Real Estate Investing Training - Creative Deal Structuring

http://www.localmentor.com creative real estate investing in action. Post your example deal numbers in the comment section of this video and I will respond with 1 or more interesting ways to put a deal together from it. for more creative real estate investing info http://www.localmentor.com

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Education

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• localmentor
• michael jake
• creative finance
• real estate training

[Robtheprince]

There are two plots of land adjacent to a each other that haven't been developed in over 20 years. There are class C houses on either side of them with the owner occupying one of those houses. After checking zoning, it is zoned for 7-8 unit apt. The property appraisers site values each plot at 19K. I want to hopefully acquire each plot at 10K maximum and wholesale at 25K or 30K for a 5K-10K profit. With the zoning I think it would be a steal for a potential investor. What do you think?

[localmentor]

@Robtheprince - great question...issue is would someone want to build a NEW multi-unit in a 20+ year old C area? In my locale, probably not. A friend of mine lives in Pennsylvania and it's common to put modular 4-plexes (possibly an 8 plex if they make such a thing) on lots like that. I doubt it's going to be as easy as just getting a contract and assigning it, you need to research the viability of doing something like that, what the costs are, and project a return for ...

[localmentor]

@localmentor ...an investor who'd consider such a deal. Sell the Dream, Sell the Vision of what it could be with HARD data to back it up....or do the deal yourself and go through the process of doing that and raise capital via construction financing or private financing - if you go private - figure a high rate of return for an investor who'd put in the cash and keep the rest as your slice of the pie. You'll learn a lot going through the process. Let me know how it turns out!

[blube444]

Hey michael. I have recently purchaced my first investment property through a tax deed sale. It's in the city of Saint Louis. I paid $5k for it. It needs a total rehab. 954 sq ft.

One thing I really like about this area is that there are tons of workers who are laid off and looking for any work.

I would like to rehab the property, rent it out, and then refinance and pull out the equity. How does that sound?

[localmentor]

@blube444 - I'd refi your rehab money and purchase price out, but I would NOT refi equity out.

Congrats on your first deal!

[localmentor]

if, for example the house would rent for 1500, then you have 1500 - less min. acceptable cash flow to support debt/taxes/insurance. If you borrow 1st position money to give the seller, you have to calculate that payment into what's left over you can pay the seller on the carry back.

Get some accurate comps, though!

[localmentor]

Seller WANTS 100k, what does he need?

Comps of 190k to 400k are NOT Comps. You absolutely NEED to have a system of getting accurate comps - to get within 5-10k of value in that pricepoint to understand how to put the deal together.

Only way to get a big chunk of cash to the seller up front without it coming from YOU is using subordination - get the seller to subordinate behind a new first (Hard Money or Private Money) - BUT you have to determine what the House will afford for a payment (ie.rent

[localmentor]

on likely size of it, your probably talking more like 2k-2.5k and then you might be able to raise that as an option consideration payment for RTO or possibly more if you wrap or carry on installment sale. Right now you have till June-ish to have a buyer collect an 8k tax refund for buying - and Installment sales qualify, so you could pitch it that way - you paint and carpet it and get 8k back.

[localmentor]

In my market, I run from modulars. They depreciate and the days on market are insanely LONG. Takes time to move even on terms, so I'd PASS.

In some markets, modular's are "normal" and even thought of as a better built home - you'd better know which you are in. If this is the case, I'd go for taking over the payments and lease it out as a "sweat equity" rent to own. doubt you'd get 5k down to recoup a 5k investment of paint and carpet, but if you really only need paint and carpet based ....

[localmentor]

it'd squeak by as an all cash deal at 75%-repairs, so you can likely fund 100% with hard money or a private lender - funding rehab as well.

another option is get the seller to take a single pay balloon note due on resale. If houses sell for that amount in the area, I wouldn't want 15k stuck in the deal long term., so I'd still want to fix and flip this, not keep long term.

3rd option for a keeper would be raise the rehab by borrowing 20k in 1st and have seller subordinate with owner carry.