Bank REO Training

I remember my first real estate deal. About ten years ago I was determined to get involved with real estate. I have read a lot about how people make their money in real estate and thought that if they can do it, so can I.

I decided I wanted to find a rental property, preferably a multi-unit. It was a time when infomercials selling information about getting properties with no money down were doing well.  I was young and newly married so I didn’t have much discretionary income.

I had a neighbor tell me that when he was selling his house he had more people call and ask him if he would seller finance so I thought that must be what the program taught.

I started out looking through the classifieds for income properties. I called everyone of them asking if they would be willing to seller finance. Many of them asked how much money I would put down. I confidently told them “nothing.”

At that point they no longer had interest in our conversation.  I kept at it and came across Bill.  Bill had many properties he was trying to move.  He had a 4-plex he was willing to sell me if I could get a loan for 80%.  He would carry the remaining 20%.  That didn’t work out, but I kept in touch with him.

One day I saw that he had a duplex and a 7-plex that he was selling.  I first tried to get the duplex even asking family members to co-sign.  When I couldn’t secure financing he offered to lease option his 7-plex to me with no money down.

We went over the numbers. He said there were six units paying $450 a month and one unit paying $550 a month.  That totaled $3250 and my payments were around $2700/month.  I jumped on the chance to get my first property with no money down and positive cash flow…or so I thought.

You see, the next day I went to the property and talked with the tenants. It turns out they were paying $200 a month for the one bedroom units and $300 for the two bedroom unit.  That’s right $1,500 a month in rents.

The units were also more like studio apartments. There were five studios, one one bedroom and one two bedroom.  They looked awful. There were doors that wouldn’t close. I am not talking about a bathroom door, I mean the front door. There were leaky pips ruining the ceiling and the floor.  Walls had holes in them.  One call to the city would have had the place condemned. There was at least $20,000 worth of repairs just to make the units livable.  The tenants never complained because they feared deportation.

I called Bill after my visit and informed him of my findings.  He wasn’t willing to budge on the price or payments and since I didn’t have anything to lose by walking away, I did just that.

I often look back at that experience and am very thankful for it. It taught me about the importance of inspections and verifying the information the seller gives me.

I will give you a lot of information here, much of it based on experience.  I have learned of the years some creative methods to obtaining real estate that I will pass on to you.

Take a look around. Be sure to visit my sponsors to see what they have to offer.  If you buy something from them, I will probably make a little money which will help keep this site running.