Trying to put together my first deal

Hey Russ,

It sounds like you are trying to buy your deals with mostly bank financing. This is not a recommended way to invest.

The foundation of what Dean's company teaches and the most suggested way to start investing would be to wholesale. You can always wholesale until you build up enough equity to invest with. Or if you REALLY want to buy rentals right off the bat with none of your own cash, you need to find private money or hard money.

I also have a few questions:

1. Where did you get 10% closing costs from? The typical closing costs would be around 3% in most areas.
2. If you are planning on profiting $5,000, but aren't planning on flipping your deal, then where are you getting the 5k profit from? Is this number in reference to annual cashflow?
3. Where are you getting your value estimates from? You shouldn't fully rely on websites such as Eppraisal. There needs to be actual sold comps to get your true ARV. Websites' automated valuations can provide ballpark estimates, but getting true comps is the only way to know what your home will sell/appraise for.
4. Why do you use a percentage to calculate rehab costs? Rehab costs vary greatly from property to property, so using a percentage wouldn't give you an accurate number.
5. If your true investment is 87.6% of the value, then you don't have a great deal. That would mean you only have 12.4% equity. You should look for something with 35% or more equity (in my opinion).

With all of this information you have provided, I am curious to know if you have at least read AND understood one of Dean's recent books. If not, then I would suggest reading his most recent book "30 Days to Real Estate Cash" and go over it until you are comfortable with the information.

Sorry if any of my post seems harsh, but I just wouldn't want you to go out there and start with bad information. Hope you understand!

Best of luck to you and reply to this post with any questions!

Thank s Dominic for the input Im really new at this and it seems complicated, I am reading Deans book 'Profit from Real Estate Now". I got the 5K figures from Eappraisal because they are suggesting if you buy the house at what they are suggesting you should make a 5K profit, plus the rehab costs have to be put in on that website as percentages. The closing costs in Florida where this house is located are unusually high, I was looking at a house for 85K and the closing costs were 5K. Also in the book Im reading it seems like a lot of running around putting buyers and sellers together assigning a property to another person, it seems all to complicated thats why I though buy one low cost home for 25K, I mean in Florida in parts of the state their are houese for 20K I can't believe that, if your buying a house that low in a few years the house should increase in value , its so low now where else can it go?

So I thought get a few of these rent them out make some money on them monthly then after 5 years just sell them off and get cashed out. My thought is Im getting money monthly for 5 years then Im getting a bigger payout when I unload them. Im not flipping and making big money right away, Im just doing it on a smaller scale. Sure I would like to buy a house wholesale, find a cash buyer and then flip it and make 50K right up front but putting up signs, advertising for cash buyers seems like a lot of foot work especially if I have only 1 house to sell. Tell me if Im wrong but my mind is going in circles with all this information. Also I just recently went to one of Deans seminars here in NJ and one thing confused me, if you pay for the coaching then you get to use his money to buy a house, it has to be flipped in 7 to 14 days they take 2 percent of the deal, what happens if the house doesn't sell in 7 to 14 days?

Do I have to pay his company 2% of the asking price of the house every week until it sells, am I on the line for money they fronted if the house doesn't sell? Im confused.
Russ

Hey Russ,

Take a look at my guide for beginners. The link is at the bottom of this post in my signature. When you get done reading it, ask whichever questions you have left and I will try to answer them the best I can! But make sure you read my guide first, it has some of the answers you are looking for in there. Should only take 20 mins!

Hope it helps!

Hey Dominic,
Thank you so much for that last reply, I read your beginners guide and that really helped me a lot! One more question, I looked at your website and I saw properties there that you have listed with for sale prices at $7000.00 $12000.00 and so on, these homes are really selling for that cheap? Are these homes that you are trying to find investors for that other people own or are these homes that you have invested in yourself and own and you are trying to find other investors to buy from you?

Thanks,
Russ

I know of a women here in my area that is an investor she already owns 4, 2 family houses and rents them out she says that she is looking for more propeties. This is where I can't get it through my head what to do. If I find her a property how do I profit from this scenario? Right now I don't have the funds to go in and buy any house I may find. Do I just refer her to these properties and try to get a finders fee from her, this is where I get hung up, do I negoiate a lower price then what the owner is asking and sign a purchase agreement to close within a certain time and then try to sell her the house at a higer price and pocket the difference?

If she looks at the house and doesn't want it then I just let the purchase agreement lapse and Im not liable?

And how do I handle this if these properties are being listed by a realtor and not FSBO?

Russ

Russ,

To be honest we haven't updated our website in a month or two, so that's something I need to look at doing soon. But yes those homes really were selling for that cheap. And we didn't own them, they were properties my company was wholesaling to other investors.

Home prices vary in every area. You can find a home for literally 10 bucks in bad parts of Detroit, or Gary Indiana. On the other hand, you'd be lucky to find a property for less than $500,000 in parts of California and parts of the east coast.

To answer your second post: It seems you have the basic idea of what to do, just don't know how to actually do it.

You would make your money by wholesaling her some properties. First, I would suggest building your buyers list more. You don't want just one buyer, because then they control your deals. If you have AT LEAST two solid buyers, then you have more leverage. The more buyers, the better.

You also need to get a Realtor so you can make offers on the MLS.

You are not buying the properties when you wholesale. You are making low offers and signing a Purchase Agreement with a 14 day inspection period so you can back out of the contract if you don't find an end buyer by day 13.

To make your money, you will be signing an Assigment of Contract with the end buyer so they can buy your rights to the Purchase Agreement for a fee. Your end buyer will know exactly how much you are making unless you do a double close, but don't worry about those until you've done a couple deals.

As for the nuts and bolts of wholesaling, that is honestly a TON of information to write out, and I simply don't have time right now. If you TRULY want to make this happen, you will find a way to learn this. You claimed to have Dean's book "Profit from Real Estate Right Now", so you should be able to find all of that information in there. You have the resources, just need to use them! Dean is a better teacher than I am!

If anything, I suggest buying his latest book "30 Days to Real Estate Cash" because it will have the best and most up to date information.

Thank you Dominic for the detailed letter, I appreciate the input. Good Luck

Russ