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#11
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Hard money lenders base their loans on the property collateral. Typically, you won't find someone willing to make a hard money loan at anything more than 75%.
Looks pretty shady. |
#12
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#13
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If I were Tony Soprano, I'd have the construction guy and maybe a bought-off appraiser give the house a value 50% higher than its true value. Then I'd have the construction guy overcharge for his services, and run into various delays, problems, and accidents. Eventually the buyer will desperately want to sell and cut her losses, so I'd arrange to rig the sale and buy it back under market value.
Probably not all three of these things will happen; it's probably just an excuse for the contractor to overcharge. |
#14
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Not sure if it is exactly the same type of situation but if you search the Bradenton Herald business page from about a month ago you'll a lot of coverage on a builder would take a $5,000 deposit from investors, they would then build the house, sell it, and they would share the proceeds. The only problem is land values started going down, the builder stopped building because he was overextended and it was no longer profitable to build, and now the original investors owe tens of thousands of dollars to subcontractors who did work and never got paid. So basically, $5000 might not be a lot to lose, but if the loan is taken out in your friends name then she can be liable for much more if things turn sour.
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#15
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That's my inclination as well. Is there zero chance this is legit? How exactly is she going to get screwed? [/ QUOTE ] I'm not saying it's a scam. I'm saying it's a bad deal. It sounds like you have a contractor looking for business, and his sales technique is to stir up dreams of wealth in people who have no experience flipping houses. The money in flipping is made on the buy, but the contractor has no incentive whatsoever to find her a good buy. |
#16
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The guy might have bad credit or be overextended with other loans etc. [/ QUOTE ] This is not what you want in a contractor. Some neighbors of mine years ago lost their house because a contractor adding a second story tore most of the house down then declared bankruptcy. |
#17
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I was interested in starting a company like this. I would located the properties and charge a fee for that, contract out the work, and find a buyer. I would let someone else take on all of the risk. I've been involved with a few rehab projects and I think that the deal maker comes out ahead, because he takes on leass risk, and can take on more projects than a single investor could.
She could also look into wholesaling properties to the investor market. I think that you own the market when you can also bring buyers to the table with investors. The ultimate goal would be to act as the investors project manager and his real estate agent. You could also act as a buyers agent and loan originator. The combination of the above would give you 3 ways to make a commision off of the deal. I suppose the layer cake was true: the secret to business is being a good middle man. HOLLA! |
#18
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he makes more money selling out his services than flipping on his own [/ QUOTE ] This statment leads me to think, the guy is an idiot or a scammer. Wish I had time I would do an: Ask me anything about real estate (Title, Lending, Flips, etc.) Here's the deal. You make your money in "legal" flips when you buy the property. Finding real estate low enough below market is hard. If you have a ton of cash that helps a bunch. I know lots of agents who find great deals and off them to a rich investor. Most of really good deals are done by insiders. You don't see homes advertised 30% below valid appraisal. Don't get me started talking about illegal flips. |
#19
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If you want realy good deals you normally have to find someone who is in bad money trouble and they need to make a deal quickly. I know a guy who sold his 5 bedroom house on an acre in San Diego for $199,000 because it was going into foreclosure. He had to act quickly.
Other peoples misfortunes are my fortunes |
#20
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Hard money lenders base their loans on the property collateral. Typically, you won't find someone willing to make a hard money loan at anything more than 75%. Looks pretty shady. [/ QUOTE ] Yes I 100% agree with this. Hard money lenders will normally loan to anyone who can buy a house for about less than 75% of the value. Collateral is the house itself. I don't know all the details of the what your friend is doing... so I can't quite come to a conclusion. |
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