As a Realtor, I come in contact with alot of investors. I meet many investors who previously purchased properties without using a Realtor. Below are one investors true real life experiences.
He became a licensed loan officer in 03. Along with becoming a loan officer, he had aspirations of becoming a real estate investor. He just knew he could make money as an investor. As a loan officer, he learned the different investor loan programs, and he came in contact with other investors which he could learn from or that could mentor him toward taking the next step.
He was introduced to an investor through a friend that was interested in and actually investing in real estate himself. The investor told him about a property that was available for purchase, rent ready and a renter was lined up to move in. He went to Fayetteville and looked at the house - not having the slightest idea what to look for. Things like structural damage, plumbing, infestation; things that a home inspection would cover. Yes, he purchased the home without a home inspection. He'll never do that again! If he would have hired a Realtor, the Realtor would have recommended a home inspection.
The house had 3 bedrooms, 1 bath, built in 1942. The repairs needed included a new roof, new windows, HVAC, landscaping, paint inside and outside trim, pressure wash outside, sand down fascia boards, masonry work and new outside doors. Sounds like a lot and it was for a new loan officer living from paycheck to paycheck. He did his best - just making the monthly mortgage payment. The renters were not the most studious at paying rent. Barely having money to make the mortgage payment, he really didn't have the money to evict the tenants.
Guess what, 3 months later he purchased another investment property. This one was purchased at 80% loan to value. He did not bring any money to the table, please do not ask. He really did not know how it all went down. He went into another real estate transaction with no earthly idea of what he was getting himself into. He had great credit. He went stated income for loan purposes, knowing good and well, he could not afford the mortgage payments if the renters stopped paying and of course, they did.
His credit score fell from a 745 to a 502. He had 3 lates on both mortgages with foreclosure threatening. His friend loaned him the money to bring the mortgages current. He was able to evict both tenants and acquired new tenants. All the while, he made new contacts and was able to sell the 2nd house for $8000 more that he paid for it. Of course, he sold it to another investor who purchased the property at 70% loan to value.
The second house did not need as much work as the first. It was all brick and 3 bedrooms and 1.5 baths. It needed simple lipstick and eyeliner, about $500 to $1500 worth of work. So it was easy to sell.
He still has the first property and he's actually had most of the work done. He had a new roof put on in Nov 07 and some other cosmetic work. It still needs some work but he's ready to sell and move on to another project. He's been a loan officer and real estate investor for 4 years now. Over those 4 years he's experienced the ups and downs of the mortgage industry and real estate investment side. It is important to learn as much as possible about real estate investing before you jump in. Take classes and spend time financially educating yourself. The first move toward any endeavor is preparation and training toward the task at hand.
His involvement in financial education courses, attending real estate investment seminars, and purchasing other real estate investments has proven to be beneficial and quite rewarding. He was willing to make the necessary sacrifices to be successful in the end.
Many of his issues could have been avoided if he would have used a Realtor. Many people don't know that you can hire a Realtor/Buyer's Agent for FREE. The Buyer's Agent would've looked out for his best interests.
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