Should I use an 80/20 Loan??

[1hustleaway]

I'm considering getting an 80/20 to get myself started in REI but I'm not sure if this is the best way to go...?  They say that you have to have a minimum of a 600 credit score....?  Is this true...?


I'd love to find another way of doing this however I dont think it's possible...!  

If I qualify for multiple 80/20's from different lenders would it be in my best interest to take all these loans...?  I'm not sure where to start guys..I gotta be honest..I just got get out there..and get started...what should I do.

[Mr.fancypants]

Hi 1hustleaway,

Instead of using an 80/20 to get started, go to HML's or a mortgage broker that deals with RE investors. Tell them you want a loan based on the ARV of the home. This may mean you have to find run-down houses, but that doesn't matter, because you're not using your own money to do the repairs anyways. You could also go look for some sub2 deals and assume the existing mortgage. I've never done a sub2, so that's not my area of knowledge. There's a lot of creative ways to get started.  Good luck.

[1hustleaway]

Chris....thanks so much for your guidance...!  What kind of credit score do I need to have to get an initial loan from a mortagae broker...??  I'm currently have a 559..!  I'm working on getting it up..but it's been quite a task..!  Now, if I buy a house for the ARV (After Repair Value)...where would I look for good contractor to come in and repair the home bring it up in value..?  As well as where do I find the propertys that are lower, with equity in them...?  I'm quite Green...but severly hungry..!  I'll be looking in the Atlanta area primarily, however for the right deal...I will travel..!  Someone else told me to use the same steps your saying however look for homes that are in Probate...!  Because most times people arent interested in keeping these homes...is this true?


I really appreciate your help and I hope these questions arent to silly...!  


Thanks,

Sam Williams

[Mr.fancypants]

The best way to find houses with equity and that are being sold cheaply is to find motivated sellers. It may be a probate situation. I've never bought a probate house, but I've heard of people making good money doing this. I prefer to buy junk houses from banks (these are called REO). If a bank knows they're house is undesirable, they're only option is to sell it at discount. This is where you, the investor come into play.

As far as the credit score is concerned, different lenders look for different things. I'll talk with off line more.

[Buckeyes]

1hustleaway,

I did an 80/20 as my first loan.  I may have just gotten a bad one due to gullibiltiy on my part, but looking back, I could have found 100 better ways.  In an 80/20, you don't pay a down payment, but you pay closing costs on 2 loans.  I was even charged title insurance from the same title co twice.  I ended up spending 6K out of pocket to close on a 50K double because I had my mind set on "no down payment".  My second deal was much better b/c I paid 2K in closing costs and 4K down, totaling 6K again but w/ 4K of it in equity.  
I agree with Mr.Fancypants that the 80%ARV is the way to go - what I may do for my next property.  Also, there is some great info on hard-money-lenders on this site.  You may want to look into that for no money out of pocket purchases.

Good Luck.

[1hustleaway]

Buckeye..!  I thank your for your help, I'll definately keep my eyes open.  I'm so hungry I can taste it.  I know where I want to be but I guess the hardest thing is making that initial step.  Maybe you and Mr.Fancypants can send me a link to a good site where I can find properties that might be worth checking out..?  Currently, I'm looking on this site called reiatl.com and they have some real pieces of crap.  I just dont think that I'd be able to get those houses and do anything with them special.  Tell me this Do you guys ever buy homes without actually going to go and view the property...?  I spoke with REOconsultant and he admits that sometimes he does do this.  Because, I am currently overseas, and prefer not to wait until I get back stateside to kick off my REI carrer would it be foolish to make offers on properties that people might be sending me with pictures and appraisal documentation attatched...?


I'm working hard guys.. I think getting the first one would really build my confidence...!!!  I'm a virtual Virgin when it comes to this game...please be gentle...


1hustleaway...

[BoboTheKing]

I can only speak for myself, but I personally would never buy a property unless either I saw it myself...or someone I trusted saw it. It would have to be someone I trusted enough to risk my money.  

[Buckeyes]

I'm 100% with BoBo on that one.  REOConsultant has done a lot more deals than me, so maybe he's comfortable with that, but as a beginner, I wouldn't even think about it.  Either find a partner you trust your life and financial future with to start looking for investments (birddog for you), or wait it out unitl you're home.  The biggest step is the first one, so it's great you're anxious, but make sure that first one is a good one.  

I don't know any sites for Atlanta, but for that matter, I don't know any around Columbus, OH where I'm at either.  Most web sites are picked over pretty hard.  You're best bet is to look at as many properties as possible, pick the good ones that you can get a steal on, and make offers (low ones) until one goes your way.  There are thousands of properties out there in the paper, the internet, through bank REO lists (call the banks and ask), unlisted properties w/ for sale signs in the yards, and homes that people aren't even thinking of selling yet but may if you ask.  Your possibilities are endless.  If you're as motivated as you sound, when you get home you'll make your legwork work for you.

good luck.

[1hustleaway]

Hey Guys...thanks for the words of advice..!  It's so hard to sit here and just wait...and wait...!  I understnand Buckeye..but I really just want to get my feet wet.  Like I said REO flips deals all day..and the guys is definately official...but maybe your right...!  Find a good birddogger or a great partner..!  

Either way I gotta get myself rolling.  The longer your wait the more comfortable you become at your job and the harder it is to ever start.  

If I gotta lose, let me lose while I'm young so I have time to bounce back...!


Thanks,

Sam

We're all just 1hustleaway......

[Rave1492]

How do you get such good deals from the bank?
I have heard that banks sell there houses right around the market value.
The one's I have seen below value seen to have pest and termite problems.
How do you find discounted REO's without putting yourself in a bad position.

[Mr.fancypants]

You're right in thinking that banks will list their REO properties near market value, but they can only do that with houses that don't need repair. A bank can't and won't expect to get top dollar for a home they know needs 20-30k in repairs. But there are deals everywhere. There's definitely more deals than I and other investors can do. So just get out there and start looking at properties. I live in a large Metropolitan area where theres a lot of homes. If you don't live in a big city, the rehabbing thing might be a little more difficult. Hope this helped.

[ARamirez]

Rave,

Well the houses you are finding that are cheap with pest and termite problems might even be a good thing...? Realtors are probably the ones talking about how the house has pest problems as the houses are vacant and owned by banks etc. Realtors are not pest control experts or house inspectors. You might find that the damage is not severe enough to warrant the house to be demolished therefore it can be repaired.

If the house can be repaired you are the man/woman to do (figuratively) the repairing. Get someone who knows to look at these houses and give you an idea of what is repairable and what is a 'house-of-sticks' ready to come down.

The more the damage, the lower the price to purchase and that is a good thing as long as the house can be repaired within your budget or comfort level.