No Equity and RE investing... - Posted by MikeSon

Real Estate Investing
1

Posted by B.L.Renfrow on November 20, 2000 at 16:34:32:

“With the exception of Lease options, there aren’t a whole lot of ways to make things happen when there is little or no equity.”

You’re forgetting about subject-to deals. I have done several of those lately without a whole lot of equity, but I will still profit because I can sell them above FMV, since I am offering terms. I will collect a downpayment from my buyer. I can raise the interest rate and make money from the spread between my buyer’s payments and the payments on the underlying loan. Or, I can lease-option to a tenant/buyer. Or, there’s always the PACTrust. That’s another whole post.

"Would I be better of placing an add in the paper
that says, “Are you motivated to sell Vs. calling
every seller?”

You don’t place an ad saying that. But you have the right idea. You want the motivated sellers to call you. You do that by telling everyone you know that you solve housing problems. You place ads which say I WILL BUY YOUR PROBLEM HOUSE… You post bandit signs, and flyers at the grocery stores. Some people put signs on their vehicles. You can advertise on the radio. You look up the lis pendens and contact the defaulted owner. You look up evictions and contact the hopefully-tired landlord. And yes, you can call the companies relocating workers, if you want.

Point is, learn to think outside the box, as the saying goes. In truth, there are PLENTY of ways “to make things happen when there is little or no equity.”

Brian (NY)

2

No Equity and RE investing… - Posted by MikeSon

Posted by MikeSon on November 20, 2000 at 24:33:07:

How can real estate investors stay in business with all
the sources online for sellers to determine their
property value?

Seems to me that the only people that will sell
below market value are the uninformed sellers.

And without equity or profit cushion, there leaves
no room for RE investors.

The issue then becomes who has the better loan source.

Without equity, there can be NO MONEY DOWN transactions,
UNLESS buyer has excellent credit. There are a few
loan sources that will borrow 100% of loan amount to
good credit people.

Seems to me all the talk about comps, market value, etc…
are to determine how much equity RE investors can work
against the sellers.

Am I wrong here?

Thanks

Mike

3

Re: No Equity and RE investing… - Posted by Jim Kennedy - Houston, TX

Posted by Jim Kennedy - Houston, TX on November 20, 2000 at 01:57:33:

“How can real estate investors stay in business with all the sources online for sellers to determine their property value?”

Most sellers have a rough idea of what their house is worth. Some think it’s worth less than it really is and some think it’s worth more than it really is, but most get pretty close to the true FMV.

“Seems to me that the only people that will sell below market value are the uninformed sellers.”

Not necessarily so! There are lots of motivated sellers that know the market value of their home, but for one reason or another they’re so motivated to sell that they willing take much less than FMV.

“And without equity or profit cushion, there leaves no room for RE investors.”

There are plenty of deals that have equity or profit cushion.

“The issue then becomes who has the better loan source.”

Having a good loan source is certainly one of the things that makes real estate investing easier.

“Without equity, there can be NO MONEY DOWN transactions, UNLESS buyer has excellent credit.”

Absolutely not accurate! Many of the pros that visit here structure no money down deals on properties with little or no equity without even discussing their credit. An example would be a seller who recently purchased a home and is now being transferred out of state. If they bought using a high LTV loan (i.e. VA or FHA) they might be very willing to L/O the property in order to be relieved of the burden of their monthly payment. The investor comes in and makes money by collecting non-refundable option consideration up front, positive monthly cash flow, and a back-end profit when their tenant/optionee exercises.

“There are a few loan sources that will borrow 100% of loan amount to good credit people.”

Stick around and read the posts here as well as the how to articles and you’ll learn several ways to construct transactions without using lenders.

“Seems to me all the talk about comps, market value, etc. are to determine how much equity RE investors can work against the sellers.”

If you’re trying to work AGAINST the sellers, you’re going to have a hard time in this business. You’ll be much more successful if you find a way to structure win-win transactions that solve the seller’s problem while affording you the opportunity to make a profit.

“Am I wrong here?”

In a word, yes. But hang around this site and you’ll learn why real estate investing is so exciting.

Best of Success!!

Jim Kennedy,
Houston, TX

4

Re: No Equity and RE investing… - Posted by MikeSon

Posted by MikeSon on November 20, 2000 at 12:16:06:

With the exception of Lease options, there aren’t a whole lot of ways to make things happen when there is little or no equity.

I either wait for sellers to drop the price or
sit at the court house to go through divorce filings,
evictions, funeral notices, and foreclosures.

Or call all the major companies in the area that
are relocating their workers???

Would I be better of placing an add in the paper
that says, “Are you motivated to sell Vs. calling
every seller?”

Thanks again.

Mike

5

Re: No Equity and RE investing… - Posted by MikeSon

Posted by MikeSon on November 20, 2000 at 06:30:17:

Thanks Jim for the replies.

Mike