Even with several years of experience as a general contractor and custom home builder, I stay away from large scale projects as they often have cost over runs and other time delays. Leave the big projects to others like the guys on Flip This House. In return the partner handles the management of the home.Lastly, only buy homes that need cosmetic rehabs at most. I find the homes, negotiate price, schedule & review the home inspection and acquire the property. I always purchase properties with a partner so that I have a truly passive income stream. I then refinance the property if they don't choose to exercise the purchase option. I have also reinstated loans for people and then rented the home to them with a lease purchase option. Then they can refinance and cash me out in 5 years or choose to sell and we take our profit split based upon percentage of ownership as outlined on the quit claim deed. I have even assisted homeowners in obtaining a forbearance agreement, paid the down payment and even assisted with their monthly payments if needed in exchange for partial ownership and in turn they stay in the home. The lender sees it as an asset based loan and if payments are not met they foreclose. Although its not a true assumption of the mortgage, the persons name on the debt is not important. In addition I have title transferred via a quit claim deed. I assume the mortgage by paying up the arrears and attorneys fees and change the address where the payment coupons and mortgage info are sent to. I have done over 100 preforeclosure deals in this specific manner over the last 25 years for myself and clients and have never once had a lender exercise the clause. I would continue with this allocation and look to complete 2 flips and acquire 2 rentals every year until you can increase the numbers.In addition you may choose to make additional income via wholesaling a few properties throughout the year as well.Also, to insure substantial profits from your flips as well as solid equity positions upon purchasing your rentals, I advise purchasing the properties directly from the homeowners in preforeclosure.This method will enable you to buy homes at a 20% plus discount to their appraised value, in addition to being able to perform a home inspection prior to purchase and lastly allow you to purchase them with as little as 10% down by assuming the loan.Couple pointers:First, there will be people that state that you cannot assume the mortgage because of a due on sale clause. With the amount of time needed to save a sufficient down payment, I would advocate flipping a home for another $20K and then purchase a rental property. Should I invest in a single family rental or flip a house? After 2 years of saving, this January I'll finally have reached my goal of having 6 months of living expenses and an additional $20k. Instead, depending upon the warranties being offered by the grantor to the grantee, the deed you use to transfer property is called either a "grant deed" (if you are offering the normal warranties) or a "quit claim deed" (if you are not). However, in CA (and, I believe, other states), the term is not really used. This process can be completed in months, rather than the year or more it takes to foreclose in a more traditional mortgage state.A "transfer deed" is one via which property is actually conveyed (for example, from seller to buyer). If #2 occurs, then the trustee is empowered to auction the property to the highest bidder via a trustee sale with the proceeds going to repay the lender. The trustee is instructed to hold the deed until one of two things happens: (1) the borrower repays the lenders or (2) the borrower stops making payment. No, it is not.A trust deed is the CA (and other western states) equivalent to a mortgage.With a mortgage, the owner of the home keeps title to it and a banj needs to go to court to get title back if the owner does not pay, which is expensive and time-consuming.With a trust deed, bare legal title to the property is handed to a trustee when the loan closes.
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