If I had 100-200k to invest at the end of this year - would you suggest I start off small by doing the lonnie deals? or do you think I should just join all the REI clubs I know, try to absorb knowledge for awhile (does a year sound good?), and then try to jump into it? What kind of deals would you suggest I start doing with my start up capital?

I'm not Spex but I wouldn't do Lonnie Deals if I had 100-200k. Maybe to learn something but not for the income. You'll need to do way too much to make it worthwhile with that kind of money.

If you're asking this question, you don't know what to do with your capital.

Park it in the bank and go out there and absorb as much information as you possibly can.

Go to all the REI clubs, find out who the successful investors are, and ask questions. Learn learn learn.


You won't know now what to do. You may want to do loonie deals, you may not. You may want to buy apartment buildings, you may not.

Go to these areas and look around. Go to the stores in the area. Look at the quality of stores as well as shoppers. Those are your tenants.


Call around for rent signs and visit the apartments. Ask the owners how many other vacants are in the building. Ask how long the current apartment has been vacant. Ask how much the rents are and compare it to all the other rentals.


Talk to the residents that seem to have been there for a long time. Ask them what this neighborhood is like. Ask them what kind of people move in. Ask them why certain properties have been vacant for so long.


That's what detectives do when they want to know more about an area. They get in there and feel it out.


In 1 day of observing and talking to the locals, you'll know as much as you need to know about an area.

QFT. IMO, I'd avoid lonnie deals if you can. They make money, but they're for building. If you already have cash, prob you're better off investing elsewhere. Nobody gets rich from Lonnie deals. However, you can use them to create capital to get rich with.

For now, follow Tien's advice.

sick, thanks to both of u guys.

Spex,

Thanks for the great thread! My biggest fear before buying my first REI is getting ripped off by contractors because I don't know how much things cost, how long repairs take, what order they should done in etc. Is there anything you could recommend to start learning these things? Is working for a GC for a month a good idea? Try interning for free for one of the bigger more successful real estate investors at one of my local clubs? Any books you could recommend on this?

I know in the past you've recommended starting in mobile homes, but I already have enough capital and I've read the DoW book and it's not something I'm really interested in. Would much rather just start with a single family home.

This is definitely one of my biggest concerns as well. I am no handy man, so I wouldnt know how much work a task would really take, how long it should take to complete, or how much it should cost.

Would you suggest getting references for reliable contractors and then getting some bids? Also, how do you best combat contractors charging more for problems they "didnt forsee"?

I'm bidding on an REO property (will post details if I get it or not), and need a proof of funds letter. Do you have a specific place you use for this? Chase charges $395 for one which is obv ******ed. I've seen some places online but they seem to also charge fees. What are the best places to get a proof of funds letter when bidding on REO?

Finding an honest contractor is one of the hardest thing's you'll encounter when starting out on RE renos. The way I did it was trial an error. I hired all types and have gotten burned a couple times - but learned alot each time. A good contractor can be the difference between a couple years worth of cashflow...

Luckily I have found "my guy" now who charges me $25 per hour for everything. He has his plumping and electrical liscnces - and knows how to do everything else top notch. If he needs a helper I hire a local guy for $10 an hour.

Just be VERY careful. Never give more than 30% downpayment at the start of the job and dont let them push you around and try to manipulate you with extra costs or other ideas they have. Dont be afraid to kick them off the job if they are not doing a good job - just pay them for the time and materials and hire some else more competent and skilled to finish off. Be the boss!

It always hard at first, but if you do enough research and pay attention, things will fall into place. GL

You can always have your potential contractor give you a written estimate of fixup costs before you actually buy the property. Just beware of the low bid / high change order bait and switch.

im in australia and over here the tax system is pretty biased against short term real estate speculation... together with there being a smaller population... property investments here are almost always longer term investments with a general rule of "double every 10 years" here in sydney

however i know in Hong Kong the market is totally different - it's very much like trading equities where property prices fluctuate rapidly and the market is very much speculative

what's it like in the U.S?

Central Texas mortgage banker here...I saw a few posts regarding mobile homes.

My of my largest accounts is a manufactured home dealer

I have 102% LTV loans for those new manufactured homes!!!

We have our own warehouse line to fund FHA, VA, etc

Anyone looking to do business of any kind in Texas should give me a call

We're set up with private money investors as well

GL All

you can just give a copy of your bank statement or brokerage statement

Why are some foreclosure properties completely gutted (no carpet, cabinets, electric outlet covers, light fixtures, etc...)? If I am interested in one of these, what do I need to be aware of besides the stuff I can see? Did someone vandalize the home?

Could be. More likely the home was bought as a fixer that never got completed. This situation is normally good for investors. It saves demo costs and uncovers some potential problems that you wouldn't see otherwise. I mean, if you're going to replace carpet anyway, why not get the home that already has the garbage carpet pulled out, right?

I'm trying to start doing lonnie deals, but I'm having problems with the whole issue of a license and if it is necessary or not. I emailed the Bureau of Motor Vehicles/dealer licensing section for my state asking if a license was needed, even if I was only doing a couple deals per year. I received a response today, and apparently you need a license to do ONE mobile home sale. There are two license options available, but both have pretty ridiculous requirements for someone who is only doing a few deals per year. For example, for the second license I would need a lot of at least 3,500 square feet. There is a "casual sale law," which allows five mobile home sales per year BUT it only allows for the sale of mobile homes that were obtained for personal use and not resale.

Earlier itt, someone asked about licensing and you said they could just operate out of an LLC and form a new LLC when they reached the max number of deals allowed. I've never formed an LLC before but the costs seem to be a couple hundred dollars. Considering I would need to form a new LLC for each sale, it doesn't really seem like it would be worth it. Maybe I'm wrong?

Should I just avoid lonnie deals until I'm living in another state? Or would you suggest something else? I'm going to call the Dealer Licensing Section tomorrow just to make sure everything I was told is correct, but I figured I'd see if you had any other suggestions first. Thanks.

I dunno. What is going to happen to you if you operate without a license? Probably you'll get a cease and desist order from the state if they ever even realize what you're up to. Otherwise, perhaps you can try to do a lease/option type of arrangement rather than a resale. I know some guys in TX that do it that way due to some state laws. The first thing I'd do is go to creonline.com to their mobile home forum and ask someone in your state for help.

Mold. Ask your rep/bank rep why the property was gutted. The last house I bought had all 3 bedrooms upstairs, and basement completely gutted. Everything.

Supposedly there was a leak in the roof that didnt get fixed for about a year. The people living in the house had left/skipped town 5-6 months before the bank took possesion of it. The mold wasnt treated, and had spread everywhere. It was all removed properly, and I got a letter/certificate saying the house was clean and mold free...

Saved me a TON on demolition costs.

you said something earlier about trailer parks/motor homes. how much can i expect to make on one of these on average?

Depends entirely on how much you buy for and how much you sell for.

I bought five at 500 this afternoon. I sold one of them for $700 2 hours later to a guy that lived next door. Apparently he got tired of looking at the piece of junk and just bought it to get rid of it. This RE thing seems really easy so far.


On another note, what % of your assets are you willing to invest in one time. I did forex for a while, and i never risked more than 1/50 of my account on a particular trade. do the same rules apply here?

If you're happy with the result, I say its a success. This is not the method I was talking about, but if it works it works. I'd caution you that real estate investing is typically not this neat, tidy, and easy, however. I'd also point out that this is not real estate investing per se.

Risk is, of course, somewhat diminished in a typical RE deal, and is very very much diminished if you follow closely the guidelines I've set out for you in this thread. But I can't really tell you HOW risky REI is. You gotta guess at it. Remember too that due to experience REI is way less risky for me than it is for you.

Having said all that, the % of my money I'd risk depends on what type of deal it is. All REI deals have a lot of risks that are totally out of the investor's control - government regulations, tax law changes, etc. Personally, I try to get as little of my cash into the deals as possible and I do deals where I can get all my money out really fast.

ok this question is sort of intrusive.

were you in that group of house-flippers that got burned when the bubble burst?

if not, did you find the situation humorous and say " I told you so"?

Did you even read any of this thread?