[Steve Cook started investing in real estate in June of 1998. At the time of this chat, June 1999, he was working on his 47th deal!]
Host SCook85 says:
Leslie, I find 95% or better of my properties on the MLS, I make a lot of offers about 1 out of 10-20 get accepted.
techlink1 says:
Steve: Any specific homes you focus on?
Dave-Va says:
Oh ….. I was wondering what you’re interested in, Mobile homes, Multies?
Host SCook85 says:
Dave and tech I buy any home that makes sense, I’ve never done a mobile home yet, all SFH’s
Redline says:
Steve: Do you record your option once you’ve got the property tied up? Do you do title search or leave that to the new buyer?
Host SCook85 says:
Redline, I don’t ever record options, I always do contracts, no options.
kathleen says:
Steve, do you ever do no money down deals?
Host SCook85 says:
Kathleen, I’ve never put my own money up yet for a deal. I’m on deal 47 now and have never used any of my money.
JaimeR says:
Steve, what criteria are you looking for on MLS to make an offer?
Host SCook85 says:
Jaime, I look for foreclosures and handyman’s specials.
SandyFL says:
Steve: do you record anything, has anyone tried to steal your deal from you.
Host SCook85 says:
Sandy, I’ve never had a problem with someone trying to steal a deal from me.
DanMc says:
Steve—I know you were cash poor when you started…how did you generate your cash in the beginning?
Host SCook85 says:
Dan, I made enough to survive in the beginning, I still do no money down deals.
Robert_AL says:
Hard money, Steve?
Host SCook85 says:
Robert, yes I use hard money.
David says:
Steve , when looking for a deal , I know you want to have at least 50% equity in the house, but 50% equity from the asking price, as is retail price, maximum retail price, or maximum wholesale value(what you are willing to pay)?
Host SCook85 says:
David, my formula is this 70% or retail less repairs, less whatever else I think I can get.
Patricia says:
Do you ever go through deals offered by realtors, or just FSBO.
Host SCook85 says:
Patricia, I work almost exclusively with Realtors
Bassman says:
Steve , how do you pay your realtor to run the mls.
Host SCook85 says:
Bassman, I don’t pay them outside of there commissions.
I do enough deals that they are happy.
Bert_ND says:
Yeah, do you use mainly realtor or FSBO?
Host SCook85 says:
I use almost all realtors 95 % or better.
BillK_AZ says:
Thanks, J.P. Steve – Give an example of a no money down deal please.
Host SCook85 says:
Bill, I usually offer low enough and get my sellers to pay closing that I don’t have to come to the table with anything. My hard money lenders will give me 100% of deal. I even have earnest money deposit on escrow with my attorney so I never have to put it up. He uses the same thing every time.
bob says:
What is your typical turnaround time on deals (time frame).
Host SCook85 says:
Bob, most of my flips are gone (assigned) within a week. Settled within 5 weeks, Baltimore takes awhile.
Brandi_TX says:
Steve, you have said before that you have a partner. Do you attribute most of your success to having that partner? Or do you feel you would have had the same results without one? (What role does your partner play?)
Host SCook85 says:
Brandi, Dan and I talk about this all the time. I’m the dealmaker. I find and I sell. My partner handles everything else. In the beginning he supplied the necessary funds. But now he handles all the bull so I can do deals.
Host SCook85 says:
He has been an asset.
Carey_PA says:
Forgive me if this was asked already, but how much money do you usually use to tie up the property for a flip?
kathleen says:
Steve, do you ever deal with HUD on any of your purchases, if so any tips?
Host SCook85 says:
Carey, I have $1000 in escrow with my attorney. I use the same $1000 for all of my deals.
Host SCook85 says:
kathleen, I’ve never bought a HUD home yet, all banks and estate sales (mostly).
Carmen says:
Yes – Thanks – Something you said about escrow is of interest – I have thought of leaving $100 (my max deposit) on escrow and using the same thing every time. Is it possible to have just $100 even if you have several contracts, each with $100 as earnest money? What if several contracts are accepted?
Host SCook85 says:
Carmen, I use $1000 every time (sometimes $500) I never increase my account, My attorney just reconciles at settlement. I don’t increase it.
CarolFL says:
Steve, I’m not sure I understand.
CarolFL says:
Your attorney has $1000 and uses it for each deal, so you could have it applied to 5 or 6 simultaneously, right?
Host SCook85 says:
Carol, yes my attorney has $1000, it is a revolving earnest money account.
Paris says:
What are your hard money guys charging you? How did you locate the group of investors that you use?
DanMc says:
Do you find a great difference in the market during the winter months?
Host SCook85 says:
Paris, you can find them all different ways, mostly asking other investors, or calling settlement attorneys (title companies) and asking them. Typically they charge 12-15% and 0-3 points.
Host SCook85 says:
Dan, I haven’t been doing this long enough to realize a different in the winter. This last winter did not slow down.
David says:
I’m in the process of repairing my credit… I have heard two sides of the coin on file segregation. I ask this because even hard money lenders look at credit reports. Is there a difference from employer identification numbers and social security numbers? Acquiring a new EIN is illegal, what about a new SSN?
David-S says:
Steve, what type ads are you using to find motivated sellers?
Host SCook85 says:
David, there is a difference between EIN and SSN, but my hard money lenders have never checked my credit yet.
They usually only care about equity
Host SCook85 says:
David, My ad is a typical one. I find most of my properties on the MLS. I advertise top $ for properties. That is the only thing different that I do then most.
Gary-FL says:
Steve, do you flip junkers, as well as good homes?
MattBanow says:
Do you work with contractors? If so are they licensed or are they handymen?
Host SCook85 says:
Gary, I flip anything that will make me money. Most are junkers, the good ones I like to try to hold onto but flip if the right person comes along.
JaimeR says:
Since you get most from MLS, what criteria are you looking for in the listings to make an offer?
Host SCook85 says:
Jaime, foreclosures and handyman’s
greeneyes says:
New at this. Where do find investors if you’re new and don’t have the money to put down?
Host SCook85 says:
Greeneyes, I sometimes feel as if I was lucky, but I just got out there and met everyone that I could. Soon I found that people wanted to partner with me and put their money up. Hard money is easy to find I have about 14 lenders behind me now.
haphead says:
How does a person go about 100% loan for a rehab?
Host SCook85 says:
haphead, if you buy cheap enough (like you should, or you should walk away) hard money lenders will give you all you need. They lend based on equity. It’s easy if you have the right deal.
Jay, do you talk to the sellers to find out they want from the deal or just use the basic 70% formula to make your offer? Also, do you always get a response after you present your offer?
Host SCook85 says:
Jay, I don’t always get a response. That disturbs me at times, but I’ve gotten used to it. I just use my formula. Offer what works and wait for a response. I have so many offers out there I’m bound to get something every once in awhile.
Jean says:
Being new, I also have the problem that no one takes me seriously, owners or RE agents, or investors! What then?
Host SCook85 says:
Jean, it all comes down to confidence. I had people taking me seriously at 19 for a $5 million deal, but I chickened out. You need to feel confident in yourself and they will believe in you.
JHyre says:
Thanks JP. Hi Steve. How far below “market” do you typically offer and pay, respectively? What is average price paid?
Host SCook85 says:
JHyre, I have 2 formulas that I use 70% minus repairs and FMV minus $25,000 minus repairs. Whatever I come up with is what I offer.
Host SCook85 says:
The lower of the 2.
JohnB_NJ says:
Steve, do you use the service of many Realtors or just one super aggressive one that loves to work with RE investors that want to buy at or below wholesale? Oh, and thanks for the great info tonight.
Host SCook85 says:
John, I use as many as 4. I’ve had my mother get her license, so I use her mostly now.
They just understand what I do.
JPiper says:
Steve…what % of your deals do you close with hard money versus wholesale…and what drives this decision…and what do you do with them when you use hard money?
Host SCook85 says:
Jim, I try to flip everything, if I can’t flip I acquire with hard money (probably 20%) once I acquire I rehab and retail via a lease option or outright sell
I intend to flip everything. What I can’t flip, I obviously keep.
Host JP-Vaughan says:
Steve, will you lead us through a typical deal from start to finish?
Host SCook85 says:
JP, I make a lot of offers. Typically 10-20 per week as much as 70. I get maybe 1 out of 10-20 accepted.
I then call my wholesale buyers.
I control the whole process, most of them use hard money that I bring them to.
I start the title work and line them up with the cash.
I then just go to settlement to pick up a check (actually I send my partner to do that).
Host JP-Vaughan says:
Do you make points of the hard money to the buyers?
Host SCook85 says:
JP, I make money off the deal and have not charged points yet. Lately my buyers have been regulars so I don’t want to burn bridges.
Gladys_IL says:
How did you get your list of wholesale buyers to flip to in the beginning, thanks. Fantastic job.
Host SCook85 says:
Gladys, running ads is the way I developed my list.
JuliaAnne says:
You have hard money and a partner–I have neither. Is it foolish for me to use my line of credit and my equity line to finance down payments? Won’t that limit how much I can do? Or put my credit at risk?
Host SCook85 says:
Julia Anne. If I had a line of credit in the beginning I would have used it. I don’t know what to advise. If you can find a good hard money lender you won’t have to use to much of your own money if any at all.
Check says:
Steve, are you talking about I buy houses ad for finding wholesalers.
Host SCook85 says:
Check, no I advertise wholesale properties with 100% financing and get a ton of calls.
Kevin says:
How did you find a good realtor to work with? How much profit do you shoot for when you flip?
Host SCook85 says:
Kevin, I don’t really know how to find a good realtor. You need to understand where they are coming from. They have been taught not to deal with investors so you have to know that up front. On a typical flip I make anywhere from $2000-$10000. Averaging about $4000 lately.
LarryH says:
Thanks JP……Steve – do you make multiple offers on these properties listed in the MLS or do you simply offer them all cash? Also do you call any FSBO’s ads? Thanks and keep up the good work……..
Host SCook85 says:
Larry, I make all cash offers on the properties. I offer multiple times. They don’t always get accepted the first time around. I once bought a property that I offered $45k for the first time and got for $29k about 6 months later
Larry, I usually don’t call FSBO’s.
LenWa says:
Thanks JP and Steve. Do the hard money lenders have a limit that they will loan on fmv say 70 %? You just answered above, but fill in more please.
Host SCook85 says:
Len, most will do up to 70% of as-is value and 70% of ARV if I need rehab money. If I get rehab money they escrow that until repairs are complete.
leslie says:
How do you access the mls for YOUR browsing, or do you get the realtors to call you when they find something? Where do you run ads (what type publication)?
Host SCook85 says:
Leslie, most of my realtors know what I want and do the searches themselves, but for the last few months I can go into the office and use the computer myself (volume has its advantages). I just run ads in the local paper (Baltimore Sun).
Lewis says:
Steve, on your foreclosure deals, have you done any “short sales”? If so, what can you tell us about them?
Host SCook85 says:
Lewis, I’ve never done a short sale. I’ve bought for much less then what the bank bought the properties back for, but that is a different story. I just offer what works. Nothing else.
Liz_in_PA says:
Yes, Thanks JP—- Hi Steve. How do you work out 100% financing for your investors? This relates to what you put in your ads to build your buyer’s list of investors to flip to.
Host SCook85 says:
Liz, I line them up with my hard money guys. I carry a short term second mortgage if my hard money guys won’t lend 100% of the purchase price after my flip.
LonnieWA says:
I am interested to know if you are in a seller or a buyer market because I cannot get a deal through the MLS. I have abandoned that method of finding flip deals. The best way to find these deals in a seller’s market?
Host SCook85 says:
Lonnie, I say that I’m in an investor’s market. Right now it is a seller’s market if you want to know the truth. Properties are turning very quickly lately. Getting harder to buy, so I make more offers.
marcus says:
Could you tell us what your ad says (finding wholesale buyer).
Host SCook85 says:
Marcus, typically the ad says, FIXER UPPERS 100% FINANCING XXX PROPERTY $XXX BLOCK, ONLY $XX CALL NOW.
SandyFL says:
Block?
Host SCook85 says:
Sandy, in your area I would put neighborhood. Baltimore is block by block as far as values go.
MarkHOUTX says:
When you make your 10 to 20, up to 70 offers per week, are you doing so with a contract filled out by the realtor each time or are you using a letter of intent for each offer? If you do a contract for each offer, out of curiosity, how many pages is the contract you are using?
Host SCook85 says:
Mark, I used to do letter of intent, but now I use a contract because they are taken more seriously. I have come up with a 3 page contract that meets most of the states contract guidelines. Also, I have gotten a good name in the neighborhood. The realtors will take verbal offers many times from me now. Or at least tell us if we are wasting our time.
MarkRinKCMO says:
Steve, how many investors do you have in your “pool,” and are they mainly rehabbers or do they flip to the next in line?
Host SCook85 says:
Mark, they are all rehabbers. I have a list of about 20 but I flip to a handful of them maybe 4 or 5 on a regular basis.
MattBanow says:
Hi Steve- What kind of legal business structure are you using? C-corp, LLC, etc. And do you use the same structure for flips and rentals? Thank You.
Host SCook85 says:
Matt, tough one. We are trying to decide. I have 6 right now. LLC’s, C-corps, and S-corp. I pushing for all C-corps, but the accountants and lawyers can’t agree.
melvin says:
How many have you been able to retail flip? How long do you try before wholesaling to an investor?
Host SCook85 says:
Melvin, first I try to wholesale. If I can’t wholesale then I explore other options. I’ve only retailed 3 without doing any work to them
MikeMD says:
Steve, do banks allow you to assign their contracts or do you buy foreclosures with hard money then sell?
Host SCook85 says:
Mike, most banks don’t allow it. I cross the clause out of the contract, and wait to see what they say. If they don’t like it I have to get there permission. I ask a day or two before settlement. They just want to get the deal done by that time and let me do it.
MikeV says:
Thanks……being in MD also, what percentage of your deals are in urbanized Baltimore and what percent are in the suburbs?
Host SCook85 says:
Mike, I work mostly the suburbs.
Mramsay says:
Steve, do you do any REO deals off the MLS? If so, how do you get by all the addenda? Also, do you run comps on all your offers? Thanks.
Host SCook85 says:
I know the neighborhoods pretty well now that I don’t always run comps. Yes I do REO’s and I sign the addenda when necessary. I’ve given my realtor (mother) permission to sign them for me so I don’t go into the office to often.
Patricia says:
Steve, Do you stay within a certain mile area? What type of neighborhoods are you buying/selling in? Are these all Single Family Houses?
Host SCook85 says:
Patricia, they are all single family homes. I have not narrowed my focus yet. I just deal in good neighborhoods, in Baltimore county and city.
Redline says:
Steve – so it sounds like you don’t worry about any weasel clauses. You are going to buy either way right? If you can’t flip it then you hold it and do a lease option ?
Host SCook85 says:
Redline, yes I don’t use weasel clauses, although I do put a financing contingency in my contract and have a good enough relationship with my hard money lender to the point if I don’t want to do a deal I can get turned down for financing.
Redline, If I don’t flip I buy.
Rich_CA says:
How many hours a week do you work at this?
Host SCook85 says:
Rich, I hate to admit it, sometimes only about 10 hours. Selling is the hard part. When I have a big inventory to sell you can work as much as 50 or 60 a week, but I enjoy it.
Robert_AL says:
Steve, can you recommend some nationwide hard money lenders that you have had good experience with? I talked with one today that quoted 6 pts and 15% interest only for up to 2 years, it sounds like you are doing much better? Also, if I may, what is the search criteria that you use with the MLS?
Host SCook85 says:
Robert, the terms you are getting are not bad with the exception of the points. I don’t use nationwide hard money. But Ready Mortgage in TX is better then that. If you whisper to Dan Fink He can give you the info. I search for foreclosures and handyman’s on the MLS.
sebastian says:
What do you say to the seller that would make him pay your closing cost?
Host SCook85 says:
Sebastian, I’ll increase my offer to get them to do it. My hard money lenders will do 100% of contract, no more, so I get everything in the contract.
Syl-Fl says:
Have you had any of your hard money lenders limit the amount of loans they will give you?
Host SCook85 says:
Syl, they actually want me to take more, as long as I pay they don’t care. I haven’t had any problems yet.
techlink1 says:
Steve: That’s great on the MLS homes, I never thought of that. That opens a whole new area for me. Thanks for spending the time with us. Your success story has motivated me to get going on more deals. JP, Tell Terry and Ed, the Atlanta seminar was GREAT!
Thurman says:
Steve, could you tell us about your last deal?
Host SCook85 says:
Thurman, they all mix together. Last one I bought I actually offered above list price. Still stole it. But a beginning to end deal. I bought a home for $30k, called another investor offered it for $34k and had the deal done by the end of the day. He already used my hard money guy so I just had to call him and tell him who was buying the home and it was done. Very simple.
Todd says:
Thanks, JP. Just curious about your background. Did you have any relevant prior experience when you started or did you start from scratch? Thanks.
Host SCook85 says:
Todd, started from scratch as far as real estate investing is concerned, but failed in business my share of times. This one is not going to fail.
As Kiyosaki would say, my 3 times is up.
Tracy_UT says:
When you first began, what were your first few deals, and how long did it take before you were making enough cash to live on?
Host SCook85 says:
Tracy, I was doing deals just to get by in the beginning. my first 7 flips were all for $1000 each. I just went out and tried to get the bills covered for a month, then the next and in time I had enough to get by 3 months so I shot for more.
Tyler says:
Steve…On what do you base your decision to wholesale flip a deal vs. hold and shoot for the bigger profits? You mentioned that you’ve retailed a handful of deals…do you find that the return for the “amount of time/energy spent” is greater when you just wholesale? Is this why you are so willing to pass these deals along…even to the point of HELPING the investors locate the funds?
Host SCook85 says:
Tyler what I can’t flip, I hold. I’m in it right now to do as many deals as I can. In all, I wholesale to enough people to that I make more then all of them on an individual basis. I’m not greedy. Thinking about retailing more of them, but the time can hurt you bad.
Vicki says:
Steve, Regarding finding sellers, lately we seem to be having trouble finding them. We are still using all the methods talked about here on CRE, and even some of our own, but the system has hit the brakes…..any suggestions?
Host SCook85 says:
Vicki, keep going. I run into slumps, but I don’t stop. I bought one house in May, already bought 5 in June. You just can’t stop, and they come in windfalls
WilliamGA says:
Thanks Steve. I am new to real estate investing. Does that affect whether or not or how hard money lenders will work with you? Or is the sole consideration how much equity is in the deal? Do they charge you higher rates due to your lack of experience? How would you recommend someone new to go about finding lenders to work with?
Host SCook85 says:
William, ask other investors or attorneys where to get the money from. My first deal that I got hard money on was a five minute telephone conversation. I told the lender that I had never done a deal before and he agreed to give me the money. There rates are typically high enough they don’t have to charge you more.
Host JP-Vaughan says:
Before we move on, I want to express our sincere thanks to Steve for his willingness to share with us here. Steve, thank you!
Host SCook85 says:
No Problem. I’ll answer everyone else’s questions if there are more.
Carey_PA says:
Steve on the deal where you bought for 30K and sold for 34K, how much did you make on the deal? What about closing costs and realtors commission? Also, when you call on the title companies in search of investors or hard money…what do you say?
Host SCook85 says:
Carey, the realtor was paid by the seller, I made $4000. I assigned my contract to the new buyer.
Host SCook85 says:
Carey, you need to find a title company that does a lot with investors. They have, without a doubt, come across hard money. Just ask if your deal is good enough do they know anyone that would be interested in lending you money.
David says:
What was the best investment book you ever read, best advice ever given to you, most respected public personality in the biz, and the best action you take every day? oops, I guess that was more than one question. Thank You so much for taking your time to do this.
Host SCook85 says:
David my favorite book is Rich Dad Poor Dad. Opened my eyes to the big picture. I want to someday do a deal with Trump. Actually I want him to come to me for help.
Mramsay says:
Steve, in what price range do you buy.
Host SCook85 says:
The price range I buy in are homes that retail from 60k-120k
Toolbar_SC says:
Steve, If your hard money only lends 100% of contract and you get 100% financing to the buyers where does your money come from?
Host SCook85 says:
Toolbar I have a new contract with my buyers. They will lend 100% of that.