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How You Can Use Hard Money to Make a $20,000 Flip in 60 Days

I am a long time cash buyer and wholesaler of San Antonio investment property. But not every investor can or wants to use all cash for their under market value property purchases.

That is why I have developed a good network of hard money lenders in Texas and California who can help my out of state investment property investors do San Antonio investment deals.

A ‘hard money lender’ is a private lender who loans capital to investors usually for flips, but sometimes for short term buy and hold investments.

Most hard money lenders lend based upon the value of the under market value investment property. It is an asset-based loan. If you have good credit and cash reserves, you may be able to qualify for a better rate.

Whatever your rate, be prepared to pay a high amount of interests, usually 12-15%. Why would you pay such a high rate? Because no traditional lender will lend on under market value properties that have not been rehabbed. Using hard money, while expensive, is a good option for some investors who either lack capital, or want to reserve their capital for other projects.

Hard money lenders will lend anywhere from 65-75% of the after repair value or ARV of the property (pending the lender’s appraisal). That means that you will need to have approximately 25% to 35% of the property price, PLUS the cost of the rehab, in cash.

So, let’s look at a new San Antonio investment property deal I just got:

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    • Address: 1723 W Ashby Pl  San Antonio, TX 78201,
    • Year Built: 1925
    • Description:  Under market value property, investors dream north of downtown, 3 beds 1 bath, 1000 sqft, built: 1925, lot size: .19 acres, yearly taxes: $1,700.00, estimated yearly insurance: $800.00; estimated repairs: 35K, includes new HVAC, updated kitchen/bath, flooring, paint in/out, exterior skirt, appliances, plumbing/electric up to code, paint out door storage exterior, trash, lawn maintenance.
    • Max After Repair Value: $129,000.00
    • Cash Price: $69,900 firm.
    • Exit Strategy: Owner Finance with 35K repairs: 5-10k down or more, $1,295.00 monthly P/I, 30 year amortization, 10% interest. Or 15K rehab, new HVAC, paint in/out, kitchen/bath repairs, plumbing/electric up to code, then FSBO at 109K, 10% interest, $1,100 monthly PI/TI, 30 year amortization. OR, flip with $35k in rehab for a 20-25k profit in 60-90 days.

On this deal, let’s assume the hard money lender will lend 75% of the ARV. That is $52,425. So, you will need to have $17,500 of the sales prices in cash up front, plus the rehab of $35,000. So you will need $52,500 cash to do this deal.

Assuming a 13% interest rate, your payment per month during rehab/resale will be $568.

Assuming 3 months to rehab and resell, you will pay interest only payments totaling $1704. Up front fees will be approximately $2500 on this deal. So, your money is going to cost you approximately $4200.

Still, even if you incur those hard money loan costs, you stand to make $20,000 on this flip. Not a bad investment in San Antonio wholesale property!

 

 

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San Antonio Investment Property Is Still Hot in 2016

Some investors might think that the San Antonio investment property market has slowed down given the decline in oil prices. But you would be wrong!

I am a San Antonio investment property wholesaler, and I am finding that sales are still strong, and prices are rising. The volume of houses that were sold in the city increased in January, and the cost to buy a house generally has gone up.

Total residential sales increased nearly 7% in January 2016 from a year ago, with a total of 1534 houses sold.

The median price of a house in San Antonio is still low – only $186,100 from $176,700 a year ago.

Overall, San Antonio is still a seller’s market, and inventory is low with demand high. I know personally I have sold 15 under market value properties in San Antonio since the beginning of the year. Investors who used to buy San Francisco investment property love to come to San Antonio and buy a distressed wholesale property for $50,000! And overall, the consumer market is still strong, with only a 3 month supply of houses available.

San Antonio’s strong investment property market is being driving by a strong economy, growing population and low interest rates. And it helps that you can still buy a single family home here for under $200,000.

I still am able to find really good under market value deals for out of state investment property investors, especially a few miles north of downtown in the 78201 zip code. Below is a great deal that I have several San Francisco investment property buyers reviewing:

thumb_IMG_4878_1024

 

  • Address: 1723 W Ashby Pl  San Antonio, TX 78201,
  • Year Built: 1925
  • Description:  Under market value property, investors dream north of downtown, 3 beds 1 bath, 1000 sqft, built: 1925, lot size: .19 acres, yearly taxes: $1,700.00, estimated yearly insurance: $800.00; estimated repairs: 35K, includes new HVAC, updated kitchen/bath, flooring, paint in/out, exterior skirt, appliances, plumbing/electric up to code, paint out door storage exterior, trash, lawn maintenance.
  • Max After Repair Value: $129,000.00
  • Cash Price: $69,900 firm.
  • Exit Strategy: Owner Finance with 35K repairs: 5-10k down or more, $1,295.00 monthly P/I, 30 year amortization, 10% interest. Or 15K rehab, new HVAC, paint in/out, kitchen/bath repairs, plumbing/electric up to code, then FSBO at 109K, 10% interest, $1,100 monthly PI/TI, 30 year amortization.
  • Alternate Exit Strategy: Flip with $35k in repairs for a ~$25,000 profit. Rehab completed in 45 days or less.

 

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Private Investors Wanted – $50,000-$1 Million

As you may know if you peruse this site, I am a financially retired, under market value property wholesaler and investor in San Antonio TX.

I am seeking cash partners to purchase 3 bedroom, 1 bath distressed properties in San Antonio TX. I find the houses. You fund the purchase. I do the rehab in 30 days.

We split the profits 50/50. Or, I can owner finance/rent the property out for you.

Remember, I handle the entire project from acquisition to rehab to resale. You ONLY FUND the deal.

My goal is to transform the city of San Antonio TX into homeowners and to improve neighborhoods.

I need your help. Please contact me.

I particularly like to work with out of state property investors who once bought San Francisco investment property, Los Angeles investment property, and Seattle investment property.

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3 Ways to Make Money in Distressed Properties

Many under market value and distressed property investors have entered the market in the last five years. After the mortgage meltdown of 2007-9, almost four million families who used to own their own home now rent. That has created a significant and growing market for rental properties.

This has created a lot of new distressed property investors, which is what I have been doing for 15 years. I invest in San Antonio investment properties and sometimes wholesale Texas properties to cash investors. As a San Antonio property wholesaler, I have done very well in the last 10 years here in up and down markets.

Since the mortgage melt down, half of all investment property purchases in the US are in distressed houses and half of them are in cash.

If you are thinking about getting involved in under market value, distressed properties to make real estate cash flow, there are several ways you can do it:

Do It Yourself

Some distressed property buyers and investors find their own fixer upper and rehab it themselves or pay a contractor to do it. You will really need to beat the bushes to find an under market value fixer upper; there is a ton of competition.

However, if you do not have any experience, I personally would not recommend buying and rehabbing the house totally on your own. There are just too many places where you can get in a lot of trouble.

One way to do it is to find a local expert with a good rehab crew and have them wholesale you a property that is under market value and has reasonable repair expenses. That company may be able to guide you on doing the rehab. I have actually done this myself in San Antonio. This father and son have bought three houses from me wholesale, and then they rehabbed it themselves with my guidance. They have managed to resell each house retail for a 15-20k profit.

Turn Key Properties

If you do not have the time or the ability or desire to rehab a house, you can buy a fully rehabbed San Antonio investment property or out of state investment property, sometimes with a tenant already in it.

If you are going to buy turnkey properties, you will want to buy in a market with affordable real estate, but cheap real estate isn’t the only criterion. Also, you want to buy in a city where jobs and population growth is increasing steadily. I am not objective, but I am a huge fan of San Antonio TX investment properties because real estate is inexpensive, the economy is strong and the population is growing.

And when the market dips, the downturn is mild in TX. So if you need to unload a property in a pinch in Texas, you probably can do it without losing your rear.

Note that some turnkey property providers will charge you a lot for the house because they have to cover their rehab costs. You won’t end up making as much money per property as if you do it yourself, but it’s less hassle, so it can be a viable alternative for some investors.

The Owner Finance Option

I have come up with my own unusual way of making money on distressed San Antonio investment properties for the last 15 years that combines a bit of both strategies above.

Doing a property yourself obviously has the risks of finding a good property on your own and getting a good price, and all of the risks of doing your own rehab. And turnkey properties are all done for you, but the price is higher and the returns lower.

In my system, I find the under market value distressed properties in San Antonio. I negotiate a good low price, and then wholesale it to the out of state property investor.

I do a limited rehab of the property for $10,000 to $20,000. After that, I usually will help the investor to owner finance it to a local family who have steady jobs. The advantage here is that the property is then maintained by the end buyer. You do not have to worry about maintaining the house from a distance.

I am a very experienced San Antonio wholesale property expert, and my investors usually make 12-15% on these distressed properties. It’s definitely something to consider, instead of doing it yourself with all the risks, or paying a higher price for a turnkey property.

 

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6 Myths About Wholesaling Investment Properties

I have been a property wholesaler in San Antonio TX for 15 years and I have seen many people come and go in that time.

Below are the most common myths that I see in property wholesaling with San Antonio investment property.

  • You have to have cash to wholesale property: No, it is not essential when you are getting started to have a lot of capital. In many of my deals, I am not actually taking possession of the under market value San Antonio property with cash. Rather, I just have the property under contract for a certain period of time until I find a buyer for it.

Of course, the key is to find a good property under market value, and THEN be able to find a good buyer for the property before the contract expires. Now this is where it DOES HELP to have your own cash. I have my own cash, so if I have not found a buyer yet, I just buy it myself with cash and mark it up, and then put it for sale again.

  • You can be an effective wholesaler without knowing the market well. Some investors really believe this, but the fact is, I am able to find great under market value investment properties in San Antonio because I am a local market expert. I often do not even need to look at comps to know what a property should sell for.
  • You have to be rich to do well in real estate from the start. I didn’t have much capital when I first started in real estate investing and had $40,000 in college debt. But by 28 I was financially retired, only my sixth year in real estate.
  • You have to have a real estate license to be a property wholesaler. Nope! I made a couple million dollars in real estate wholesaling in San Antonio before I got my real estate license. I do like having my real estate license now, because I am no longer dependent on real estate agents to show me properties.
  • You don’t have to have a lot of experience to be successful in wholesaling. In my view, you do need to have experience, but you can gain a lot of that at the beginning by working with expert real estate investors. If you don’t have much experience in real estate investing, you should pair up with an expert to help you get to know the ropes (such as yours truly but you do need to have cash to invest).
  • You have to borrow money from banks. No way! I borrowed more than $2 million from private investors when I first got started in under market value real estate investing in San Antonio. You just have to ask around, but you can eventually find money to borrow, if the deal is good enough.

I now am a successful property wholesaler in San Antonio, and so can you if you remember most of the above.

 

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How I Find Excellent Under Market Deals in San Antonio Wholesale Property

Some of the under market value property investors I work with think that finding wholesale property in San Antonio is difficult. I do not agree. I have been a San Antonio wholesaler of investment properties for 15 years, and I never have a problem finding excellent below market value investment property in San Antonio because I am a well known cash buyer of investment property here.

To find the best wholesale deals in San Antonio, you need to work with an expert who is well connected and experienced in this marketplace. Most beginner wholesalers will try to buy under market value houses at auctions. The problem with this is that everyone and their mother goes to property auctions to find a cheap San Antonio investment property.

By the time all of the other under market value wholesalers are done bidding, the price of the house usually is above market value.

It is very difficult to make a profit on a San Antonio wholesale deal that is at market value.

That is why the smart investor works with an expert in wholesale properties in the Alamo City.

I have been buying and selling investment property here since 2001, and I have a huge network of agents and investors. I also have two other wholesale companies that work for me. They are able to find wholesale properties in San Antonio for me. I also buy many investment properties here through estate sales.

I am an expert at negotiating a low price for myself and/or my investors. Most of the houses I buy are at least 30% under market value as of February 2016.

Below is an excellent 2 for 1 investment property deal that I got through an estate sale in San Antonio. Good luck finding a deal like this at an auction.

Out of state investment property investors, this San Antonio investment property has two houses on one lot and has needs only $10,000 in rehab before you owner finance it for $5000 down, $900 per month.

Note that this San Antonio investment property has two houses and is very easy to sell, given the extended families of most of our buyers.

We will complete the rehab for the out of state investment property investor and will resell it with owner financing. Rehab will be completed in three weeks.

front man

    • Address: 3230 La Violeta St., San Antonio, TX 78211-3728
    • Year Built: 1950
    • Description: 2 homes for the price of one;  Home #1, 3 beds 2 bath, 928 sqft, built: 1950, lot size: .15 acres, home needs minor plumbing, carpentry, paint, cleaning, estimated rehab cost 10K, Home #2, 2 beds, 1 bath, 600 sqft, has been remodeled no repairs needed
    • Cash Price: $69,900.
    • Exit Strategy: Owner Finance with 10K repairs: 5-10k down, $900.00 monthly P/I, 30 year amortization, 10% interest, Price: 89K, ROI will be 13-14% per year.
    • Additional Costs: $1500 commission to me on wholesale, $2000 in closing costs, $1500 commission to me on resale, $2000 in closing costs on resale (taken out of $5000 down payment from buyer).
    • Profit Year 1: 12% ROI
    • Profit Subsequent Years: 13% ROI

In summary, if you want low priced San Antonio wholesale property as an out of state investment property investor, work with an expert with 10 or more years of experience and has done at least 500 deals in San Antonio.

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How I Still Do $12,000 Flips in San Antonio With Under Market Value Properties

The San Antonio investment property market has really heated up in the last 18 months. Back in 2014, it was possible to buy houses for $30,000, do $10,000 in rehab at most, and owner finance them for $59,000.

Or, you could buy an under market value property for $40,000, do $10,000 in rehab, and flip it for cash and make $30,000.

Making money in San Antonio investment property is still very possible and I do it every week, but it is more challenging now. The economy has improved a great deal, and San Antonio TX is a booming market, with great numbers of people moving here every month. With all of the construction going on, there is plenty of blue collar job demand.

Lower gas prices have also put more money in people’s pockets, which leads to more economic growth and spending.

All of this has led to an increase in real state prices in my under market value properties.

But, the good news is that because I have been doing this for 15 years and I know how to rehab properties and negotiate investment property deals, I still am able to make excellent returns on flips.

I mostly am a buy and hold investor with owner financing, but I have been doing some extremely profitable flips these days. My work crew loves when I do flips because they pay well, and I like them because they are profitable for me!

I have a current flip that the investor would make $12,000 on, which is fantastic in this hot market. This house is listed below:

herm

 

  • Address: 2229 W Hermosa Dr.  San Antonio, TX 78201
  • Year Built: 1948
  • Description: Under market value property sale in hot north of downtown neighborhood, 2 beds 1 bath, 769 sqft, built: 1948, lot size: .14 acres yearly taxes: $1,200.00, estimated yearly insurance: $800.00, estimated repairs on this distressed sale.
  • Rehab Option#1: 35K, includes new HVAC, converting to 3 BR, updated kitchen, flooring, paint in/out, exterior skirt, roof, room addition, appliances, paint out door storage exterior, trash, lawn maintenance.
  • Max After Repair Value: $139,000.00 with owner financing, comps are for 3/1.
  • Rehab Option #2: 15k AC, flooring paint in and out $109,000 ARV.
  • Cash Price: $69,900 firm.

This house is located in a hot area north of downtown and is an excellent under market value fixer upper. I was able to get a very reasonable price of $69,900 on this deal.

Of course if I didn’t know what i was doing, this wouldn’t work. Most under market value property investors spend too much on rehab, which kills the deal. I know exactly how much rehab to do on this project – flooring, HVAC, paint in and out, and resell it. By doing that amount of rehab, this will resell for approximately $109,000. Quite a nice flip in this hot San Antonio market!

Try to do this type of flip with San Francisco investment property, Seattle investment property, Los Angeles investment property or San Diego investment property 🙂

 

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How to Turn $10,000 Into $30,000+ in a Year

Most of the time, I only work with under market value property investors with at least $50,000 cash, and preferably $250,000 cash or more.

However, I once started out in San Antonio investment properties without any capital, so I wanted to sketch out quickly how you can make $30,000+ out of $10,000 in a year.

It is possible with my guidance to buy an under market value property with a hard money lender, do $1000-$5000 in clean up and rehab, and flip it to another investor/cash buyer.

On each of these hard money deals, you will need to have $8000 to $10,000 invested. Then, when the deal sells, you will make $8000 to $10000, after your hard money expenses and closing costs.

Hold On!

This is the point where many typical below market value property investors will smirk and say, why bother? Who cares about making a piddly $8000?

Ah :), that is why I financially retired at 28 and you most likely did not. I NEVER turn up my nose at making $5000 or $7000 or $8000 on a deal! Never!

You know what I do? I do 50 of those deals per year, in addition to my large buy and hold investment portfolio, and make another $300,000!

I strongly believe in doing a lot of small San Antonio investment property deals. When you do just four of those deals per year, you can triple your money….transform $10,000 into $30,000 or more. Then you can afford to do more than 1 flip at a time, and do eight per year and make $64,000…..see where this is going?

Of course, in the end, I am a buy and hold investor, and I would advise you after you have at least $100,000 to invest in long term buy and hold, owner financed properties in San Antonio. Then do 2-3 of these quick flips per year to increase your cash as you need it to do more buy and holds.

Here is a fantastic San Antonio investment property for the out of state investor that will make you a quick $8000 to $10,000.

ONE LAST THING!

Before I show you this San Antonio investment property, if you want to turn $10,000 into $30,000, you need to do the following:

  • Listen to what I tell you to do and do not question it.
  • Do not doubt my ARVs or rehab costs.
  • Do not call me every day asking when your house will resell.

I know exactly what I am doing, and it is important for you to trust me.

Out of state investment property investors, this San Antonio investment property has two houses on one lot and offers you a quick $10,000 on a clean and resell flip, or 13-14% ROI on a buy and hold.

front man

    • Address: 3230 La Violeta St., San Antonio, TX 78211-3728
    • Year Built: 1950
    • Description: 2 homes for the price of one;  Home #1, 3 beds 2 bath, 928 sqft, built: 1950, lot size: .15 acres, home needs minor plumbing, carpentry, paint, cleaning, estimated rehab cost 10K, Home #2, 2 beds, 1 bath, 600 sqft, has been remodeled no repairs needed
    • Cash Price: $58,000.
    • Exit Strategy: Owner Finance with 10K repairs: 5-10k down, $900.00 monthly P/I, 30 year amortization, 10% interest, Price: 89K, ROI will be 13-14% per year. ; or do $1500 in quick clean up and flip to another investor at $69,900. This is a 2 for 1 deal and will resell quickly.
    • Contact us for more information or to make offer.
    • Rental Comps 3230 La Violeta St Sold Comps 3230 La Violeta

More Pictures:

Living Kitchen Kitchen 2 Bedroom Bath

Investors, you will never see a San Francisco investment property, Los Angeles or a Seattle investment property at this price point and rate of return! This under market value property is a good option to invest in real estate with IRA, or invest in real estate with 401k.

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Pseudo Investors – Do Not Waste My Time

I work with many successful out of state investment property investors in my San Antonio investment property business.

But I also have come across many unsuccessful ‘investors’ who typically never make any money in real estate cash flow investing in under market value properties.

I call them pseudo investors.

When I say ‘pseudo investors,’ I am referring to people who flatter themselves as investors but either rarely or never do a real estate investment deal.

Here are the most typical types of pseudo investors i deal with in under market value properties:

  • The ‘investor’ with zero capital. There are ways to invest in under market value San Antonio investment properties without cash of your own, but most of those methods suck as far as making cash flow each month. The best option you have is to borrow capital from friends or family at a ‘friend rate’ of 7-8%. At that rate, you can buy a $50k house and produce monthly positive cash flow. But if you don’t have capital of your own, I don’t want you to call me yet. You need to go find that capital from a private investor first. I deal ONLY in investors with cash.
Front
Five investors passed on this deal. ‘Too ugly and run down.’ I sold it AS IS with owner financing and $5000 down myself and will enjoy 14% ROI on it. Pseudo investors.
  • The ‘investor’ with capital but incapable of making an informed decision. I have ‘investors’ on my list with $500,000 or more to invest who never do a single real estate deal. They are simply constitutionally incapable of making decisions. If I send you a below market value deal, I expect a yay or nay in 24 hours. MAX. When I see a hot deal, I make an offer in minutes. Bottom line – if you have cash but are incapable of making decisions, don’t call me please.’
  • The ‘investor’ with capital and can make decisions but is too picky. ‘Oh that neighborhood is too risky, oh that house only has two bedrooms, that property has a cracked foundation…..” Look folks: I have made MILLIONS of dollars on under market value San Antonio investment properties that look like crap with every problem in the book – roof, foundation, too small you name it. Every deal that a pseudo investor turns down – EVERY ONE – I buy it myself with my own cash and make $5000-$15,000. I already have my own cash and portfolio. I really don’t need it. But if you are foolish, fine, I’ll make the money.
  • The ‘investor’ with capital and can make decisions but has absurd expectations and is greedy. I have made a fortune on 10-15% ROI buy and hold deals in San Antonio. But this type of ‘investor’ is never happy with a certain return, they always want more.  Listen, this is San Antonio TX. It has many advantages – real estate is dirt cheap here, we have a great population of blue collar buyers, the economy is stable and taxes are low. But my typical deal is $50,000 and my profit might be $10,000 or $15,000. If that sounds like pennies to you, please don’t call me. I do 50 or 100  of these deals per year. That’s at least $500,000 i my pocket. That’s real money in San Antonio. You might get big profits in San Francisco investment property, but you have to have millions to invest. Here in San Antonio investment property, you can get rolling with $100,000. Have realistic expectations of $10,000 on a quick flip to another investor, or 12-15% per year on a buy and hold.
  • The ‘investor’ from out of state who questions my rehab cost, comps and ARV. Please. Don’t let the door hit you.

If you call me, I expect you to have proof of funds of at least $50,000 liquid or more, with expectations of making $10,000 max on a deal in 60 days or less. Or, 12-15% ROI on a long term buy and hold with owner financing or renting, if you prefer the latter.

Right now, I am seeking private investors – such as a former San Francisco investment property investor – who will buy a $50,000 3 BR 1 bath fixer upper. I do all the work – finding the house, doing the rehab, which you pay for. When the house sells, we split the profits on the San Antonio investment property down the middle.

Remember, I am not interested in a pseudo investor. Only a real investors with cash who can make decisions. Former San Francisco investment property investors especially welcome.

Let me know. Thanks.

 

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How to Recognize Value in Junk Homes

Now in Inman News

I have made a good career in San Antonio real estate investing by buying and selling under-market-value properties (“junk” houses) that most investors would never touch. Then, I owner finance them for maintenance-free cash flow, which has the added benefit of giving a hardworking family a chance to own their own home.

Sure, the under-market-value houses that I buy are ugly at first glance, but the smart investor needs to look underneath that ugliness and see the value of the home and the area around it.

A smart investor needs to look underneath that ugliness and see the value of the home.

Last week, I had yet another junk house success story that I wanted to share with you. Last year, I bought this junk house:

k

It sat vacant for several years, and I bought it in an estate sale in September 2015. No question that this house was ugly and run down:

Kitchen

However, this under-market-value property is located in a booming area a few miles west of downtown San Antonio. The Bexar County government has invested millions of dollars in this area with new running trails, parks, shopping plazas, green space and more. Just two miles from this junk property is the San Antonio Riverwalk, a tourist mecca.

Also, this distressed property has nice, owner-occupied homes right next to it worth $100,000:

tampico-5-300x169 tampico-6-300x169

So I snatched up the house and resold it to my out-of-state investor for $25,000 late last year. The regular investor cannot see past the temporary ugliness of the under-market-value house, but I can.

After my investor purchased the home, I did $27,000 in rehab:

  • Electrical update
  • New flooring (float new floor over that minor foundation issue after it’s repaired)
  • Clean out
  • Update bath and kitchen with tile and granite
  • New light fixtures
  • Paint — interior and exterior
  • Finish second bedroom

Now the under-market-value property looks like this:

The ARV on this distressed property is $89,000, and we completed the rehab in mid-January. By the end of January, we already had an owner-finance buyer for it with these terms:

  • $89,000 purchase price
  • $5,000 down
  • $800 per month
  • 10 percent interest
  • 30-year note

So, the investor bought this out of state investment property for a total of $52,000, and is now earning 15 percent per year in real estate cash flow on a property that he will never have to repair. The buyer of the home will take care of it, and eventually, hopefully, pay off the investor and own the home.

The investor is now earning 15% per year on a property that he will never have to repair.

 

That is the type of under market value property investing that you can do — if you have some cash and if you can see beyond surface ugliness in San Antonio investment property.