Getting Started In The Real Estate Rehab Business

Getting Started In The Real Estate Rehab Business

You have decided to start a Real Estate Rehab business. Now it is time to decide where you are going to start and which road you should proceed down in order to make your business as profitable as possible. Of course you are going to discover many different ways and roads you can go down with your business adventure.

Many people will tell you that if you play your cards properly that you can start a business such as this with none or at least very little capital investment. However it would be prudent to dismiss this route in the beginning. You will find many publications that push the idea of buying properties with “nothing down.” I must say, this can be done if you have three or four years of good solid and prudent business experience. So where are you going to begin?

If you do not have any funds to speak of, then you should be advised to seek out a couple, and maybe three good mortgage brokers with a lot of experience. You should also question the mortgage brokers as to the availability of “Hard Money Lenders” available in your area. If the mortgage broker is a good one worth his salt he should have 4 or 5 “Hard Money Lenders” in his back pocket ready to go at all times.

You will quickly learn that a novice or beginning mortgage broker will probably not be able to help you. In order to have back pocket money available the broker will need to have been into the private mortgage money lending circles for at least three or four years. I can attest that when I first started looking for such a mortgage broker, everyone I approached was not knowledgeable on the subject, then one day I visited an office and started talking with the broker. Did I ever hit the mother lode.

This man had the whole area sewn up, at least all of 3 counties and most of another, Exactly what I was searching for. However he was very careful with his lenders, shall I say protective of them. It took a month and a half to finally do a loan, this was in high interest days, and the rates and fees were exorbitant. The broker had every private lender in the area pretty much in his pocket.

He knew the rules and rates that each lender was charging and believe me when I say it took at least two years to get introduced to the lenders using lower rates and fees.

You will learn quickly that you just as well forget about using banks to borrow from. If you have 2 to 3 loans show up in your name when they do a credit check on you. Just as well forget it. You would be laughed out of their office. The belief is you had to have at least one foot in the bankruptcy court. So immediately you are in the spot of borrowing money at high rates and high fees.

Well, welcome to the world of real estate rehabs and foreclosures. However we must not forget that unless we have inventory to work with we will have no profits. A true story I will relate now, has happened to me many times. My wife used to ride with me to visit and inspect prospective properties for purchase.

When we went to check a property out, many times she would grab her nose and appear to be ready to throw up, and tell me ohooo, you do not want this place, smell all the cat mess, and dog mess, look how filthy. After having this happen on a regular basis for a couple years, It came to a point that when she done this, I would get very excited, Why? Cause I knew I was going to make some big money. Especially if everyone felt the same way she did about the property. I believe this was true as some of my higher profits came from these houses.

You will end up paying high rates and fees on a lot of the properties you do. So with this in mind you need to gear all of your buying campaigns and argue, fight and whatever it takes to get your sellers to give serious consideration to doing “owner financing” for you when you purchase the house.

This is the most profitable way, but you will consider yourself very lucky if you can get 7 to 10 percent of your sellers to do owner financing. It is worth enough for you in extra profits that you should always try. In fact for every house you buy you will find you visit the property and talk with the owner at least 5 to 6 times over the period of sometimes 4 to 6 months. Each visit you should be concentrating, searching for a way and fighting for owner financing.