Phoenix, AZ · Member since 2016 · 74 posts · 17 votes
I'm curious as to what obstacles you faced going through your first deal? How did you handle them? Did they set you back or did you press through with flying colors?
We offered under a 1031 and the buyer signed a "Cooperation" agreement for same. V E R Y late in the process, there were all kinds of new demands, including $x thousand for a silent partner.
We were within 4 weeks of the 180days closing and this T*R* was attempting to extort more cash or fail my 1031. My exquisite wife found the seller from which our seller bought the propert - - OUCH, what an earful. We gave the contact info for the Escrow agent and suggested that a claim be made to get paid at COE. Our seller had defrauded his purchase in the same manner, extorting some 40K as a second and destroyed their 1031.
I send a nasty gram to the seller, his agent and my agent of the consequence of failing to close one time:
suite for specific performance (aka complete the transaction)
all tax liabilities attached to the 1031 would be sought as damages - - and that was 128k!!!
I would file with the Calif board of RE to take the licenses of both brokers as being complicit in the fraud.
After 4hrs of two lawyers from both agencies in the sellers home, the sale was consummated.
The escrow agent ask "Why didn't you just walk away?" I replied, the 1031 was just to heavy to ignore.
Moral: Know your rights and act BEFORE time becomes your enemy.
Peter T. I love the confidence and description of your MFP! What is a UST? I don't recognize the acronym😂 how long did it take you to flip? And through the process of flipping what was the biggest obstacle? It sounds as though you hit an empty goldmine and found diamonds instead, as you turned what most would never touch into a great asset.
John Kesner I feel I am developing a base layer of that mindset as nothing has gone as planned so far. I kind of like it, the process makes it exciting😂 Jeff B. What precautions would you say to use to prevent such a scam to a newbie? I do plan to use equity to expand my portfolio once I get solid traction and get my first deal underway. I know that some over extend and that's something to be cautious of, but I would do it conservatively.
Peter T. I love the confidence and description of your MFP! What is a UST? I don't recognize the acronym😂 how long did it take you to flip? And through the process of flipping what was the biggest obstacle? It sounds as though you hit an empty goldmine and found diamonds instead, as you turned what most would never touch into a great asset.
Underground storage tank is UST. I flipped it in 2 months and lived there for 2 years. The biggest obstacle was not even knowing how to change a door knob and rehabbing an entire house (admit most of it was cosmetic) while dealing with 6 weddings during those 2 months (including my 2 week honeymoon). I can't keep up with the rent increases fast enough now that it's so nice for the area. It sat on the market for 2 years and the price kept dropping and dropping and dropping. I discovered it by accident.
These responses are awesome. I am really learning a lot. That 1031 exchange scam is such a crappy thing to do to someone and I'm glad those folks got put in their place. Thanks to everyone for sharing!
Peter T. Thank you so much! And it sounds like you were dealing with both life and business in crazy fashions! Glad you found your self an amazing deal!
@Anastasia Jordan, what would you say some of the biggest things to look out for with a tax lien property are? I've been looking into them!
Without having the right to access the property "legally" before purchase you are basically rolling the dice. You would have to have basic knowledge in home inspection and be able to make an estimate from the outside only.
Even though I was able to gain....uh....."entrance" to my home before applying to purchase it I was so excited I didn't pay attention to or know how to assess damages: vandals stole the all the copper wiring, bootleg window installation (there are vines growing over my bedroom curtains), bootleg hardwood floor installation, salvaged & broken bathroom fixtures installed, non working electrical outlets, GIANT RAT INFESTATION, no central air or heat, broken sinks in both bathrooms and kitchen, giant forest overgrowing in back yard, brand new hot water heater not installed properly.
None of what I listed above was too much to handle but if I would have assessed it before hand I would have had it taken care of in 1 week instead of 3 months.
I bought my first property at auction. A broker assured me he could get me financed. However I titled the prperty in an LLC. I could not get financing for an LLC.
Fortunately I had the cash to purchase it. I learned two valuable lessons.
Getting financing in an LLC is more difficult.
Mortgage brokers will make promises they can't keep
How did that turn out for you and how does it work to get financing in an LLC anyways? From what I understand, if you finance in your rename and transfer to an LLC you are running the risk of having to pay the full note correct? Will you be fin I have under an LLC again?
How did that turn out for you and how does it work to get financing in an LLC anyways? From what I understand, if you finance in your rename and transfer to an LLC you are running the risk of having to pay the full note correct? Will you be fin I have under an LLC again?
It turned out good. Once the electrical was done every thing else got done in about a week. No financing was need as I only paid about $648 for the house. I will never finance the purchase of a house as I don't want to incur any debt to do so. Every move I make I pay straight cash, thus the purpose of me working with tax liens/deeds only.
The first property I bought was a short sale. Two hurdles that I faced.
1. Having faith in my numbers and not searching for a deal with a 'higher return' I sent my criteria and almost talked myself out of an accepted offer because I thought I could get a higher return down the line.
2. Managing my Agent. I try to treat all professionals like professional, whether they be layers, accountant, Agents ect. I give them my goals, criteria, the endstate I envision, things I won't do, and things I must have happen before I sign. Once they have all that I let them go to do their job. Sometimes this yields sub par results but other times the person does things I would never have thought of. In this case I had two things I needed done during due diligence before I closed: a home inspection and copies of the HOA financial documents (Budget, P&L, Balance Sheet). My agent didn't communicate how important the HOA financials were to the Closing attorney and they didn't pull the Financials from the HOA Management Co because I bought in all cash and thought it wasn't needed. I ended up reading the HOA Balance Sheet and other docs on my cell phone literally 30 seconds before I signed the closing documents.
Bill F. So you definitely had some challenges. As far as the numbers go, was it your ability to run them that you did not have faith in? Or just believing them once you saw them?
@Alexander Alguire Neither, It was the mental/emotional decision to ignore the little voice in my head saying 'that yield isn't enough' or ' another house sold for a better price three months ago so you should wait for one like that to come along' and write the check. The greatest hurdle was myself and overcoming my own short falls as an investor that seeks the highest yield. I have the same issues when I invest in equities and its been a shortfall that I've had to constantly work on through defining my investing process and sticking to that process so that I don't give that little greedy voice an opportunity to rear its head.