you put subject to my partners approval on an REO offer they will not take you seriously. I submit POF and a copy of earnest money with every offer(written). It shows you are a serious player!! Remember nothing happens with earnest money until after your offer is accepted so offer away!!
You MUST have POF to offer on REOs and Short sales and you must have transactional funding in place to wholesale flip and double close them!

Michael Mangham
MD Home Acquisitions LLc

http://www.mdtfcam.com Transactional funding and POF letter site

__________________

Knowledge is power, but execution trumps knowledge. Tony Robbins

http://www.mdhomeacquisitions.com Seller site
http://www.mdhomeacquisitionsbargainhouses.com Buyer site
http://www.mdhomeacquisitionshousehunter.com Bird Dog Site
http://www.mdlodeals.com Tenant/Buyer site


AND/ OR ASSIGNS?

do you put and or assigns on your reo contracts? how does the banks take this? from my understanding when banks see this kind of thing they pass it right up.


Michael

michaelmangham wrote:

I work directly with DISTRESSED homeowners, tired landlords, etc. I use my own purchase and sale agreement and assign these! Once again you need to purchase right!

Michael,

1) Would you be willing to share your purchase and sale agreements?
2) Regardless, did you ever have an attorney or anyone look at the agreemetns to see if they were legal for your area?

I have heard about POF and transactional funding and know you need POF for acquiring REOs and short sales.

3) Will you give a brief run down of what transactional funding is and why it is needed for short sales and REOs?

4) With the short sales and REOs, do you personally deal with the bank or do you go through (or need to use) an agent, attorney, title agency, or other?

Thanks so much for your insight on these topics! I'm just starting out and plan to wholesale, too. However, it's hard to ignore all the REO properties that must be around me since I live in AZ!

__________________

Sincerely,
Kevin A Goldman

Goldman's Gardens Real Estate, LLC
Wholesale Real Estate Investing
Great Success to Us All!
My Journal: http://www.deangraziosi.com/real-estate-forums/investing-journals/62066/...

Why do I deserve this? Because everyone should be able to enjoy their life, not struggle through an existence.


Kevin

1. Yes I had a RE attorney look over my Purchase agreement and my assignment contract. I use them with homeowners I am working directly with.

2. TF is not a loan, it is funding that covers the a to b transaction when doing a double close. You must go on title in order to purchase a REO or short sale 99% of the time. So you have to "buy" the property before you can sell it to your buyer. You must have your buyer in place and his funds in escrow at the time of closing(the b to c) The funding I use charges 2 points, no up front fees ever!

3. I go directly to the listing agent. I make 2 REO offers a day and provide POF and a copy of the earnest money with every written offer. The realtor supplies the contract on these. I am going to try going to a small bank and try to make contact with their asset manager directly. Haven't had time yet!

Don't ignore REOs, Wholesale flip them! You have to have POF and transactional funding to do it. Above all you must take action!

Hope that helps,

Michael Mangham
MD Home Acquisitions LLC

http://www.mdtfcam.com TRANSACTIONAL FUNDING SITE

__________________

Knowledge is power, but execution trumps knowledge. Tony Robbins

http://www.mdhomeacquisitions.com Seller site
http://www.mdhomeacquisitionsbargainhouses.com Buyer site
http://www.mdhomeacquisitionshousehunter.com Bird Dog Site
http://www.mdlodeals.com Tenant/Buyer site


THANKS

HEY MIC...HOPE ALL IS WELL WITH U & THE FAMILY
THE FUNDING SITE WAS VERY GOOD BUT I JUST DONT HAVE THE FUNDING 4 IT RIGHT NOW.BUT I WILL GO 4 IT WHEN IM ABLE.THANKS AGAIN 4 THE INFO

__________________

"KINGDAVID"
LOTTIGROUP CAPITAL DEVELOPMENT


markl and Michael

I'm glad markl that you started this blog, it is really refreshing me on
how to handle these.
Michael, I opened the web site on TF that you offered and really think
that it is well worth the investment.
I don't have the money now, but hope to be able to borrow it.
So thanks both of you for all this info and questions. Gave me another shot of hope!
Have a Blessed day!
Sandi


Markl

Banks will not (99% of the time) allow an assignable contract on a REO or short sale. That is why I double close using transactional funds!! Same principle, just a different strategy that allows you to "assign" a REO or short sale.

With POF letters, you need POF to be able to offer in the first place and then the transactional funds to double close so you can wholesale flip REOs and Short sales using none of your own money!!

You must have the POFs and the funding to back you up or you CAN NOT be in the REO or short sale wholesale flipping business.

Sandi and David. Remember, sometimes you have to spend a little money to allow yourself the chance to make alot of money! Besides its free the first time you use it! Full refund!

Good luck wholesale flipping REOs and short sales!!
Michael Mangham
MD Home Acquisitions LLC

http://www.mdtfcam.com Transactional funding site

http://www.mdhomeacquisitions.com Seller site
http://www.mdhomacq.com Seller site
http://www.mdhomea.com Seller site
http://www.mdhomeacquisitionsbargainhouses.com Buyer site
http://www.mdhomeacquisitionshousehunter.com Bird dog, door knocker site

__________________

Knowledge is power, but execution trumps knowledge. Tony Robbins

http://www.mdhomeacquisitions.com Seller site
http://www.mdhomeacquisitionsbargainhouses.com Buyer site
http://www.mdhomeacquisitionshousehunter.com Bird Dog Site
http://www.mdlodeals.com Tenant/Buyer site


Michael

Great information.

Markl thank you for starting this thread.

Steve


hard money lender

We just found and were a approved by a new local hard money lender( only 2 points and 8%) not bad. And we have a couple banks lined up that do our refi's, so here is our plan... buy forclosures and distressed props. through our hard money lender using his cash, then turn around and do an early refi. to get the hml paid off and use the additional refi. funds for the rehab and try to do at least one every two months... then flip in between using our loc we have with the bank, paying only interest on the loc. We are finding out quickly that having access to multiple sources of funds is key.

I feel with this strategy we should be able to quickly build up our net worth and cash flow through rentals while at the same time accumulating some lump sums of cash through the flips.

I appreciate the feedback from you guys and I will keep this thread going so I can let you know how it works. God Bless!


markl

I would still consider wholesaling WHILE doing fix/flips!! Using a no money out of pocket strategy! Be careful on your buy price in this market!! Its not like a buy and hold strategy. Be sure you can refi on a property that still needs rehab.

Good luck and keep us posted!!
Michael Mangham
MD Home Acquisitions LLC

http://www.mdtfcam.com Transactional fund site

__________________

Knowledge is power, but execution trumps knowledge. Tony Robbins

http://www.mdhomeacquisitions.com Seller site
http://www.mdhomeacquisitionsbargainhouses.com Buyer site
http://www.mdhomeacquisitionshousehunter.com Bird Dog Site
http://www.mdlodeals.com Tenant/Buyer site


Michael, You really don't

Michael,

You really don't have money out of pocket because you can pay the points at closing, can't you? Especially since you're doing a double closing on the same day. Am I missing something here?

Vincent

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"He who is mighty has done great things for me...He has...exalted those of humble estate; he has filled the hungry with good things..." Matt. 1:49-53


money down

technically we don't have money in our deals either way. When we are doing our rentals we are using the hml's money to purchase which up to date are usually purchased at about 40-55% arv then refi'd with the bank which refi's them at 75% of appraised value, so we are able to pay back the hml and fix it up with no money of our own. ( infinite return! ).

and with our loc we should be able to use the loc for purchase and rehabs we will just incur the interest payments for as long as we hold.

for whatever reason i'm just not that fond of wholesaling, here's why... awhile back we put an offer on a little two bedroom that was an estate sale for 32k, it was accepted and our intentions were to wholsale for 40k, well the moron investor that was supposed to buy cash goes to the bank to get a loan for it which obviously didn't happen since we didn't even own it yet... needless to say by the time we got things figured out we almost lost the property... thankfully we were able to scramble and find a hml put 15k into it and it appraised at 94k, so we gained 44k in equity after the mortgage.


Vincent, Markl

Vincent, correct, it is a no money out of pocket strategy! Just add the points to your sell price and you've got it covered. You usually have to put up earnest money when you make the offer and it gets accepted however that comes back at closing and/or your buyers earnest covers yours! I always make my buyers earnest money for more than mine and non refundable so there is NO risk in doing this!

Markl, you have a great example on why it is critical to pre qualify your buyer and make his earnest money more than yours and non refundable. You would have had no risk had you done your sales contract properly! The non refundable earnest stops BS in its tracks! Don't close if you don't have a real buyer!

Anyway, good luck to you guys and above all take action no matter your strategy!

Michael Mangham
MD Home Acquisitions LLC

Http://www.mdtfcam.com Transactional fund site

__________________

Knowledge is power, but execution trumps knowledge. Tony Robbins

http://www.mdhomeacquisitions.com Seller site
http://www.mdhomeacquisitionsbargainhouses.com Buyer site
http://www.mdhomeacquisitionshousehunter.com Bird Dog Site
http://www.mdlodeals.com Tenant/Buyer site


Thanks Michael,

michaelmangham wrote:

...Hope that helps

Michael Mangham

Absolutely, it does help tremendously! Truly, thank you fo rthe knowledge.

Also, I would like to ask again in case you missed it:

Are you willing to share your purchase agreements?

OR

Do you recommend I simply go to a real estate agent here in AZ and use one of their purchase agreements, but modify it to suit my purposes (incorporating exit strategies and contingencies)?

__________________

Sincerely,
Kevin A Goldman

Goldman's Gardens Real Estate, LLC
Wholesale Real Estate Investing
Great Success to Us All!
My Journal: http://www.deangraziosi.com/real-estate-forums/investing-journals/62066/...

Why do I deserve this? Because everyone should be able to enjoy their life, not struggle through an existence.


flipping & holding

when you said" I double close the REOs using transactional funds and assign the contracts on homeowner properties." Could you explain how did you do it and how did you assign contract on homeowner propeties? Thank you for your help.


Blessedjc

I get the property under contract with the seller/homeowner directly. I find the homeowner in a county notice of default listing(or FSBO, Or tired landlord or?). I then assign that contract to one of my buyers. I get paid my assignment fee at closing.

Have you checked into Dean's Success Academy?

Michael Mangham
MD Home Acquisitions LLC

__________________

Knowledge is power, but execution trumps knowledge. Tony Robbins

http://www.mdhomeacquisitions.com Seller site
http://www.mdhomeacquisitionsbargainhouses.com Buyer site
http://www.mdhomeacquisitionshousehunter.com Bird Dog Site
http://www.mdlodeals.com Tenant/Buyer site


Am I stupid?

I was signed up to the Success Academy with a large down payment, and monthly payments for 18 months. I just backed out because the payments left me with not enough to cover my expenses every month (unless I was able to complete a sale of some sort), and in the hole with the large down payment. So, what happened was that I got overwhelmed with all of the information and froze up so I couldn't take any action. UGH! I just couldn't get clear on exactly what I needed to do with all of the choices and such and the fact that I knew ZERO about RE when I signed up. I feel bad because I had to back out but I didn't know what else to do! I hate borrowing money from my mom and dad, which is what I had to do anyway. Sad I have no money, bad credit, and feel insecure about trying to present myself as an investor when I'm so GREEN! I'll probably look back on this in a few months and laugh, huh?

:/

I'm skeered!

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"Those who wait on the LORD Shall renew their strength; they shall mount up with wings like eagles, they shall run and not be weary, they shall walk and not faint." Isaiah 40:31

View my journal here: http://www.deangraziosi.com/real-estate-forums/investing-journals/59850/...


ALL!!! Add me to your buyers list!!!

Michael... Tremendous information!!! Thanks...

All... You need to have a buyers list and I am a buyer looking for Detached SFR that are in need of Rehab!!! It needs to be local to me which is Gloucester and Camden Counties in NJ... I will buy under assignment or Double Close as long as the numbers work... I will be buying a home in the next 4 weeks... PM me if you need more info...

Meanwhile, I am going to look into this Wholesaling REO's and building my own buyers list...

Thanks for the inspiration and good luck all..

Dan (Mcarlo24)


raising cash with your 4 rentals

I wish I could say I was a very experienced investor, but the reality is that I am fairly new, with only 2 deals under my belt.

Have you considered leasing one of your properties with the option to buy? There are several potential buyers out there who, for a variety of reasons, cannot get approved for a mortgage. They have the income and the down payment, but they may be divorced, in BK, have credit issues, etc. Read the chapter in Deans book on lease options. You would recieve what is called "option consideration" and it is a cash down payment due at the beginning of the lease. If you need 20k, advertise the property as a rent to own, with a $20k down payment required.

Mark Lawless
NJ


Website fee for Transactional Funding Program!!

Michael... Just wanted to say Thanks again... When I got started 2 years ago in REI with Dean's Success Academy, Assigning/Wholesaling is what I was going to do... But, since I have a Handyman Brother who was out of work, I rehabbed and Flipped 2 homes and looking for my next one... Even though I still have a lot to learn, just being on this web site for the last 2 years I can actually now understand what you more seasoned REI's are talking about so I think I am going to look into Wholesaling again... Before I sign up for the transactional Funding system, what is the monthly fee for the Website... Are the transactional funds your typical Closing Cost, Title Searches, Utility fees, etc? And is it basically doubled at a double closing?

Thanks for your time,
Dan (Mcarlo24)


what is a POF again ?

what is a POF again ?

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