Discussion Forum

Sub2 Deals on Vacation Property

Posted by: TurbineTester
Posted on : 5/25/2011 9:37:42 AM

William,
I've got a good bit of experience with Sub2 deals and other types of buying techniques. What i'd like to know is what marketing methods you would use to creatively (also read cheaply) purchase and finance a vacation home like a lake or beach house. I want a Lake House and my wife wants a Beach House. Since these properties are almost always going to be a fair distance away, and in some cases in another state, i was curious as to how you would approach this goal? Have you ever creatively purchased a vacation home?

Re:Sub2 Deals on Vacation Property

Posted by: WilliamGA Still Master of ALL I Survey
Posted on : 5/27/2011 9:48:49 PM

I do deals today much differently than I did just a few years ago. I now buy hundreds and sometimes thousands of miles away from where I am actually living and while I at one time thought that would be difficult, I am finding it to be just as easy as buying close to home.

Tried and true methods still apply. Craigslist, checking the foreclosures and tax liens and even good old realtors in the areas I want to buy will turn up deals in this market like you wouldn't believe.

The internet is a fantastic source for homes, especially the homes it sounds like you want to buy. I currently live in a beach home in San Pedro, Belize that I bought off of a FSBO site. Seller financing is common here as commercial lending is very difficult to come by so this was not a tough deal to get done.

I would target the town I wanted to buy in and get to advertising. In times like these those second houses are the first to go. It might be a little more difficult at this time of year but as soon as summer is over I would bet you will be able to pick one up.

William Tingle
www.Sub2Deals.com
williamtingle.com
williamtingle.us
williamtingle.net

How beautiful would this world be if we all practiced what we preached?

Re:Sub2 Deals on Vacation Property

Posted by: RSB
Posted on : 6/1/2011 10:41:52 PM

That is fascinating. Could you share some details?


1. Do you search specific parts of the country?

2. Do you advertise or do you search the sources you mentioned? Seems like it would be hard to advertise over such a vast area.

3. How do you determine value? BPO?

4. Do you negotiate everything over the phone or do you travel and inspect before closing?

5. How are you selling? Wholesale, Retail, Wraps?

6. Are you JV'ing with local Investors or flying solo?

This would be a great Webinar!

Damn William you Rock! You really are the Sub2 King.

Richard

Re:Sub2 Deals on Vacation Property

Posted by: WilliamGA Still Master of ALL I Survey
Posted on : 6/2/2011 1:32:39 PM

Richard,

Your answers:

1. Yes, I do. I am looking for a specific area where houses I buy are in a specific price range. I am also looking at various demographics, employment specs, average household income, etc. I have found with the specific model I am using my sales happen much faster, the people stay in the house (although I only have a little over a year of historical data so far) and take better care of it.

In short, I am much more analytical in areas other than just the value of the house and the price I can get it at.

2. Once I narrow down an area I like, I do several things to initiate the buying process. Craigslist ads, small paper ads like the Green Sheet or Penny Pincher, phone calls to real estate agents in the area (this is crucial for several reasons) and a bandit sign campaign. I also do a search and contact on foreclosures and tax sale properties.

As you can see, most of what I do is 100% free. I can generally commit to a marketing budget of about $200 a month to cover any ads and bandit signs but I am finding if I can hook up with a good agent fairly quickly, I only have to spend money for a couple of months and that is just to establish a presence in the area.

Finding an agent right now is much easier than years prior. They are hungry.

3. My agent (I told you the agent was crucial) will help me with market value. As I do not have MLS access in every market the agent providing comps is important. I also use other sources (local tax records, etc.) to help me in my valuation. I never rely on the agent for 100% of my information.

Finding a local appraiser can also help. In a couple of markets I have been able to use an appraiser for drive bys and MLS info to help me in determining an accurate value.

4. I do 95% of my business now on the phone. I use people on the ground where I am buying to do the things that need to be done there. I only travel if I really want to go to the place I am buying in. So far that has just been New Orleans and one other location.

I use an agent for a large part of what I do and generally the agent can recommend someone for minor repair and maint if the property needs it. If not, Craigslist is a terrific resource for most anything. Finding someone to take pictures or other errands is so simple these days.

Most of the places I am buying wouldn't be considered vacation locations. These places are small-medium towns with stable employment, relatively stable home prices and working people. Nothing flashy at all.

New Orleans really doesn't fit the profile I generally follow today and the property I just bought there was completely different from most I buy. This will be the only rental I have so far and most likely the only one I do buy. It was just too good a deal to pass up and fell into my lap unexpectedly when I was visiting for my birthday.

5. We sell virtually 100% with owner financing. Again, the agent is crucial to this formula as by now you can see. They supply us with leads for buying, leads for selling, comps and loads of other things and they get paid by performance. If they don't produce, there is no/very little cost to me.

6. So far no JVing although we have paid a couple of bird dog fees to local investors for leads on houses. I have just recently started using private money again but I really don't consider that a JV as they are just acting as the bank. I have never been a real JV type person anyway.

I agree, it would be a great webinar. No one else is doing exactly what I do now, at least as I know it.

Just a few years ago I would have never dreamed of doing business this way. It just seemed too hard or complicated but I have to tell you, it is so simple it is scary and I am having more fun with real estate and making more money than ever before.

You really can step in a pile of shit and come out smelling like a rose.

William Tingle
www.Sub2Deals.com
williamtingle.com
williamtingle.us
williamtingle.net

How beautiful would this world be if we all practiced what we preached?

Re:Sub2 Deals on Vacation Property

Posted by: RSB
Posted on : 6/3/2011 12:37:30 PM

Thanks William,

The reason that I am so interested in this is because I live North of Atlanta and my area has been killed in the downturn. I bought my house in 2002 for $138,000 and the idential house next door just sold for $98,000. Ouch. I realize that some parts of the country are more stable so I started researching different areas.

1. You have said to look for homes 80-90% of median value. I live in the fastest growing county in the USA before the crash. The median value is $260,000. I am researching areas that are 1/2 of that. So far I have been researching TN and NC. What is the $ value of your average purchase? What reference guide do you use? Census figures or another source?

5. I didn't think you used a Realtor with your O/F homes. Is this a change?
If you pay a Realtor 6% + Arrearage costs + Closing costs + Minor repair what are you asking for a down payment? Are you putting in more cash than you are taking out in your first year? That would surprise me.

6. Private lenders usually like to look at their colateral. Are you using them just for your local deals?

I am glad you are happy and things are going well for you. What next....China? I hear they have 100 year loans in Asia. :)

Richard

Re:Sub2 Deals on Vacation Property

Posted by: WilliamGA Still Master of ALL I Survey
Posted on : 6/3/2011 5:59:17 PM

Rick,

I have had about a dozen emails about my post on this yesterday. I may need to write another course on how it all works.

Your answers.......

I have changed alot of how I buy. The major change is in analysis of alot of things other than the actual house.

I gather alot of information now on a specific area (the people, jobs, average income, political views and more) and then filter it down to specific neighborhoods in a target area. These are the areas I buy in and nothing more. I follow the results of my analysis absolutely with no deviation.

None so far, anyway.

People sometimes wish for a chance to start over and do things completely different. Well, I got that chance and although it wasn't the way I would have liked for it to happen, it has worked out for the best.

Yes, It is crucial to get a good deal on the house but I use a formula to do that. Houses with more than one mortgage are key.

Good financing that you can take over is also key. Again, multiple mortgages make this almost a certainty.

Our average purchase price varies with the area we buy. I don't mean to be vague but that is the way it is. We might be buying for 75k in one town and 150k in the next. It is all relative.

As far as a reference guide, nothing means so much as recent, comparable sales. The best place to get that is a realtor or appraiser. Yes, I could find a way to get MLS access in alot of places but why bother? An agent has these things and they want paydays. When I find an agent to work with I make a package deal with them.

Yes, I used to be very agent adverse but that was in the past. Realtors are much more schooled on subject to and short sales today and these things don't seem so foreign. Most continuing ed services offer classes to realtors on these topics now.

Do some say no? Of course but that wasn't the one I wanted to work with anyway. I have never spoken with more than 3 before I found one that was happy to do business.

See, here's the thing. Trash talk gets old but cash pays the bills. I make deals happen so finding someone to work with is never a problem.

What I pay is always negotiable. Agents are used to doing alot of work without always getting paid so getting them to do customary things like showing houses, taking pictures, generating a comp sheet or listings sheet, filtering MLS listings according to my specifications and emailing are generally easy to do with no fees expected.

Depending on the agent and how our phone conversations go, I have a fee sheet I usually fax over to the agent to see if they are agreeable on doing certin things for a set fee. My ultimate goal is to pay them a fair wage for some things while they wait on the bigger payday until I get mine.

Some money now to pay immediate bills and a bigger payday down the road. You would be amazed how agreeable they can be when they haven't had a retail sale in weeks.

I have yet to leave more than a couple grand in a house beyond my buyer taking possession. You have to remember, I get a down payment from them, too. That usually covers most all of my costs. The amount of cash to be left in the deal is an analysis factor, too.

Also, not every home we buy is in default. Some of the best deals I have ever made, even beck when I did things completely different, were made on houses that were completely current on payments.

I have yet to use a private lender that wanted to visit the collateral before they made the loan. I think you are confusing private money with hard money. Much different product and one I have never used.

My lenders get a report with all the numbers and pictures and a plan for the property. None ever say no.

China? No, have to pass on that one. I am enjoying the tropics too much right now although I have had my eye on Spain and am actually planning a trip there this fall. I don't think I will be buying any real estate, though.

William Tingle
www.Sub2Deals.com
williamtingle.com
williamtingle.us
williamtingle.net

How beautiful would this world be if we all practiced what we preached?

Re:Sub2 Deals on Vacation Property

Posted by: RSB
Posted on : 6/9/2011 10:58:18 PM

Could you elaborate on the "more than one mortgage are key". Are you SS these properties, are you buying the junior mortgages or something else.

Thanks

Richard

Re:Sub2 Deals on Vacation Property

Posted by: WilliamGA Still Master of ALL I Survey
Posted on : 6/9/2011 11:38:20 PM

Hey Rick,

Yes, we are shorting the second on most of these homes. It creates instant equity and is very simple to do with seconds in most cases.

William Tingle
www.Sub2Deals.com
williamtingle.com
williamtingle.us
williamtingle.net

How beautiful would this world be if we all practiced what we preached?

Re:Sub2 Deals on Vacation Property

Posted by: vdennis re investor
Posted on : 8/14/2011 8:07:19 PM

William you mentioned a fee sheet that you send to realtors you work with do you think I could get a copy of that sheet.