Now that your credit score is going up, let’s start putting together our overall business plan. Every business should have an overall mission statement.
I’ll let you use mine if you promise to follow it religiously. This will be your intention, focus and motivation. I think a lot of people just go out, trying to look for real estate, without a plan of what exactly they are going to do when they actually find the “Sweet Deal.” Anyone can drive around looking for properties, look in the newspapers and have a real estate agent, but if you don’t have a structured plan in mind, it will be hard to make things happen.
mission status
I am in the business of finding bargain properties that I will sell on a lease with an option to buy. I am looking for people who want to buy a house, but have been denied a loan through their financial institution. I help them repair their credit, introduce them to my mortgage broker, and within a year they own their own home. After creating a happy and appreciative customer, I acquire referrals. Now that you’re focused on what you’re supposed to do, you need to start putting everything in place.
Business plan
“target property”
The most common clients you will have are young people eager to acquire their first home of their own. So in the beginning, your target property should be starter homes. You will probably be dealing with young couples who have been trying to buy a home but just don’t have the credit. After you actually build your business, there may be times when you find a buyer before you find the property. In fact, you can ask them exactly what they want and then go find it. Starting out, I would focus on starter homes that you can acquire for at least 10-20% below market value.
“Ultimate Plan”
If you want to create a serious source of income, you need to have a great plan and set goals for yourself. I’ll show you two different ways to sell lease-option or rent-to-own properties. The first will not require any of your money or credit. They are a little harder to find, but they are very effective. They are called “Sandwich Lease Options.” You are buying the property in a lease option, but you are also subletting the property to your tenant. This can usually be done when a property owner is unable to sell their home and is tired of making the payments. The downside is that there is not as much profit margin and sometimes it is hard to persuade the seller that he will have to wait a year to sell his property. If your credit is a bit banged up or destroyed, this is where you’ll start. It is a great technique for beginning investors because there is not a lot of risk and it is not necessary to use
your own credit or money. The way I like to sell lease options is to buy the property first by taking out an interest only loan.
There are also loans available with 100%
loan, known as 80/20. The lender will give you two loans, one loan for 80% of the purchase price and the other loan for 20% of the purchase price. This type of loan will keep you from putting money down and will also drastically reduce your mortgage payments. If you’re only going to own the house for one year, it doesn’t matter what your interest rate is or that you’re not paying principal. In both situations, you will require a deposit from the tenant; You’ll also have a declining monthly profit each month, and you’ll also make a sizable profit at the end of the lease. Now your ultimate business goal is to have numerous leasing options in the pipeline at all times. You will earn a lot of money up front, have a great source of monthly income, and acquire your great
he benefits from some properties that are bought from him every year. Are you ready?
building your team
“Mortgage Brokers”
One of the key players on your team will be a really good mortgage broker with access to many different types of loans. Most mortgage brokers can get “interest only” loans. They should also be able to provide you with a 100% loan. Don’t go to your bank, they are governed by the federal government and have specific underwriting laws. When you go to a bank, you
You will normally be required to make a 5% down payment on the property. Huge insurance companies that have tons of money to invest in general.
mortgage company fund. They provide the money to certain mortgage companies as an investment.
They do not have to follow the same laws as banks and are more flexible with their loans. Let your new mortgage broker know that you’re not only coming to him for investment loans, but you’re also
bring in your tenants for financing as well. Make sure they are dedicated to their job and will be available to help you. Find out what types of loans are available and the credit score needed to purchase the loan. you will need this
information when you go over everything with your prospective tenant. Now you’ll know exactly what’s available to you and your prospective tenant. You will also be able to determine if your credit score can be repaired to acquire loans within a reasonable period of time.
“Realtor”
Another key player is a great real estate agent. They will serve you for a few purposes. Let them know that you are in the market for investment properties. A good real estate agent will be able to locate properties and do comparison shopping for you. Obviously, you need to know the “market value” of a property before you make a purchase.
You need to make sure you leave enough profit margins. Another great resource that a real estate agent can provide is that you will meet many people who do not qualify for a loan. They will have clients asking them to find them a home, but when it comes time to make the purchase, they will not be able to qualify for the loan. This is where you come in. Ask the real estate agent to give your card to people like that. You can even offer to compensate them for their efforts. If a real estate agent works with someone and then doesn’t get paid, this is a great way for him or her to
make up for your lost time. You can offer them 10% of your profits if clients follow through and buy a property from you. I think it’s worth 10% of my earnings, if I’m constantly called by people who are determined to buy a
home. You will also build a great relationship, create a win-win situation, and have someone who will always help you at the drop of a hat.
“Business Letters”
In fact, you are starting a business and you need to appear professional. No one wants to enter into a contract with someone who seems to have no idea what they are doing. Just get yourself some nice business cards for personal use and be sure to give them to your real estate agent to generate leads.
“Creation of a Corporation”
At some point you will need to establish a corporation to protect your personal assets and save on your taxes. I recommend that you contact a tax attorney to help you set up your corporation.
Now that you’re focused on exactly what you’re going to do, it’s time to get going. There will never be a good time in your life to start investing in real estate. I think you better start now before things get worse. I think once you get out there building your team and laying the groundwork for your new
business, the rest will fall into place.
