All of our loan officers are thoroughly trained and experienced to assist investors in every aspect of rehab and financing of thier real estate project. From purchase, to rehab, all the way to selling, Direct lending Partner & its loan officers have the experience investors need to complete a fast no hassle rehab investment.
How do I get started in real estate investing?
The very first step in real estate investing is evaluating your financial goals and determining a plan based on those goals and the financing you have available. Be it cash, hard money or conventional financing, having a plan in place is crucial to being successful. If you are a first time real estate investor or you simply want more experience, I would suggest finding a reputable real estate agent or company that has a proven track record and focuses on investment properties (such as Direct Lending Partner). Our experience and guidance can be invaluable, and help you avoid mistakes made by many new investors.
What are whole sale properties?
Wholesale properties are distressed homes found and purchased to be resold to investors for a fee. Each property is evaluated and sold at a fair price to make sure the investor can meet his or her profit margin
goals.
What is a distressed property?
A distressed property is simply a home that is being sold under fair market value. Most distressed properties are in need of some type of repair.
What if I have don’t know how or where to get the repairs done?
Direct Lending Partner has a list of licensed and trusted contractors for every aspect of rehabbing distressed properties.
How much of a discount can be expected when purchasing a whole sale property?
Every property is different but you can expect to purchase a wholesale property at a 10% to 30% discount minus repairs of the after repair value.
What are the differences from buying a wholesale property to buying another type of distressed property?
There are two major differences when buying a wholesale property. The first is there is no “option” / ”inspection” period after a contract is executed, and most contracts include a nonrefundable down payment in order to execute the contract. The properties are offered to a list of investors and they are sold first come first serve. The second difference is the price is not negotiable.
Why can’t you negotiate the price on a wholesale property?
The reason for this is the profit margin on almost every wholesale property is so small for the wholesaler; there is not enough room for negotiation. Also New Western has priced their properties to move quickly and you shouldn’t have to negotiate to make a good ROI.
Can you use conventional financing to purchase a wholesale property?
Unfortunately no, New Western only accepts cash or “same as cash” financing, like hard money, to purchase a property. Conventional financing takes too long to close and most banks will not finance distressed properties to begin with.
Do I need to join a club or pay any dues to buy whole sale properties?
Any reputable wholesale company will not ask you to pay dues or “join a club”. New Western will ask for a short face to face meeting to discuss your investment goals, show you our specific way transactions are handled and get your appropriate contact information. After this short meeting you should be put on a list of investors and sent pre-evaluated deals, all for free.
How much research is done on the front end when a whole sale property is offered?
New Western does a thorough preliminary inspection of each property. New Western knows repair cost and comps are essential to the investor when evaluating a property, and will give as detailed information as possible on potential cost of rehab and estimated ARV.
How do I know buying a specific whole sale property is a good “deal” or not?
Each property offered by a New Western should come with a property evaluation packet. This packet will include a detail of estimated repair cost, any repair bids that have been made, after market value (or ARV), a comparative market analysis, and the price. It is also recommended that you do your due diligence when evaluating a property to make sure no mistakes were made and you agree with the analysis. These will help you determine whether the property fits your unique investment goals.
Why can’t I just find discounted properties myself and cut out the middle man?
You should absolutely be looking for properties on your own and through any means you can find. The questions you should be asking is why not have another source of properties at your disposal. Also New Western has the means to find non MLS properties that you may not have access to. If you are an aggressive investor wholesaling should not be your only source for distressed properties, but it should be in your arsenal.
How do I buy a property from Direct Lending Partner?
After you have reviewed a property and decided to purchase it, a down payment is needed to secure the property. Each property is sold, first come first serve to our investors.
Can I do my own inspections?
Absolutely, however to secure the property a non-contingent contract is required.
What is the “buy / fix / sell” strategy?
Buy/fix/sell is a short term real estate investment strategy. You purchase a property in need of repairs, ideally at a large discount. Fix “or rehab” the property to make it sell-able in your current area and market. And then of course sell the property.
What are the short term and long term goals of buy / fix / sell?
The buy / fix / sell strategy is a great short term strategy. Especially if you are trying to build your assets to acquire multiple rental properties. While “quick flips” are good for short term gains, the cash flow of rental properties is a long term strategy.
How long does the average buy / fix / sell take?
Every property and investment is different. Current market conditions, the amount of money and type of work you put into the house affect how much time passes before you can sell and close on any investment property. Experience, research and working with a strong team can limit the amount of time from purchase to sell.
What are the risks involved in a buy / fix / sell?
As in any investment opportunity there are risks. The biggest risk is selling the property for less than what you purchased and rehabbed it for. The best way to avoid this is to know what the property is worth, determine how much equity you want out of the deal and subtract repair costs to define the appropriate purchase price. If you can’t purchase it for that price than don’t purchase it all.
What kind of return on investment is expected or considered good for a buy / fix / sell?
Everyone’s investment goals are different, and market conditions change. On average though an ROI(or return on investment) of 10% to 30% is good.
What is the “buy / fix / rent” strategy?
Buy/Fix/Rent is a longer term real estate investment strategy. You purchase a property in need of repairs, ideally at a discount. Fix “or rehab” the property to bring it up to comparable rentals in the area. And then of course lease the property to a qualified tenant.
What are the short term and long term goals of buy / fix / rent?
The buy / fix / rent approach is a great long term investment strategy. Accumulating multiple rental properties will not only diversify and protect your investments but also bring in monthly cash flow to reinvest or use at your discretion.
How long does it take to get a property leased from purchase, on average?
Every property and investment is different. Current market conditions, the amount of money and type of work you put into the house affects how much time passes before you can sign a lease. Experience, research and working with a strong team can limit the amount of time from purchase to lease.
What are the risks involved in a buy / fix / rent?
As in any investment opportunity there are risks. The biggest risk in a buy / fix / rent is owning the property for an extended period of time without a tenant.
Who qualifies the potential tenants?
This is the investor choice. Some investors choose to review and qualify each tenant themselves, while other investors let their experienced and licensed real estate agents filter the applications and only present qualified potential tenants for the investor to approve or deny. The third option is to have a management company review and approve the applications.
What kind of return on investment is expected or considered good for a buy / fix / rent?
Everyone’s investment goals are different, and market conditions change. When purchasing rental property generally there are two main goals in mind. The first is to generate a positive monthly cash flow, and the second is for the property to appreciate and become more valuable over time.
What is the “Owner Financing” strategy?
The owner financing strategy is best described as a mixture of the buy / fix / sell and buy / fix / rent strategy. This strategy allows an investor to purchase a distressed property. Fix or “rehab” the property. Then sell the property by acting as a bank for the buyer. The buyer pays the monthly mortgage and interest to a third party servicing company which distributes the funds to the investor. Unlike the buy / fix / rent strategy the investor is not a landlord and is not responsible for property upkeep or repairs.
Why would someone use owner financing to purchase a home?
A buyer would uses owner financing when conventional financing is either unavailable or unattractive due to their specific situation.
What are the typical qualifications of a buyer to purchase an owner financed property?
The qualifications vary by investor. On average though an investor will require: 15% down payment, the property must be owner occupied, no other real estate can be financed, the buyer cannot have any late payments over 30 days in the last 2 years, the buyer cannot have any foreclosures or bankruptcies with in the last 2 years, and the buyer cannot have any outstanding tax liens. Other requirements may include proof of funds, employment, and income and rental history.
How long does the investor finance the property to the buyer?
The typical owner financed note is between 20 to 30 years at the investors discretion. However in most cases the buyer is put on a plan to fix whatever maybe preventing them from getting conventional financing. In most cases the buyer will refinance into a conventional loan within 2 to 3 years.
What are the short term and long term strategies of owner financing?
The owner finance strategy is a longer term strategy than the buy / fix / sell, and shorter term strategy than the buy / fix / rent. An investor is typically holding a property for 2 to 4 years versus to 6 to 9 months with a buy / fix / sell or 7 to 10 years with a buy / fix / rent.
How does the buyer get into a conventional mortgage?
Many investors choose to mandate the buyer is put on a plan to fix whatever issue is preventing them from getting a conventional mortgage. This ensures the buyer will be able to refinance out of the owner financed loan and pay the investor off within 2 to 4 years.
How long does it take to get a property sold (owner financed) from original purchase, on average?
Every property and investment is different. The amount of work, type of property and current market conditions all determine how long it takes to sell the property.
What are the risks involved in owner financing a property?
There are 2 main risks involved in the owner financing strategy. The first is not being able to sell the property for an extended period of time and paying your financing obligations with no income to offset it. The second main risk is having a buyer default on the owner financed loan. This risk is mitigated by the investor’s initial evaluation of the buyer and the investor’s right to foreclose on the home and take the property back if the buyer defaults.
What kind of return on investment is expected or considered good by owner financing a property?
An investor is looking for 2 types of ROI with the owner financing strategy. The first is a monthly cash flow similar to the buy / fix / rent strategy. The second is the income made when a buyer pays their down payment, and when a buyer refinances into a conventional loan paying off the investor and cashing out the equity in the property.
What protections are in place for the buyer?
A third party servicing company escrows and pays yearly taxes and insurance to ensure the buyer is protected. Also most owner financed properties are owned out right by the investor; this protects the buyer from an investor defaulting on an original mortgage.
Who qualifies the buyer?
An experienced and licensed real estate agent will collect the appropriate documentation from the buyer, and give the investor a recommendation based on a thorough review of the buyer’s financial status. In the end, the investor has the final say whether to approve or deny a buyer.
Is foreclosure the only option an investor has toward a delinquent buyer?
No. The investor can choose to work with the buyer and come up with unique options that allow the borrower to catch up on payments and keep the property.
Who ensures each transaction is in compliance with all the lending and real estate laws?
An experienced and licensed real estate agent is involved from start to finish and a licensed mortgage company is responsible for preparing all the lending documentation. Using a trusted agent and mortgage company is essential to the investor’s protection.
What is the first step in finding distressed or discounted properties?
Finding a real estate professional or company that only deals in investment properties(such as Direct Lending Partner) is easily the first step any new investor should take. They have the experience and can offer you the guidance you need to find your very first deal.
What methods are used in finding distressed or discounted properties?
Here is a list of methods used to find distressed properties: MLS, Direct Contact, Short Sales, Foreclosures, Probate, Estate Sales, Court House Steps, Direct Marketing, and For Sale By Owners. Every investor and company has their own unique ways of finding distressed properties.
How do I know if a property is worth purchasing?
This is the most important and also one of the most over thought processes in real estate investing. If the property you are evaluating has comps that justify an after repair value of 10% or more than what you can purchase and rehab it for, than it’s worth purchasing. This is where relying on real estate professionals and trusted contractors is essential, because you may not know how much repairs cost, what repairs will be needed, how to pull correct comps, or any subtle clues that may make a deal not worth buying.
What steps are involved in evaluating a property?
There are 5 simple steps to evaluating a property. Make sure you know what investment strategy you are going to use before you start.
- Step1. Determine the rehab cost.
- Step 2. Determine the ARV based on comps.
- Step 3. Determine if this property will meet your investing goals (buy /fix /sell, buy / fix /rent, owner financing or your own unique investment strategy).
- Step 4. Determine expected days on market based on comps and market conditions.
- Step 5. Evaluate the potential risk. Are there any unusual circumstances that may prevent you from selling this house for what you have estimated its worth, or renting it quickly and at the appropriate price. Once you have all this information you can make an informed decision on whether or not to purchase the property.
