The Right Real Estate Agent For The Property Investor? – Some nice ideas in this thread.
Frederic P.:
A real estate agent might be able to help you locate properties and if he is an investor himself or know how investor think, he might be able to bring you some deals that could fit your criterias but you will be the one who has to decide if a deal is good for you or not.
Ross H.:
Out of 10 agents, 5 will hurt your business, not help it, 3 will add no value, 1 will be helpful and 1 will actually be of benefit to your business.
I highly recommend that you find a successful investor in your area of investment and find out who that investor uses as an agent.
You’ll find that the successful investor uses multiple agents – many for finding deals, one or two for selling deals.
Tony S.:
When interviewing an agent, I would ask them if they have any income property themselves. In my experience, there is a big difference in the way agents that are investors and non investors think.
Real Estate Agents vs Real Estate Lawyers – Frederic P.:
Real estate agents cannot write a contract from scratch, it would be practicing law and unless an agent is also a lawyer they cannot write anything themselves or could be held liable for it if something happens. In some state, agent don’t even have the option to fill out a pre-written contract, the contract has to be written by a lawyer.
In a commercial real estate transaction, there is no pre-written contracts. Anything agreed upon between the buyer and the seller has to be written in the contract and an agent cannot write such a contract. If you are looking for someone to write some custom contracts for you, a real estate lawyer might probably be more what you are looking for.
The two types of real estate agents – J S.:
There are essentially two types of agents:
1) Those who work for the seller and are contractually obligated to help the seller get the best deal possible;
2) Those who work for the buyer and are contractually obligated to help the buyer get the best deal possible.
The important thing to keep in mind is that if you don’t have a specific contract with an agent that calls for that agent to represent YOU, then by default they will represent the seller.
The seller’s agent (known as the “listing agent”) can certainly write up your offer for you, do all the paperwork, get you to closing, etc. In fact, he/she will do everything you need an agent to do to buy that house. But, the reason that agent recommends that you find your own agent is that, while he/she will take care of all the paperwork for you, he/she is still contractually obligated to help the seller get the best deal.
In other words, if you say to the listing agent, “I’m willing to spend $200,000 for this house, but let’s put in an offer for $150,000 and see if I can get the seller lower…”, the listing agent will be legally bound to let the seller know you said that. And that’s not good for your negotiating stance.
So, while you don’t need to find your own agent, it’s in your best interest to do so. It doesn’t cost you anything (the seller pays all commissions), and this way you have someone who is familiar with the process, and is also looking out for your best interest and can help you negotiate.
Purchasing property for resale – MyTwoCents:
Before I purchase a property, I think about resale – regardless of the market. That’s my little check to make sure my money is spent on a desirable property.
When I bought a condo, I purchased the least expensive one with low fees, on the highest floor in a very desirable complex. It was a one bedroom in downtown Kirkland – perfect for singles or a couple without kids. I was able to sell it in one month for a very tidy profit to a single person. (BTW, the expensive ones were a much harder sell, especially since they cost so much to begin with).
Years later, I bought a 4 bedroom house in Seattle at the height of the market in 2006. I chose a very desirable area for families with children (excellent schools). Then, I picked a house that had been on the market for a very long time, knowing the flipper was anxious to sell. I was able to negotiate an excellent price, and although this isn’t any guarantee on a future sales price, I am still ahead in value according to Zillow.
SFH / Single Family Home / Single-family detached home – Wikipedia:
A single-family detached home, or single-family home or detached house for short, also variously known as a single-detached dwelling or separate house (see below), is a free-standing residential building.
Most single-family homes are built on lots larger than the structure itself, adding an area surrounding the house, which is commonly called a yard in North American English or a garden in British English.
Garages can also be found on most lots. In older homes, they are typically detached, standing as a separate building, either near a driveway or facing an alley in urban areas.
Newer homes in North America favor attached garages, often facing the street, as most recent developments do not include alleys.
A Northern European single-family home in Denmark:
Is the slow down in housing sales a sign NOT to buy rentals? – Rich W, responding to a suggestion that the economic slow down means that this isn’t the right time to purchase rental properties:
However, I’d also differ with you on investing now.
Do you really have a problem finding renters in your area?
There have been job losses everywhere, but that doesn’t reduce the number of people that live there – unless they moved.
In my previous area of s. TX, we were approaching 9% unemployed, yet the rental market is stronger than EVER.
NO BUILDER is building, and that reduces overall inventory.
Many families have been foreclosed on, and that creates more folks that HAVE to rent.
Banks are holding the foreclosures and WON’T rent them. That also reduces inventory. It creates the perfect storm for rentals.
My occupancy is near 100%.
I’m finding the same thing in FL where I now live. Amazing demand for rentals.
Same situation. Simple Economics 101. When demand is high and inventory is low, price (or rent in this case) goes up.
I haven’t heard of areas where the rentals are hard to rent, unless you’re talking Flint, MI type areas.
I would expect every investor to do his homework on the area he’s buying in before jumping in.
You seem to be trying to “time” the market on when to buy. That never seems to work well. BUY BUY BUY, I’ll repeat.
You’re correct on good deals available in all markets, and research is needed as well as holding capital.
I just disagree with the doomsayers. They are always late to the party and will be this time also, in my opinion.
If you choose to wait to buy, so be it. I would continue to suggest the opposite.
BUY BUY BUY!
Example of an exit clause involving REO purchase post inspection – Eddie Z.:
As stated before, Banks are hard to negotiate with when it comes to REO purchase post inspection.
Also, some banks require 10% earnest money in cashier check for any cash buy. That could potentially put you in a substantial loss should you decide to opt out the deal.
Here is an exit clause I always put in my contracts and you can modify it to your own needs:
“The Purchaser will hire a licensed home inspector to inspect the property within five business days of the acceptance of this agreement. Should the inspection conclude that the property possesses fundamental flaws which renders the property uninhabitable and / or the repair costs of those flaws would equal or exceed the sale price of the property, the Purchaser then reserves the right to remove himself from, and all his obligations of, this contract and the seller agrees to refund the earnest money to the Purchaser in full.”
Re-Negotiate The Price After Home Inspection? – Scott R.:
Normally re-negotiating after the inspections is a great idea but it depends on a lot of factors if you should.
I represent REO properties right now and even though prices are falling the inventory is not the same as it was 1 year ago.
Banks hate to re-negotiate after the inspections. In those cases I tell my clients if they are willing to walk away from the deal if they don’t get at least some relief, then ask for the repair/credit.
But if they would go ahead with the deal, but the bank says no, then don’t ask. One of my bank clients cancelled a deal for the simple fact that the buyers asked for repairs and they were within their rights in the contract.
It also depends on how you offered to purchase the property. If you said you would buy it AS-IS then take it AS-IS. Unless again if the repairs are so much that you would walk away if the seller does not give a credit.
In a normal transaction ask for the credit. You have nothing to lose and everything to gain.
But be reasonable. The things you mentioned sounded reasonable but some people take this to extremes and think that it is an opportunity to get the seller to buy you a new home.
Even new homes are not perfect.
Does the “No cash / No credit” creative financing for real estate investments really work? – There are two ways, according to Scott M.:
Of course it is possible – that is how I got started in this biz – no cash and no credit. I found partners with cash and other partners with credit – I did all the work and split the profit 50/50 until I had enough to work on my own.
A lot of those guys also talk about a sub2 deal – where you find a distressed homeowner who needs to sell and you lock up their home on a sub2 deal and then you do a lease option with a buyer or sell to an investor and you make some cash in the middle.
You can search sub2 in this site for lots more info.
But yes – it can be done – but as others have said not the easiest way but a way lots of us started out.
Louis B. adds:
Sub 2 is the best way to accumulate a portfolio of properties based on no cash – no credit.
But realize this, if you don’t have a buyer lined up, you will have to make (up) the payments to the Lender.
So make sure you have a solid and extensive buyer’s list, and you’ll be just fine.
Sub2 / Sub 2 / Subject To Real Estate Deals – What is a “Subject 2” Deal?:
The typical sub2 deal involves having a seller deed the property to you while leaving the existing mortgage in place. There is no “formal” assumption of the loan, you just start making the payments. There are many variations to this type of deal and as many ways to “take one down” as there are investors doing it.
Anatomy of a Sub2 Purchase: William Tingle shares the 5 steps he uses.
Frequently Asked Questions About Sub2 – William Tingle:
There are many ways to buy property. In the almost 3 years that I have been investing, I have bought with cash, bank loans, via sandwich lease options and my personal favorite, “Subject-To”.
In my opinion, subject-to is the easiest, fastest, cheapest, least complicated way to acquire property, although contrary to what some will tell you, it is not without risk. Although in a lot of cases you CAN buy without having cash, I would not recommend doing so without cash or access to it. Agreeing to make payments on someone’s loan is a huge responsibility, and I think everyone that utilizes this way of buying should look at each loan as if he himself had personally signed the mortgage.
Sub2 Real Estate Investing – Lori Kimble, on the subject of “How to Obtain a Property Without Bank Financing”:
Sub2 is real estate investing lingo for ‘subject to’. It means you are just taking over the payments for the existing mortgage, and the seller will deed the property over to you. This way you are not taking out any formal financing, but you and the seller will have a written contract that the deal is subject to you taking over payments on the original mortgage. Since most banks do not issue assumable mortgages anymore, this is a way of making it assumable on your own. You can then agree to give the sellers a lump sum when you sell the property.
Buying real estate “Subject To” is a technique that can allow you to acquire a property with virtually no cash by leaving the seller’s existing mortgage in place. This means that you do not have to get a loan to buy the property because you have purchased the property “subject to” the existing loan or loans. Practically, this means that the owner deeds the property to you and you both agree that you will make the payments on his mortgage. Since the owner’s name is still on the loan he does remain liable for the payments however.
How real estate investors should build business relationships with bank loan officers – Ryan B.:
Probably the best advise I got was make friends with small to medium size bank loan officers.
Give them a call, stop in for a ten-minute conversation. A couple of days later, send them some donuts to share in the office. Take him / her out to lunch a couple weeks later. Those relationships will be the most valuable.
Just a side note with those relationships … this is just the salesman in me … when you are talking shop with them, the question should never be “DO YOU have …?”
Be specific with your question: “WHAT do you have …?”
It’s too easy for him / her to say “Aww nothin” simply because they may not consider what they do have to be of high interest for most.
Also ask, “WHAT do you have coming up?”, not, “Do you have anything coming up?”
It is just a psyche thing and human nature to respond better to open ended questions that require more than a Yes or No answer.
Finding real estate short sale opportunities from foreclosures – Ryan B.:
If you are able to find foreclosures, you’ve just found short sale opportunities. If you have a redemption period in your state, wait till the redemption period is nearly over so there is little risk of being redeemed.
You should, through the public notice, be able to find the attorney that was handling the foreclosure process for the lender. If you contact him he will often be able to give you the name and contact info of the employee at the bank handling the foreclosure. And if that particular individual at the bank does not have decision making ability for short sales, then they most likely know who does.
Finding Real Estate Deals: Go Through A Bank Or Agent? – Ryan B.:
First let me say that you are not wasting your time by going through a bank directly. This is often where the best deals are found.
Think of it this way, there are a bunch of individuals such as yourself that are trying to get an “in” with the banks, and many individuals already have an in. So the properties you see with agents have already gone through the first round of filters by investors.
The bank would much rather (in most cases) sell it directly to you and cut out the expense and time of using an agent.
BUT, not all of them will. Large banks often times will not sell them directly because they just don’t want to deal with it on their own. They would rather just set the parameters of the sale and hand it off to an agent.
Real Estate – Short Sale – Wikipedia:
A short sale is a sale of real estate in which the proceeds from the sale fall short of the balance owed on a loan secured by the property sold.
In a short sale, the bank or mortgage lender agrees to discount a loan balance because of an economic or financial hardship on the part of the mortgagor.
This negotiation is all done through communication with a bank’s loss mitigation or workout department.
The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender, sometimes (but not always) in full satisfaction of the debt.
In such instances, the lender would have the right to approve or disapprove of a proposed sale. Extenuating circumstances influence whether or not banks will discount a loan balance.
These circumstances are usually related to the current real estate market and the borrower’s financial situation.
A short sale typically is executed to prevent a home foreclosure, but the decision to proceed with a short sale is predicated on the most economic way for the bank to recover the amount owed on the property.
Often a bank will allow a short sale if they believe that it will result in a smaller financial loss than foreclosing as there are carrying costs that are associated with a foreclosure.
A bank will typically determine the amount of equity (or lack thereof), by determining the probable selling price from a Broker Price Opinion BPO (also known as a Broker Opinion of Value (BOV)) or through a valuation of an appraisal.
For the home owner, advantages include avoidance of a foreclosure on their credit history and partial control of the monetary deficiency.
A short sale is typically faster and less expensive than a foreclosure.
In short, a short sale is nothing more than negotiating with lien holders a payoff for less than what they are owed, or rather a sale of a debt, generally on a piece of real estate, short of the full debt amount.
It does not extinguish the remaining balance unless settlement is clearly indicated on the acceptance of offer.
FSBO / For sale by owner – Wikipedia:
For Sale By Owner, or FSBO, is the process of marketing, buying and selling of real estate without the representation of a real estate broker.
Many sellers who choose to sell via FSBO do so to avoid paying a commission to a broker, typically 6% of the selling price of the property in many parts of the US. Commissions can range between 5% and 7% in different markets across the U.S. as well as in Canada. In the UK, 1.5% is the average commission rate so sales by owner are rarer.
REO / Real estate owned – Wikipedia:
Real estate owned or REO is a class of property owned by a lender, typically a bank, after an unsuccessful sale at a foreclosure auction. A bank will typically set the opening bid at a foreclosure auction for at least the outstanding loan amount. If there are no bidders that are interested, then the bank will legally repossess the property. As soon as the bank repossess the property, it is listed on their books as REO – Real Estate Owned – and is categorized as an asset (non-performing).
Do Not Let Emotions Enter Into The Real Estate Investing Equation – rentec<:
If your buying for investment, there’s no reason to get emotionally attached to any property. There’s no such thing as “I better get it before it’s gone because there isn’t going to be another deal like this in my lifetime”. There’s ALWAYS another deal around the corner. If your in a small town, there’s going to be another deal available next week. There’s a $190 house that will take $130.
The Importance Of Having A Proper Real Estate Investing System In Place – Trace Trajano:
To avoid any of the scenarios from happening to you, you have to have systems. You have to have systems for buying, selling, funding, even closing your deals. You have to have a pipeline of properties to sell and a pipeline of eager, qualified buyers competing for your deals.
Why Is Obtaining A Thorough Inspection Of A Potential Investment Property Crucial? – waziri:
Failing to have a complete and proper inspection can lead to disaster when the renovations begin costing extra money and time as efforts are undone in order to get to the root of the problems as you go. There are very few things that can save you the time or money that having a decent inspection can manage to save. Inspections can also make you aware of any structural problems, code problems, and other problems that may mean the difference between this property offering a possible profit or a probable loss. It is much better to be armed with this knowledge before ever making an offer on the property in question.
Why Is Location Important When Considering The Worth Of An Investment Property? – waziri:
Before placing a bid on a potential property for flipping you need to learn as much about the neighborhood as possible. You do not want to place a family home in the middle of a retirement neighborhood, nor do you want to place a potential bachelor pad in that type of area. You also want to avoid areas that are entering a state of decline, as the rehab efforts are unlikely to achieve the profits you are hoping to receive. Instead, look for bargains in areas that are approaching some sort of renewal or have very low crime and excellent growth potential.
What Kind Of Investment Property Is Ideal For Families? – waziri:
If you are rehabbing a home that is meant to appeal to families make sure the neighborhood is safe, has a relatively low crime rate, access to good schools, and entertainment opportunities that may appeal to families.
Where To Find Real Estate Bargains – waziri:
Another great place to find bargains of this nature is to search through foreclosures, auctions, and homes that are preparing to enter into foreclosure. While not always the case, there are many in these situations that are willing to be a bit more flexible with the price. Never offer full asking price first. Start low and negotiate up. This may lose some properties but in the end it will be a much more profitable venture if you can get the properties you want for a smaller investment.
How to Find a Good Real Estate Investment Property – Waziri::
There are many ways in which you can find a great property for your real estate investment. The problem lies in the fact that many would be investors aren’t exactly certain what specific types of investment they wish to make. Unfortunately, the type of investing will greatly affect the type of property that will best suit your real estate needs. This article focuses on finding a great property for the purpose of flipping or rehabbing a property.
Four tips to keep in mind:
- Seek Bargains
- Know the Neighborhood
- Get a Thorough Inspection
- Realize That You do not Need to Buy the First Property You See
Home Inspection Tips For The Property Investor – Michael Suess:
Here is a question… Why are you getting them inspected?
I haven’t paid for a home inspection for years.
If you don’t know what to look for when you go through a house, pay for one and walk around with the home inspector and ask A LOT of questions:
- Why are they doing what they are doing, what if the house had this that and the other thing, what would they look for?
- How do you make sure that the furnace is good, the hot water tank, the roof, chimney, etc.Spend 3, 4, 5 hours doing the inspection, and make sure that the inspector gives you a very detailed report.
Once you have gone through one, you can pretty much do it yourself.
Sure, you might not catch EVERYTHING, heck I still don’t, but if you can get a good idea of the condition of the house, and what needs to be replaced and what is good, that few hundred bucks spent on the initial inspection will be worth it – call it a training seminar!
Should The Property Investor Pay For Home Inspections? – Greg:
Pay for professional inspections and do it right. If you lose $400 because a house has too many problems to fix, consider it money well spent not money lost. I have had inspectors find $30,000 in needed repairs.
Section 8 (housing) – Wikipedia, the free encyclopedia<:
The Housing Choice Voucher Program is a type of Federal assistance provided by the United States Department of Housing and Urban Development (HUD) dedicated to sponsoring subsidized housing for low-income families and individuals. It is more commonly known as Section 8, in reference to the portion of the U.S. Housing Act of 1937 under which the original subsidy program was authorized. The United States Code (the compilation of current U.S. federal laws) covers this program in Title 42, Chapter 8.
NOLO, Debtors and Judgements – cjmazur:
Check out Nolo, they have great legal reference,
If you can serve the debtor after the judgement, you can request a court examination of all their assets.
Collecting Debts On Your Own vs Using A Collection Agency? – loon:
I don’t need a book [on debt collection].
I just hand my judgments over to my collection agency. They also do my credit checks.
Swallowed hard at their 40% fee (I paid the amount at filing as much as possible to offset this eventuality) and let them do the heavy lifting, garnishment, whatever.
One county (bless their heart) did the work for me, and I just got a check the other day, but that involved criminal charges and property damage.
Debtor Information at Accurint – uSonia:
Usually the hard part is obtaining financial information on the debtor. One good source is Accurint (a division of LexisNexis).