REAL ESTATE INVESTORS CHECK IN!..."FORECLOSURES", "SHORT-SALES", starting a business 101

[mlaurente]

Whats up NT...

Me and a buddy of mine are getting into REAL ESTATE. Not thinking of becoming a Real Estate agent or anything. Just looking into short sales, quick flips, andfocusing on foreclosures.

**Accomplished Goals**
-Network with successful real estate investors
-Establish a relationship with a trusted lending institution
-Establish a relationship with a trusted contractor with connections to other contractors
-Research, Read up on books, go to real estate seminars
-Visit local cities with foreclosed homes, research the area's, environmental surroundings, etc.

Right now, we are brainstorming ideas of what we can call the company. Within a couple weeks, or at least sometime in May, we hope to have a TAX ID and havethe name under a LLC (Limited Liability Company). My buddy said, we should instead of an LCC, have it as a corporation, or incoporation. Not sure of thedifference, which is what this post is about. To gain knowledge from experienced NT'ers in the field.

*Forclosures- pretty much, a homeowner for some reason (laid off job, divorce, fired, etc.) are not able to make monthly mortgage payments for the house. Homeis then seized by LENDER or state, or whoever. Homeowner's credit is put in a deep ditch for 7 years. House is then sold for 30-50% off MARKET VALUE.

***PRIOR TO THAT HAPPENING, I come in and say, hello homeowner, I see you're in deep dookie, i'll buy your house for $X,XXX (X% less than marketvalue). I will give you $X,XXX to get yourself back on your feet. You DON'T FILE for foreclosure, your credit is not shot, I give you this amount of moneyto build another foundation for yourself. You win, I win.
***I then fix the house up a bit, sell it for the market value. or even a little under so it'll seem as if the buyer is getting a good deal. Easy profit.selling price-purchase price/renovation cost/other cots=profit ...profit=contribution to next "SHORT SALE"

*******PLEASE KNOW THAT I AM A ROOKIE IN THE GAME, THAT MY EXPLANATION WAS VERY BRAUD AND GENERAL, THAT IT IS A QUICK FEW SENTENCE SUMMARY OF FORECLOSINGHOMES, I AM NOT AN EXPERIENCED NOR A PROFESSIONAL, FEEL FREE TO CORRECT MY STATEMENT OR ADD ON TO BETTER INFORM READER****(not trying to get flamed for comingoff as a know it all)

***REASON FOR POST****

NT has a pretty diverse group of people. I know there are pro's and experienced real estate investors who's been in the game for a bit. I'm justanother motivated person commited to come up in the world.

*any tips, pointers, advice would be appreciated
*any websites that i should check out would be cool too. i've done a lot of online reading though, but everytime i try to google something, something newcomes up. so maybe you guys know some other good sources.
*advice on what proper steps i should take in creating this business, so i don't run into a lot of bumps down the road.


I live in the NORTHWEST by the way, 19, business partner is in his 30's. Have a little around $10k that i can contribute to the business.

if you have any questions for me, feel free to PM. I know a little bit, at least enough to get someone to listen. I'm in WASHINGTON STATE. NORTHWEST MARKETis not yet tapped, so it is an advantage for anyone interested in learning the trade.
*over 60% of all millionaires started their wealth in REAL ESTATE. 90% of millionaires are "First generation" millionaires meaning, they didn'tinherit the money, they made it themselves, they were the first generation in their family to become millionaires...........not that it matters or anything.


Thanks in advance NT

 

[dirtylicious]

***PRIOR TO THAT HAPPENING, I come in and say, hello homeowner, I see you're in deep dookie, i'll buy your house for $X,XXX (X% less than market value). I will give you $X,XXX to get yourself back on your feet. You DON'T FILE for foreclosure, your credit is not shot, I give you this amount of money to build another foundation for yourself. You win, I win.
***I then fix the house up a bit, sell it for the market value. or even a little under so it'll seem as if the buyer is getting a good deal. Easy profit. selling price-purchase price/renovation cost/other cots=profit ...profit=contribution to next "SHORT SALE"
1. how are you going to find these houses?
2. no one files for foreclosure..it's something that happens when the bank auctions off your house after you get behind
3. Short sales have to be agreed upon by the lender.
4. lastly and most importantly...how are you going to sell the house if the current homeowner couldn't sell it at below market value?

 

[realxfresh]

someone has been following rich dad poor dad too much.

 

[dirtylicious]

oh yeah..
it's broad. not braud.

 

[nikeflightposite]

rediculouslyballin, is that you??

 

[hiphawpdrunkie]

a very risky situation you are putting yourself in. first off, by many estimates, we are no where near the end of the downturn. so going in now would be highlydangerous.

also, homes destined for foreclosures aren't steals by any stretch of the imagination. sure people get lucky, but you don't build a company on merespeculation. i could answer some of your questions, but i don't think it's worth entertaining the thought. if you don't know the difference betweenan LLC and a corp, at least research it before asking about it on a shoe forum.

also, be wary of "market values." we'll be seeing a lot of litigation regarding shady practices of appraisers and their role in puffing the valueof properties so that homeowners could obtain refinancing on their homes in excess of the actual liquidity available.

but..... i could be wrong and you could be ballin in no time.

 

[22 deuces 22]

DO NOT GET INTO REAL ESTATE.


Seriously, IT'S DONE.

 

[martin and co]

Sounds like this is straight out of some "invest in foreclosures" book...

Serious real estate "investors" don't go to seminars and the like...

Any "good" deals that will actually turn a profit will be realized by investors with much more money than you...


The only way to makes waves in ANYTHING is to do your own thing, find a niche.

If you're serious about investing in Real estate with relatively little money, try developing countries. I'm not going to give you the entire game planhere, but certain countries have recently joined the EU and with 20-35K you can secure financing for a 100k condo. You need to do your own research to seewhich markets are developer driven and which are driven purely by lack of available housing (another tip: Capital cities).

5-7 years ago I'd recommend Russia, but now everything in Moscow is more expensive than most cities in the world (I think THE most but not sure), andtheres still room in Real estate but you need 7 figures to get your toes wet because Russia is cash based, no mortgages and the like (consumer mortgages are avery new financial product and carry an apr of 10-15%, and finance of small percent of the purchase. Plus, if you aren't Russian or don't speakRussian,you'll have a hard time doing business. Officially there is no such things as loans, but Russia is one of the most relationship based countries,where you either know people or your don't. If you have good connections you can get a loan for any amount for anything really. I just Bring up Russiabecause its the country with the most potential in Europe.

China is also a very good bet, China's middle class is booming like no other. 2nd tier cities are posting the highest growth as a % in most sectors.I'd go on about China but I honestly don't know all that much, but its on the radar.

btw real estate will never ever ever be done. It only experiences fluctuations.

 

[the dauqs]

Originally Posted by Dirtylicious

***PRIOR TO THAT HAPPENING, I come in and say, hello homeowner, I see you're in deep dookie, i'll buy your house for $X,XXX (X% less than market value). I will give you $X,XXX to get yourself back on your feet. You DON'T FILE for foreclosure, your credit is not shot, I give you this amount of money to build another foundation for yourself. You win, I win.
***I then fix the house up a bit, sell it for the market value. or even a little under so it'll seem as if the buyer is getting a good deal. Easy profit. selling price-purchase price/renovation cost/other cots=profit ...profit=contribution to next "SHORT SALE"

1. how are you going to find these houses?
2. no one files for foreclosure..it's something that happens when the bank auctions off your house after you get behind
3. Short sales have to be agreed upon by the lender.
4. lastly and most importantly...how are you going to sell the house if the current homeowner couldn't sell it at below market value?

Listen to this man. It's not really a home buyers market right now. Simply people cant buy right now. You will not see much of a profit if any at thispoint.

 

[rocathajordans23]

Only way you're gonna be able to make money off of real estate if you're able to buy and rent/ or buy and sit on the property till the market getsbetter.

 

[vagixxer]

DO NOT GET INTO REAL ESTATE.


Seriously, IT'S DONE.

It's not done....it's just time to adjust your business plan.

i could answer some of your questions, but i don't think it's worth entertaining the thought. if you don't know the difference between an LLC and a corp, at least research it before asking about it on a shoe forum.
I feel the same way.

I'm 21 now and have been involved in real estate since I was 18. Just to give you some Idea we started a company last year doing ALMOST exactly what youare trying to do and to give you some idea we got out of that business module entirely 4 months ago. It was good at first, but the abundance of foreclosurescauses that way of business to take a nose dive.

I could go on forever, but I'm not going to. I was like you at 19 from what you typed and thought I knew enough to step out on my own. 2 years later Ifinally made the jump. What background experience do you have in RE? Have you worked under any successfull investors by birddogging ETC? Do you know theprocess of renovation on a home? Basic construction knowledge so that contractors are running game on you?

at good contractor...isn't such a thingwhen it comes to inflated construction prices. They may do good work, but you also may have overpaid dramatically for it as well. Chances are you aren'tready yet, but I could be wrong. You have to be honest with yourself about that cause I can't make that judgement for you.

Good luck with your future business.

 

[mlaurente]

thanks for all the good advice NT. I am trying to gain as much knowledge as possible, both beneficial advice, and constructive criticism. I am honest to myselfthat I know very little about the game, but we all know, the only way to find out is to speak up. It's really hard to come across good and honest peoplenowadays, specially that everyone is so money hungry. But i figured, i'm young, i definitely have a good job to fall back on, and the biggest risk in life,is not taking one at all.

I do know a couple of successful real estate investors, and most of the ones i come across do agree that the market sucks, that it's very hard to jump onthe boat at this time. But there's a light at the end of every tunnel you know. Can ya'll really knock me for wanting to learn a honest successfultrade. I definitely appreciate everyones opinion though.

VaGIXXER, I would say i can relate to you the most. Pretty sure you had a similar vision at my age. What was your motivation to make the jump after two years?.I'm currently working on my Bachelors degree at the moment, have a couple years left. My current job pays me about $3500. slangin phones. So is trying todo this real estate thing going to be a burden on me, since i have a busy schedule as it is? My connections are close friends of family and or people i'veknown for years. same with contractors. I agree, knowing the renovation process of a home is critical in real estate. Is there courses you can take for that?.I hate reading, but if books are the best source, then i don't mind.

Thanks again everyone.

Someone asked how to find foreclosed homes. There's a few sites that somewhat post them up in any county in the US.

REALTYTRAC.COM
FORECLOSURES.COM

 

[mk25tolife]

How are you gonna get all this money to buy all these houses and pay off all these people? Also, you are 19, go to college. No offense, but if I was in my30's I would not be going into business with a 19 y/o. EDIT: Glad you are in college and not putting your eggs in this one basket.

 

[peteweezy]

No offense, but if I was in my 30's I would not be going into business with a 19 y/o.
Not being opened minded might lose you some money my man. Age is just a number if dude is 19 and is better than the 30 yr old thats who I'mgoing with.

 

[mk25tolife]

Originally Posted by The Dauqs

Originally Posted by Dirtylicious

***PRIOR TO THAT HAPPENING, I come in and say, hello homeowner, I see you're in deep dookie, i'll buy your house for $X,XXX (X% less than market value). I will give you $X,XXX to get yourself back on your feet. You DON'T FILE for foreclosure, your credit is not shot, I give you this amount of money to build another foundation for yourself. You win, I win.
***I then fix the house up a bit, sell it for the market value. or even a little under so it'll seem as if the buyer is getting a good deal. Easy profit. selling price-purchase price/renovation cost/other cots=profit ...profit=contribution to next "SHORT SALE"

1. how are you going to find these houses?
2. no one files for foreclosure..it's something that happens when the bank auctions off your house after you get behind
3. Short sales have to be agreed upon by the lender.
4. lastly and most importantly...how are you going to sell the house if the current homeowner couldn't sell it at below market value?

Listen to this man. It's not really a home buyers market right now. Simply people cant buy right now. You will not see much of a profit if any at this point.

Huh? It IS a buyer's market right now, what are you talking about? Maybe not to flip, but if you are looking for long term, it's definitely abuyer's market.

 

[vagixxer]

Mlaurente wrote:

---

thanks for all the good advice NT. I am trying to gain as much knowledge as possible, both beneficial advice, and constructive criticism. I am honest to myself that I know very little about the game, but we all know, the only way to find out is to speak up. It's really hard to come across good and honest people nowadays, specially that everyone is so money hungry. But i figured, i'm young, i definitely have a good job to fall back on, and the biggest risk in life, is not taking one at all.

I do know a couple of successful real estate investors, and most of the ones i come across do agree that the market sucks, that it's very hard to jump on the boat at this time. But there's a light at the end of every tunnel you know. Can ya'll really knock me for wanting to learn a honest successful trade. I definitely appreciate everyones opinion though.

VaGIXXER, I would say i can relate to you the most. Pretty sure you had a similar vision at my age. What was your motivation to make the jump after two years?. I'm currently working on my Bachelors degree at the moment, have a couple years left. My current job pays me about $3500. slangin phones. So is trying to do this real estate thing going to be a burden on me, since i have a busy schedule as it is? My connections are close friends of family and or people i've known for years. same with contractors. I agree, knowing the renovation process of a home is critical in real estate. Is there courses you can take for that?. I hate reading, but if books are the best source, then i don't mind.

Thanks again everyone.

Someone asked how to find foreclosed homes. There's a few sites that somewhat post them up in any county in the US.

REALTYTRAC.COM
FORECLOSURES.COM

A few things.......

I'm a full time college student at a university. Up until recently I was working part time doing finance for Tmobile doing real estate and taking classes.It's all about what you want to put in. Do think you don't have the time to make moves cause you do.

Why did I make the jump? well around this time last year I was doing package deals for investors as a birddog. I aranged contractors, appraisals, ETC all theyhad to do was "run numbers" and pay me a fee and they in the end would make money off the deal. I set up a deal for a investor on a property and sheasked me why wasn't I investing personally and that's when I started to seriously consider found a business parter as well as a silent investor andmoved from there. I was hesitant to make the jump because I wanted to make sure that I was ready and was prepared. You've said yourself that you don'tknow much. I really suggest birddogging. Your 19 and have plenty of time no need to rush it now. What kind of experience does your partner have? I'dsuggest starting out with a referral company as we did which limits risk to almost none. That way 3-4 years from now when the market turns back around andit's a investor field day ala 2000-2004 you will be prepared to cash in and cash out.

Their is no course for that, but real life experiences. You said you have a good contractor. What I did was ask him to give me a basic run down tag along withhim for a few weeks so that you can get familiar with what certian things are called and general price ranges of services. One person might tell you hvacinstallation is 7 grand while another 15grand you have to be careful.

If that is how you find properties in forecloure then you will be out of business by the time you set up your LLC

Those pay sites are rarley updated and by the time they are another investors as already made the move on that house.

Establish relationships with real estate agents that specialize in assest management and selling distressed properties. Search MLS for keyword foreclosure tofind those agents and properties. They will talk to you trust me. They are hurting right now and will do anything to make a buck.

Look under truste sales daily in the major paper in your area. Depending on what time of lending you have you can catch people either a month or 2 weesbefore their auction date. The closer the better as they have no means to negotiate and have already hired agent and listed WAY under value is a desperatemove. What i'm saying is be patient grasshopper

It's not as easy as it seems when your reading those books trust me

 

[vagixxer]

double

 

[jstunn197]

Huh? It IS a buyer's market right now, what are you talking about? Maybe not to flip, but if you are looking for long term, it' definitely a buyer's market


It is a buyers market but the issue is that people can't get loans right now. Its not like ba few years ago that everyone qualified for a $500k loan.

 

[vagixxer]

Originally Posted by JStunn197

Huh? It IS a buyer's market right now, what are you talking about? Maybe not to flip, but if you are looking for long term, it' definitely a buyer's market

It is a buyers market but the issue is that people can't get loans right now. Its not like ba few years ago that everyone qualified for a $500k loan.
Bingo.....

People aren't able to get loans like could before for the amounts that they were. People can hardly refi right now.

 

[22 deuces 22]

It's not done....it's just time to adjust your business plan.
Okay let me elaborate on what I said.....

REAL ESTATE IN THE UNITED STATES IS DONE FOR THE NEXT FIVE YEARS ATLEAST.

It is a buyers market but the issue is that people can't get loans right now. Its not like ba few years ago that everyone qualified for a $500k loan.

You can say it's a buyers' market....but what you fail to realize is that it won't be a seller's market anytime soon. And by anytime soon, Imean atleast 5 years. People who are ignorant on real estate do not realize that the only reason it boomed so drastically from 2003 to early 2007 is because ofthe sub-prime market. Because of the sub-prime banks, people who otherwise could not afford a single house (main reason being down-payment and income), wereable to buy MULTIPLE houses. Imagine the increase in demand for real estate just off that last sentence. Realistically, the lower-class can't afford topurchase a home. In that crazy market, lower-class individuals were able to (and DID) buy multiple homes. That's why values went so high....from 2003-2007the question wasn't "could I afford a house?" it was "how many should I buy, and where should I buy them?" Thus, people were overpayingfor homes. If a home was worth $350,000, people were paying $400,000+ for those homes.


Long-term, real estate values will still go up. And by long-term, I mean that if you buy a nice home for $600,000 today (in California), in ten years it willprobably be worth $750,000. But the days of "buy today, and sell in two years for a $150,000 profit" are over.

TRUST ME, I KNOW WHAT I'M TALKING ABOUT.

 

[r33p04s]

OP your plan has a major hole in it. If you take over this property before foreclosure, who says the house is worth as much as is owed on it? You may be ableto find people desperate enough to sell or leave the property to you for a pay-off but you will be stuck making payments or trying to sell a house worthsignificantly less than what the loan was for.

 

[jstunn197]

Originally Posted by 22 Deuces 22

It is a buyers market but the issue is that people can't get loans right now. Its not like ba few years ago that everyone qualified for a $500k loan.

You can say it's a buyers' market....but what you fail to realize is that it won't be a seller's market anytime soon. And by anytime soon, I mean atleast 5 years.


I'm not failing to realize anything. It's a buyer's market, I never said anything about a seller's market.

 

[stringer bell 32]

Originally Posted by JStunn197

Originally Posted by 22 Deuces 22

It is a buyers market but the issue is that people can't get loans right now. Its not like ba few years ago that everyone qualified for a $500k loan.

You can say it's a buyers' market....but what you fail to realize is that it won't be a seller's market anytime soon. And by anytime soon, I mean atleast 5 years.

I'm not failing to realize anything. It's a buyer's market, I never said anything about a seller's market.


So why are you going to pick up all these properties if no one is going to buy them?

 

[jstunn197]

^ I'm not buying properties, I'm just saying it's a buyer's market. But, people are still buying houses everyday. I bought a condo two monthsago, and my sister and bro in law just sold thier home and purchased a new one last month (if we bought, someone sold, right?). Check your local newspaper,they list transfers of title every week. Is this the time to get into the business of buying and selling properties? Hell no.

 

[sidneylov23]

I'm hearing a ton of wisdom, yet I'm still hearing weak advice. You guys have to turn off the CNN lol. The market is an absolutely beautiful conditionfor someone who is investing in Real Esate, it really couldn't get any more beautiful. The main issue these days is that no one can qualify for a loan,that has nothing really to do with the actual Real Estate. The bank has set down some hefty requirements due to the fact their have been so many foreclosures,and you gotta remember the banks make their cheddar off years of interest! So if someone has a house for two years and then goes into default, they are losingtons of money, and then they gotta seize these bad boys and get em sold, point blank they're losing.

Housing prices and Interests Rates are so low right now, if you have good credit, you are a very happy camper. But what about the people who don't havesuch good credit, are they going to sleep in a mini-van with their family? Of course not! That is where a good investor comes in! A good investor would acquirea couple properties right now, there are many way to do this. He would then put the family in a nice home in a great area under a lease with an option to buywhen the contract is up. That'll be enough time for them to straighten their credit out. The investor makes a hefty wad of cash, and the family is happy ina house they love(of course their are more steps to the process, its simple but tedious). Voila! This is just one example out of like 20, that shows why somepeople are millionaires, and why some people just give up after they watch CNN

.

Building wealth in Real Estate is more then going to Barnes n Noble and picking up a book, you need a mentor, someone who has been doing this thing for awhile, someone who thrives in all markets. I'm confused, I thought a hustle was to buy low and sell high, why are so many people crying then! Real Estateis so damn sexy. I love it!