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investment ideas


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#1 Guest_Ray_*

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Posted 05 November 2004 - 11:57 AM

I am looking to start in the realestate racket . My idea is to buy homes in need of repair at a cost well below market . do what needs to bring the property to a selling price I am happy with and sell or hold as a rental if the market isn't at its best . I have talked to some friends who are doing the same . Thay have only been at it for a year and haven't bought more then 3 properties yet .

They have used what they call a hard lender I am not familer with that financing option . I guess it a broker of sorts but not a normal financing instution so . They buy the property with there monies and refi right after closing to pay the hard lender off and pocket the equity that the property has .

My ? is does this sound like a good idea , Is there a differnt name for the lender type I'm talking about .

Any ideas ,comments or warnings would be great . I am kind of worried that normal financing might be a issue
right after closing on the inital buy

Thanks to all
Ray

#2 loanuniverse

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Posted 06 November 2004 - 10:37 AM

Ray:

My comments on this are limited because I have only work for bank lenders, which do not usually lend money to someone to do this as a business. I think that when banks are involved providing financing, they are looking at this mostly as residential financing.

Having said that, I also know of people that are doing this successfully.

If I have a comment is that you are not really buying the property at well below market in the first place. The market values a damage property at a certain amount. It is the sum of the refurbishment as well as the normal increase in price over the six months that it takes you to clean / fix / paint / build that increases the value.

Financing happens before closing, you are probably thinking about having trouble finding financing after the purchase contract is signed.

Good luck

#3 Commercial Lender

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Posted 26 November 2004 - 12:37 AM

Go in as a partner with someone. If you dont know what you are doing and dont have the needed connections you will loose your shirt. Many people doing this (Its called flipping properties). Hard money lenders participate in this but most the the people have either line of credit or personal funds.





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