OfflineI'm a new starter, still waiting for my BREM book to arrive - I'm studying these forums while I wait, heres my question:
As the housing market is still in free-fall, how can we use comps when calcuating what offer we should make ?
I should mention I'm planning to buy a property to take cash out at closing and keep it for the rental income.
It seems to me the deal might seem to be a good one using current comps, but in 1 year's time the property value might be $150,000 lower, and suddenly I'm underwater on the deal ?
Thanks for any suggestions.
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If you purchase a property that you can take some cash out at closing, you are probably getting it at less then 80% of its value. The property value will need to drop considerably before it would fall below the purchase price. If you are renting with a positive cash flow, even if the value dropped, you can hold the property until value comes back, and all the while your tennant is paying down the principal.
I wish you success in your investing career, Al
"NOW GO FIND A DEAL"
Watch your thoughts; They become words,
Watch your words; They become actions,
Watch your actions; They become habits,
Watch your habits; They become character,
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what area are you in?
Al is right, even if the prop value drops, you can hold the prop until the values start to rise. Either way, if you get cash at close and hold the prop, you are in a win win.....jan
Thanks for your replies. I'm in southern Cal.
All the news on the $750 billion bailout package notes that "investors" won't be protected, only owner-occupiers - So I guess I was just worried a $10-20,000 profit could suddenly turn into a $150,000 loss, and then I'm headed to bankruptcy.
Thanks for clearing that up.
While I've started reading Deans book I haven't found out how to get cash at closing, could someone explain how this is done or direct me to a good resource for info.
Thanks,
Linda
Hey Linda, I saw Dean's TV infomercial recently, he talked about someone who walked away from a closing with a check for $102,000 as I recall ("results not typical, your results may vary").
As far as I know, the method is to make an offer waaay below market value then get a 100% loan (or 95% or as high as you can in today's market conditions).
You pocket the difference (check for $102,000 in this case) then hopefully rent out the property to meet the loan payments.
As far as I know, the method is to make an offer waaay below market value then get a 100% loan (or 95% or as high as you can in today's market conditions).
You pocket the difference (check for $102,000 in this case) then hopefully rent out the property to meet the loan payments.
Many times this kind of closing is done on a private level. Most banks and assembly more so now will not give money at the closing table. Hard money and private lenders may. There are those that will allow you to purchase below their ratios and will pay you the difference. These type of lenders are available you just need to look for them.
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