Please feel free to jump down to the questions at the bottom of this post! I don’t want to scare off any potential help with a long post, but I wanted to lay out a theoretical situation and ask questions at the end. Please let me know if any of my steps along the way are wrong/misguided. Question numbers are in parentheses throughout the scenario.
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My goal is to start BRRRRing SFR properties in my neighborhood in Fort Worth. I am going to start "Walking for dollars" and picking out distressed/abandoned properties. I already have owner info and such from the county assessor. Once I pick out several properties, I will send out personalized mailers. (1)(2)
Once I get a call back and a willing seller, I will draw up a contract (with the document I pulled from the Texas Real Estate Commission.) (3)
Next, I would have at least 5-7 days option built into the contract so that I could get contractors in and have estimates. Then, if all goes well in the option period, the seller and I could go to the title company for closing and funding. (4)(5)(6)(7)
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1.Based on square footage and exterior condition, I feel like I could go ahead and make contingent offers and include that in my mailers. Would that be a good idea?
2. I would also want to include a seller finance option. So my mailer would say something like “I can offer you up to $60,000 cash or $70,000 with seller financing. *contingent upon walk-through” This would be a personalized part of the mailer and I will figure these numbers up based on what I’ve seen of the house and county info. Would that be a smart way to handle that or should all numbers be discussed in person?
3. Do I need to use a real estate agent? It seems that I could, with a little research, fill out the offer contract on my own and avoid using an agent. I’ll be using PML or hard money. I’ve bought 2 houses already, so I know the process fairly well and want to make sure that going agent-less is ok?
4. If I use private money lenders (family/friends) would I just have them wire funds to the seller/bank at the time of closing? Or should I have my lenders send me the money ahead of closing so that I can send it to the seller?
5. I’ve been told that all of the documents that I need between my lender and myself can be taken care of at the title company. Is that true? If not, what documents do I need to have prepared/signed before I go to closing?
6. Funding question… I have several people interested in investing with me that have smaller dollar amounts to offer (like $15-20k each.) These are all personal relationships. How should I utilize that money and how do I secure each person’s investment with the property as collateral? Would the highest investor have the number one lien spot and the rest would be listed in the 2nd lien spot? Would this be considered syndication and thus require filing with the SEC?
7. I also have someone interested in investing a larger amount with me, but they currently live outside of Texas. If they were to completely fund a BRRRR for me, would that raise SEC red flags, since it would technically be an interstate transaction?
