| | Meet Steve
How long have you been involved in real estate investing?
Since early 2005. I want to make it clear to everyone reading this that in my eyes, at least, I am still new at RE investing. I have only acquired one property thus far, although, I am on the phone trying to make deals with sellers on a routine basis. Maybe my criteria is too strict?
What strategies do you use and why?
Mainly buy-n-hold SFR’s and duplexes/4-plexes, but will flip wholeslae or retail to generate more cash reserves.
Acquisition: Subject-to (Sub2), Seller-financing, government/bank foreclosures.
Exit: Rent, wholesale flip, retail flip (I’d love to do lease/options, but my wonderful state of Texas has pretty much outlawed that recently).
What types of financing do you regularly utilize?
I used conventional financing, but am relying more on no (or very little) money down deals now. I have equity in my personal residence and rental, so I could do a HELOC, if necessary. As a last resort, I’d probably use low-interest cash advances on credit cards.
How did you go about finding properties?
I peruse free foreclosure web sites on a daily basis, like BidSelect.com and ocwen.com. I also get a daily feed from a RE agent with properties that match my criteria, but I seem to rely less on the MLS as it seems to be well-covered by other investors with deeper pockets. Lately, my biggest source of leads has been self-marketing ( i.e., bandit signs, business cards, networking with contractors).
What is your average purchase price?
Having only one investment property, my average so far has been $101,000. My range, though, for prospective deals is < $150,000.
What is your average net profit per deal?
I haven’t profited - yet! I bought my lone property at 80% FMV and it has about $30,000 in equity right now. Since I am a buy-n-hold investor, I won’t see a net profit for a while (other than monthly cashflow).
Describe your first deal and how much you made on it?
It was a HUD foreclosure I got through my RE agent. At the time, I was submitting about 4-6 offers per week through her on properties on the MLS. I was on about my 20th offer when my agent said I won the bid for Offer #7, which was the HUD foreclosure. I was both ecstatic and wrought with fear. It was a 4/2 SFR built in 2002 located in a rural town. Quite homestly, I didn’t even remember it when my agent told me I won the bid. Even though I had never been in the house before making the offer (STUPID MISTAKE - DON’T EVER DO THIS!), I allocated $2,000 for repairs based on peeking through the windows. I got a mortgage broker through my RE agent to handle the financing (this was actually done before I started making offers), and closed about 45 days later. It took us two weeks to make the necessary repairs, which consisted of new paint, a microwave/vent hood, general cleaning, some light fixtures, and landscaping. Total cost for repairs was <$1,000. I put it on the market as both a resale and a rental. It sat for about two months with very few offers until one day a couple saw it and signed a lease. I make about $150/month cashflow on the property.
Describe your biggest deal (purchase price) and how much you made on it?
What was your worst deal and did you loose any money on it?
I haven’t made a bad deal yet, although, I almost jumped on a zero-equity deal about three months ago. The guy wanted out of his property and was willing to just sign over the deed to me without any consideration. He said he owed about $86,000 and thought the place was worth $115,000. You bet my heart was racing. It turned out, he owed $87,000, but the place only comp’d out at about $85,000 on a good day. I did a rental analysis and would have been cashflow negative to the tune of $200/month. If this area was appreciating real well and/or Texas allowed lease/options, I would have taken the deal.
Any favorite real estate web sites, books, software, mentors etc.?
Plenty. REIClub.com, REIPlace.com, RichDad.com, and CREOnline.com are all good sources for RE investing information. For books, I recommend Bronchick’s “Flipping Properties”, Summey & Dawson’s “Weekend Millionaire Secrets to Investing in Real Estate”, and “Profit by Investing In Real Estate Tax Liens,” by Larry B. Loftis. I would also highly recommend Steve Cook’s “Wholesaling for Quick Cash” and “Rehabbing for Big Cash” courses. And for Sub2 courses, I really like William Tingle’s “The ULTIMATE Sub2 Guidebook” - it goes over Sub2 deals in great detail.