experienced investor advice needed! - Posted by vp

Posted by jasonrei on October 08, 2003 at 07:54:03:

4 months.

experienced investor advice needed! - Posted by vp

Posted by vp on October 06, 2003 at 12:35:53:

My husband and I just started our own re investment co and he’s quite more cautious than I am. I’ve established some business relationships with some finance companies where I’m getting a list of their REO properties that they haven’t listed with a RE agent. So far many of the deals would equal 15k-30k profits. However, since they aren’t in the best of neighborhoods, my husband prefer to flip them to other investors. So here’s my question, until my husband becomes more comfortable investing in less desirable areas, with such potential profits, should we flip for a finder’s fee or with an option contract? Also, how does wholesaling fit into this? The reason for my question is an investor prefers offering only a finder’s fee if he closes on a deal.

Re: experienced investor advice needed! - Posted by jasonrei

Posted by jasonrei on October 07, 2003 at 14:22:55:

Consider that if you flip to an investor they may go direct to your lead at the finance company and bypass you in the future. I buy rehabs, mostly REO’s. It’s tough, where I am, to get a bank to sell on an option.

What would I do if I had a good lead at a finance co, but didn’t want to do deals (right now) in the areas they had houses? I’d get an option if I could, but I’d be prepared to buy the house myself if I couldn’t flip it. I’d only flip it to 1) an experienced investor who wouldn’t try to bypass me or bid against me down the road, or 2) an investor I felt I wouldn’t outperform me down the road.

I think wholesaling would be tough. I fix my houses up pretty nice, do it about as inexpensively as I think it can be done, and it still isn’t all that easy to get top dollar quickly on most of 'em. Seems to me lenders just don’t like to make loans on flips. Could just be me, though. My avg profit after all costs is probably barely over $10k.

Re: experienced investor advice needed! - Posted by Mark_IN

Posted by Mark_IN on October 07, 2003 at 10:24:33:

Did you establish your business relationships with the finance companies through cold calling or were they relationships you had prior to REI?

Re: experienced investor advice needed! - Posted by Randy

Posted by Randy on October 06, 2003 at 15:27:20:

Seems to me you have several options, the assignment fee (probably lease profitable), flip it with an option contract or look for retail buyers. If there is not much rehab work needed, the retail flip is going to be most profitable. The key to a retail flip is having a lender not concerned about the seasoning issue. The secondary market or private sources are your best bet for this.

Re: experienced investor advice needed! - Posted by vp

Posted by vp on October 07, 2003 at 23:29:02:

clarify something for me please. Are you saying that some lenders don’t like to approve loans for potential homebuyers if a house was recently purchased, rehabbed, and put back on the market for sale?

Re: experienced investor advice needed! - Posted by vp

Posted by vp on October 07, 2003 at 10:33:29:

cold calling.

Re: experienced investor advice needed! - Posted by jasonrei

Posted by jasonrei on October 07, 2003 at 23:39:27:

I would say most lenders don’t want to if the house has been owned by the seller for less than 12 months.

I’d say that for every 10 prospective buyers brought to me by real estate agents, about 7-8 have lenders that have a problem with the length of time I’ve owned a property. It used to be that 30-40% of lenders I talked to wouldn’t do the deal. That number has increased steadily since the beginning of the year. About the only time it isn’t a problem now is when I steer the buyer to a lender I like, or when a buyer has 680+ FICOs or a 10% down payment. If they have FICOs under 680 and want 97% or higher financing, it’s almost always a problem.

This has been MY experience in selling about 30 rehabs this year. Finding at least 3 good rehabs a month is way easier than finding 3 good buyers a month.

Re: experienced investor advice needed! - Posted by Mark_IN

Posted by Mark_IN on October 07, 2003 at 13:07:00:

thanks. I am just getting started and it looks like you have tapped a nice source.

Re: experienced investor advice needed! - Posted by vp

Posted by vp on October 08, 2003 at 24:08:57:

Thanks for the info. What’s your average timeframe in selling your rehabs once on the market? I quess I should start searching for lenders who wouldn’t have a problem with investors flipping,and therefore, be able to refer potential buyers to their office.