Posted by Rich-CA on April 24, 2007 at 18:26:07:
You don’t mention how far into the Chapter 13 you are. The first 3 years are very difficult to get loans and in the rare circumstance you can get a loan, you will be charged a lot more. After 3 years, the lenders will look at your payment track record. There is still a higher rate charged, but its possible.
Chapter 13 and investing in real estate - Posted by monie
Posted by monie on April 24, 2007 at 15:57:05:
I recently fell into hard times and filed chpt. 13. My question is how can a newbie invest after filing bankruptcy? I have been reading all Dwan T’s info and interested in “flipping”. I am a little nervous about it and want to make sure I am moving in the right direction. After reading several post, it looks like getting an LLC may not work for me, because I have been reading that it is hard to get financing under an LLC. There are so many grey areas. I am ready to start, just need some advice from the experts.
Thank you.
Re: Chapter 13 and investing in real estate - Posted by Bill Foust
Posted by Bill Foust on April 25, 2007 at 22:40:50:
I echo the question of how far are you into the Bankruptcy? Having been through a chpt 13, I can appreciate your position.
If you are not out of the bankruptcy yet, I would do absolutely nothing except to invest in your education. Use this time to focus on gaining as much knowledge as you can by attending REIA meetings, reading forums, listening to podcasts and teleseminars.
If you do investing while in the bankruptcy, it could jeopordise your bankruptcy. For one, you must get the trustee to agree to any major purchases or to take on any debt. Also if you suddenly start flipping properties and making even 5k here and there, a judge may seize it to satisfy your debts that you say you cannot pay.
If you are out of the bankruptcy, then I would wait a year. you can buy your own residence 1 day out of bankruptcy, but for investments, lenders want at least 1 year out and most likely 2 yrs.
I am currently 1 yr out of my chpt 13, and it is still causing issues, though I am finding lenders that can do it. The properties that I’m acquiring are being done on land contract, some with balloons and some without. with the land contract you get equitable title and control, but not the deed. Still for a buy-and-hold strategy, this is working. There are a lot fewer deals available this way, but in this buyers market, its not as hard as you might think.
Bill
Re: 9 ways to do a deal with bad credit, no money - Posted by Ed Garcia
Posted by Ed Garcia on April 25, 2007 at 01:39:49:
Monie,
In my workshop, I teach that there are at least 9 different ways you can do a deal with poor or bad credit.
Now before I give them to you, I want you to know that I’m really supportive of learning deal structuring. The first thing you need to do is, “investigate your deal” to know what I call (where the bodies lie) another words what is the seller’s main objectives or motivation. That allows, you to have an idea of what approaches are going to be compatible with the sellers needs, allowing you to do the deal.
Here are the 9 ways that I’ve mentioned.
(1) PARTNERHIP: Find a 50/50 partner. It don’t have to be 50/50, it can be what ever you can negotiate.
(2) FLIP: the best way to flip is to find a potential buyer first and then find a property. You can do this by running an ad on a property to see what kind of action you get. Once you have a potential qualified buyer, you’d be surprised how easy it is to find them a house.
(3) LEASE OPTION: Many times you can buy and sell with a lease option. We call this a “Sandwich Lease Option”. Jim, I’m not going to go into any great detail, you can find this information all over this forum.
(4) SELLER CARRY BACK: This is one of, if not my favorite way to buy. Now the best way to utilize this system is to do a second seller carry back in order to give the seller some cash in the deal. If money doesn’t exchange hands, many times the seller doesn’t feel that they consummated a sale.
Example:
I find a house that has a small balance on the first. Lets say the house is worth a $100,000; the balance on the first mortgage is $30,000.
If I wanted to buy this house for lets say $80,000, I could ask the seller to carry back $15,000 and go to a hard money lender to borrow 65%
of AMV (appraised market value) of which is $65,000 and the seller carrying $15,000 in second position, would ad up to $80,000. It would also give your seller $35,000 new cash, and $125.00 income on the $15,000 loan that they carried at 10% interest only, for 5 years.
(5) HARD MONEY: Hard money, is an equity loan made at approximately 65% LTV, based on the equity of the property only. Credit is not a consideration.
(6) HARD MONEY/SELLER CARRY BACK: Again, You can have the seller carry back a second and refinance the first, giving the seller some money. You can do variations of this system.
(7) SUB PRIME FINANCING: Many National lenders will provide financing at 70% with poor credit and won’t verify money down.
(8) SUB PRIME/ SELLER CARRY BACK: Again this combination can provide money to the seller, rather than ask them to carry the whole thing. Also there are local independent portfolio lenders that will lend as well as mortgage co’s and I always recommend seeking them out. National one’s would be Associates Finance, American General, Beneficial etc.
(9) CREAT YOUR OWN MORTGAGE: In our workshop, Terry Vaughan covers this, and shows you how to discount it and market it.
Ed Garcia