To get started in real estate investing you must first do a substantial amount of homeword. If you don’t learn the do’s and don’t aspect you probably will end up loosing your investment money. Once you’ve learned what to do and not do, you will find several things that real estate sales agent courses don’t teach. First you should learn that you don’t need to hire a real estate agent, nor do you need to hire an escrow company to close your escrows (although many buyers and sellers you deal with will insist that you hire them). You should though have an escrow company do a lean search on properties you are trying to purchase. If you don’t, you may find that the seller didn’t tell you everything; and there may be a lot more owed on the property than you thought. You also need to learn what type of loan programs are available from banks and loan companies; as well as whom the private investors are that may be available to you.
If you check with your area’s local housing authority, you may well find some that some sort of down payment assistance program(s) are available to you or people buying from you; as well, there may be some type of limited time tax incentives that could be used to increase your profit potentials. You also must check your local and state laws; as some states may require a real estate agent or escrow company to be involved. When it comes to escrows, if you are handling it yourself, you know exactly what is happening. If you hire a real estate agent and or an escrow company, you need to make sure that you keep in contact with either the agent, or escrow company’s agent as to any potential problems for closing the escrow on-time. A lot of escrows that fail escrow would have went through, had the agent and or the parties involved in the sale kept in contact. Even staying in contact, I’ve had last minute problems arise, that could have caused an escrow to fall through, had I now been on the ball.
You need to keep up to date on state real estate laws; and keep blank Contracts, Power of Attorney and Trust Deeds on hand I have in some instances had a seller sign papers; and within 24 hours filed the deed (myself). Expect that when you file deeds, that you must take care of transferring property taxes and paying any back taxes. I seldom notify finance companies if I’m assuming a loan, for several months. The reason is, that most property loan contracts today state that the loan in non-transferable. Once you’ve owned the property for several months; and paid the payments with your checks, you can easily walk into the loan company and tell them that on _____ date you assumed the loan and transfered the property to your name; and they will not care. You showed them that you are making the payments; and that you intend to make the loan good. They will then change their records to your name. They don’t want the property; they want your money. If they want a credit check, tell them that if they want to keep receiving your money and not having to reposes the property, that they will just change their records without a credit check.
I have cards that I hand out to virtually everyone I meet. I also leave my cards on bulletin boards and on store counters (with permission from store managers). My cards are simple…. I buy and sell properties. It’s being reposessed I can improve your credit rating. Once you as buyer catch up the seller’s behind payments; and the bank still thinks that the seller still owns the property, their credit improves. I also try and have people on-hand with money to put a down payment on a property; but for some reason the loan companies won’t loan to them. Either I can get them to assume the current loan; or I often can find from the list I keep, a private party to loan money on the property. When I purchase a property being reposessed (note some states make such assumptions illegal), I often offer the seller $1000. to $1500., if they move out within 24 hours of signing the sales contract. Many times I do a double-close escrow. I have a buyer with down payment money ready to purchase a place, the moment I get a signed sales agreement and signed trust deed from the seller. I then use the money the buyer I have standing by has for a down payment to catch-up the behind payments, do the escrow, pay the seller to move out quick; and take a profit from the transaction. By doing this, I often own a property for only a few minutes; and without using any of my own money.
I personally never apply for any loans. Either I do a quick Trust Deed transfer, or I get the seller to carry the note on a place. When It comes to mobile homes, there are different laws covering them; and I’ll discuss that in a different article. One thing I did not mention, is how to find places to buy/assume. The newspapers and internet has long lists of FSBO’s (For Sale By Owner) you can call. As well, the Death notices many times means that a family suddenly not only looses a loved one, but discovers that a large monthly house payment is expected each month; and they need to get rid of the place as soon as possible; since they cannot afford the extra loan payment over what they already had where they already live. These are great for profit, as no back payments are owed; and if you do a double-escrow, 100% (after escrow costs and a little to the family) go into your pocket. Other ways to find places is through tax lien sales, homes that have been on the market for over six (6) months. Some of these people are discouraged having had their place for sale for months, only to have “no” offers. As soon as the real estate for sale sign comes down, it’s time to hit the owners up. Note…. Most real estate offices will have you sign an exclusive agreement to not do this, “IF” they show you the property. This is another reason to not have real estate agents show you properties.
If you are creating the sale and closing the escrow yourself, be sure to have all documents notarized. That way there can be no-one claiming that you changed the document. This reminds me that when you make a written offer, if they give it back signed, make sure you read it. We had the brother of a broker “change” the financing agreement and tell us that he accepted our offer. I could have had the broker’s license suspended; as the hand-writing that changed the wording was his. If they want anything changed, they must write in big letters “Rejected”; and then give you information as to what they would accept. You then can accept or reject that offer. Legally in many places, an offer “MUST” be in writing. A verbal offer is not a legal offer in most states.
Again, check the legality of “all” of the above in your area and state. When I sold real estate in the state of Washington, we had “new” multi-page contracts from our lawyers virtually every week. Laws change; and each state decides many of it’s own real estate laws. Although I do seminars and one-on-one training with people that take my courses, I too must keep studying daily; so that I don’t give misleading information to those that entrust their money to me. With the economy, I have switched from homes to mobile and manufactured homes in senior parks. Transferring them is easy; and with the park being for seniors only and families inheriting a place they cannot move into (due to their younger age), they need to get the places gone fast. If they don’t, even if the place is paid for in full, there’s that monthly space rent cost; plus if someone is not living there taking care of a mobile home, they get problems fast that could make the place too expensive to fix and sell. As I said above, I won’t go into mobiles in this report, but in todays market, mobiles and manufactured homes are easier for me to realize a profit with.