Is This Worth It
Im in business with a company that buys pre forclosure homes, rehab them and resale them. I want to get started in the Real Estate Business (buying for myself). I feel that i have to start some where and build capital. Here is the home they have
price- 178k
app value - 205k (before rehab)
I got a freind that has a high credit score i would like to partner with them and buy a few of these homes i have the know how she has the means. My question is in MIami the market is horrible for sellers now, if i buy this house (and others) my company will work with me on finding a tenat and taking some of the equity out on the front end to cover the mortgage until we find a tenant, does it sound worth it or am i forcing the issue?
I figure if i do this a few times we could eventualy build capital and get into buying pre foreclosure homes ourself.
I personally would never be involved with a company that needs my credit to do deals. I believe you are pressing the issue. That is my opinion only however. If you think its the best way into real estate investing then, by all means, move forward.
How much is the rehab going to cost?
Are you going to sell the property on the MLS? - Realtor fees are 6%...
How long will it take to sell?
Is the company you are working with a reputable firm?
Just some thoughts
You’re only looking at about a 13% difference between the asking price and appraised value – which is not near enough to make any money at all. If you can’t get it for at least 20%-25% below appraised value, I would keep looking.
Just my 2¢
The margin looks rather slim. You are looking at around $10K or so of closing costs. Let
s say rehab is only cosmetic and around $5K. You are looking at a cost of $178+5+10= $193K
If it sits on the market a few months before renting then you will have hlding costs to cover.
The to try to take out equity and things look grave as they will most likely want the loan seasoned so at least 6 months. Add to that the reality that a lot of companies right now are only doing 85% on non-owner occupied and the equity loan becomes even less likely.
Buying outright even on an owner occupied a lot of banks are only doing 95% on properties that are foreclosures and sometimes pre-foreclosures.
Thanks for all your replies, let me paint a better picture
The company that i do business with are very reputable they are taking care of the rehab they rehab all the homes before they sale them, they are also covering closing cost.
The home may have to be rented out for at least 6 - 12 mos. Im in Miami, Fl one of the top appreciation cities in the U.S. (its slow now but its coming back) I know its slim pickens but i jsut saw it as a way to build some capital even if its 5k 0r 10k at a time.
Does this sound any better.
Find a great deal and pass it on to a seasoned investor. You can probably turn your money into a few thousand $s.
To find the deal is another story!! Write some letters to owners of vacant houses, put an ad in the paper that you buy fixer uppers, get some business cards and send them to every friend and relative you know and let them know that you are ready to help someone who is in a bad way with their real estate. You can take it off of their hands and get them some money.
Also to add in . join a local investor club, and introduce yourself to others and bird dog for them. That is no cost and you will learn alot.
good luck!
Networking is very inexpensive, I get maybe 50% of my deals from networking. Monday I got a call from a realtor I knew about a house for $22k I put it under contract and yesterday I sold the home for 31k and I still havent even closed. All networking. I will net $8k in the end for 10 min worth of work