Is it true that 50% of investor deals have problems?
Rental Property Investor · Member since 2021 · 423 posts · 190 votes
Is it true that 50% of investor deals have problems?
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votesQuote from @Peter Walther:
In my experience, some investors tend to hunt down properties with obvious physical problem, i.e. tarps on roofs, overgrown lawns, broken windows etc. It stands to reason that properties with such problems have a higher probability of title problems, improperly executed deeds, code violations, unpaid judgments and liens that have attached to the property, unpaid utility bills, etc that may effect title. That may explain why an attorney who works with a lot of investors in those types of properties might have that opinion.
biggest title issue we see is break in the chain no divorce ever filed deed to 7 relatives whom 3 are dead that type of thing. Liens and such are just money problems.. but actual title defects can create zombie properties.
13 Replies
Quote from @Mike Schorah:
E.g. Probate issue, issue with seller LLC, etc…
I apologize if this question offends someone or if they take “50%” meaning to be an exact number. A real estate attorney told me 50%. So maybe it’s less than 50%. Maybe it’s more than 50%. I noticed a lot of people on this forum take what you say literally and word for word.
Is there a question?
Quote from @Mike Schorah:
What are the most common title work problems you see as an investor?
I apologize if this question offends someone or if they take “50%” meaning to be an exact number. A real estate attorney told me 50%. So maybe it’s less than 50%. Maybe it’s more than 50%. I noticed a lot of people on this forum take what you say literally and word for word.
What are the most common title work problems you see as an investor?
No title problems this is why you have a title company, ?
- 3yHenry ClarkPro MemberDeveloper · Member since 2020 · 4k+ posts · 4k+ votes
The only title items we have ever run into are old mortgage liens that were not removed. A few phone calls by the bankers and cleared up in a week. These were “recent” mortgage items and not tied to bankruptcies or estates.
You were talking with a Real Estate Attorney, that is probably their perspective, but from their universe.
Kind of like asking a worker at a hamburger joint if most people eat hamburgers. Versus a worker at a Vegetarian restaurant. - Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes3y
In my experience, some investors tend to hunt down properties with obvious physical problem, i.e. tarps on roofs, overgrown lawns, broken windows etc. It stands to reason that properties with such problems have a higher probability of title problems, improperly executed deeds, code violations, unpaid judgments and liens that have attached to the property, unpaid utility bills, etc that may effect title. That may explain why an attorney who works with a lot of investors in those types of properties might have that opinion.
- 3yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Peter Walther:
In my experience, some investors tend to hunt down properties with obvious physical problem, i.e. tarps on roofs, overgrown lawns, broken windows etc. It stands to reason that properties with such problems have a higher probability of title problems, improperly executed deeds, code violations, unpaid judgments and liens that have attached to the property, unpaid utility bills, etc that may effect title. That may explain why an attorney who works with a lot of investors in those types of properties might have that opinion.
biggest title issue we see is break in the chain no divorce ever filed deed to 7 relatives whom 3 are dead that type of thing. Liens and such are just money problems.. but actual title defects can create zombie properties.
- Investor · Philadelphia, PA · Member since 2019 · 618 posts · 430 votes3y
Only lesson Ive learned over the years is if a seller with the potential for a complicated title situation wants you to utilize their title company, you may want to push back and use a company you trust instead.
- Investor · Chicago, IL · Member since 2011 · 74 posts · 35 votes3y
I would say that the title problems are the main reason that they're investor deals. Retail buyers don't want to hassle with that kind of bs. They'll just move on to an easier deal.
Secondly if you're an investor, a big part of creating a great deal is shaving all the hair off a deal, ie solving all those problems, title issues or otherwise.
So look for deals w/ problems that most people don't want to mess with and you might just create some awesome profits!
@Mike Schorah the attorney just wants job security. Without problems they are needed less.
Don't let one comment scare you. Do things the right way and you'll be fine
- Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes3yWhat he must be commenting on is that it's fairly frequent that at purchase there are items on the title report that shouldn't be there and items that need payoffs. Say a mortgage payoff or an old lien or identity confusion or something that is very common and is an easy fix, it's just that it has to be taken care of before closing.
Quote from @Mike Schorah:
What are the most common title work problems you see as an investor?
I apologize if this question offends someone or if they take “50%” meaning to be an exact number. A real estate attorney told me 50%. So maybe it’s less than 50%. Maybe it’s more than 50%. I noticed a lot of people on this forum take what you say literally and word for word.
What are the most common title work problems you see as an investor?
I just bought a house where the lady had posted bail for an active case against her granddaughter and guaranteed the bail against the house. The bail bondsman had closed his business and sold the guarantee to a friend. Tracking down ownership was a little complex but completed. Then the issue was that the case was still active and the new owner of the bond wouldn't release the bond of course until the bond was paid or the trial was over or the granddaughter was safely in the pokey. So, we just had the escrow company do a "hold back" on the amount and proceeded to closing. She'd receive the "hold back" at some later date. It didn't affect us except for the slight delay to figure things out.
I've bought plenty of foreclosures, probates, vacant houses and so on and I expect there to be a little title work to sort out on each one. That's why I get such great pices.
The hardest one to resolve, in my opinion, is when there is more than one owner, one wants to sell and the other one can't be found or doesn't want to sell. So, the first question I always sort out is if the person(s) I'm working with are the actual owners and the only owners. - Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes3y
Quote from @Account Closed:
What he must be commenting on is that it's fairly frequent that at purchase there are items on the title report that shouldn't be there and items that need payoffs. Say a mortgage payoff or an old lien or identity confusion or something that is very common and is an easy fix, it's just that it has to be taken care of before closing.Quote from @Mike Schorah:
What are the most common title work problems you see as an investor?
I apologize if this question offends someone or if they take “50%” meaning to be an exact number. A real estate attorney told me 50%. So maybe it’s less than 50%. Maybe it’s more than 50%. I noticed a lot of people on this forum take what you say literally and word for word.
What are the most common title work problems you see as an investor?
I just bought a house where the lady had posted bail for an active case against her granddaughter and guaranteed the bail against the house. The bail bondsman had closed his business and sold the guarantee to a friend. Tracking down ownership was a little complex but completed. Then the issue was that the case was still active and the new owner of the bond wouldn't release the bond of course until the bond was paid or the trial was over or the granddaughter was safely in the pokey. So, we just had the escrow company do a "hold back" on the amount and proceeded to closing. She'd receive the "hold back" at some later date. It didn't affect us except for the slight delay to figure things out.
I've bought plenty of foreclosures, probates, vacant houses and so on and I expect there to be a little title work to sort out on each one. That's why I get such great pices.
The hardest one to resolve, in my opinion, is when there is more than one owner, one wants to sell and the other one can't be found or doesn't want to sell. So, the first question I always sort out is if the person(s) I'm working with are the actual owners and the only owners.Rather than doing a hold back and accepting a title that's clouded with a lien which could be a problem if you want to sell or use the property to obtain a mortgage down the road from a not so accepting a buyer/lender, didn't the grandmother/seller pay off the bondsman and become the surety herself leaving the property free and clear?
- Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes3y
Quote from @Peter Walther:
Quote from @Account Closed:
What he must be commenting on is that it's fairly frequent that at purchase there are items on the title report that shouldn't be there and items that need payoffs. Say a mortgage payoff or an old lien or identity confusion or something that is very common and is an easy fix, it's just that it has to be taken care of before closing.Quote from @Mike Schorah:
What are the most common title work problems you see as an investor?
I apologize if this question offends someone or if they take “50%” meaning to be an exact number. A real estate attorney told me 50%. So maybe it’s less than 50%. Maybe it’s more than 50%. I noticed a lot of people on this forum take what you say literally and word for word.
What are the most common title work problems you see as an investor?
I just bought a house where the lady had posted bail for an active case against her granddaughter and guaranteed the bail against the house. The bail bondsman had closed his business and sold the guarantee to a friend. Tracking down ownership was a little complex but completed. Then the issue was that the case was still active and the new owner of the bond wouldn't release the bond of course until the bond was paid or the trial was over or the granddaughter was safely in the pokey. So, we just had the escrow company do a "hold back" on the amount and proceeded to closing. She'd receive the "hold back" at some later date. It didn't affect us except for the slight delay to figure things out.
I've bought plenty of foreclosures, probates, vacant houses and so on and I expect there to be a little title work to sort out on each one. That's why I get such great pices.
The hardest one to resolve, in my opinion, is when there is more than one owner, one wants to sell and the other one can't be found or doesn't want to sell. So, the first question I always sort out is if the person(s) I'm working with are the actual owners and the only owners.Rather than doing a hold back and accepting a title that's clouded with a lien which could be a problem if you want to sell or use the property to obtain a mortgage down the road from a not so accepting a buyer/lender, didn't the grandmother/seller pay off the bondsman and become the surety herself leaving the property free and clear?
My Comment: "So, we just had the escrow company do a "hold back" on the amount and proceeded to closing. She'd receive the "hold back" at some later date."
I received clear title. I was no longer involved. I could sell or mortgage at will.
The "hold back" though, was between escrow, the seller and the bondsman. I was not privy to how they worked things out but my understanding is the escrow company held onto the money as an intermediary until the situation was resolved. This allowed us to close with clear title.
- Specialist · Winter Springs, FL · Member since 2009 · 1k+ posts · 747 votes3y
Quote from @Account Closed:
Quote from @Peter Walther:
Quote from @Account Closed:
What he must be commenting on is that it's fairly frequent that at purchase there are items on the title report that shouldn't be there and items that need payoffs. Say a mortgage payoff or an old lien or identity confusion or something that is very common and is an easy fix, it's just that it has to be taken care of before closing.Quote from @Mike Schorah:
What are the most common title work problems you see as an investor?
I apologize if this question offends someone or if they take “50%” meaning to be an exact number. A real estate attorney told me 50%. So maybe it’s less than 50%. Maybe it’s more than 50%. I noticed a lot of people on this forum take what you say literally and word for word.
What are the most common title work problems you see as an investor?
I just bought a house where the lady had posted bail for an active case against her granddaughter and guaranteed the bail against the house. The bail bondsman had closed his business and sold the guarantee to a friend. Tracking down ownership was a little complex but completed. Then the issue was that the case was still active and the new owner of the bond wouldn't release the bond of course until the bond was paid or the trial was over or the granddaughter was safely in the pokey. So, we just had the escrow company do a "hold back" on the amount and proceeded to closing. She'd receive the "hold back" at some later date. It didn't affect us except for the slight delay to figure things out.
I've bought plenty of foreclosures, probates, vacant houses and so on and I expect there to be a little title work to sort out on each one. That's why I get such great pices.
The hardest one to resolve, in my opinion, is when there is more than one owner, one wants to sell and the other one can't be found or doesn't want to sell. So, the first question I always sort out is if the person(s) I'm working with are the actual owners and the only owners.Rather than doing a hold back and accepting a title that's clouded with a lien which could be a problem if you want to sell or use the property to obtain a mortgage down the road from a not so accepting a buyer/lender, didn't the grandmother/seller pay off the bondsman and become the surety herself leaving the property free and clear?
My Comment: "So, we just had the escrow company do a "hold back" on the amount and proceeded to closing. She'd receive the "hold back" at some later date."
I received clear title. I was no longer involved. I could sell or mortgage at will.
The "hold back" though, was between escrow, the seller and the bondsman. I was not privy to how they worked things out but my understanding is the escrow company held onto the money as an intermediary until the situation was resolved. This allowed us to close with clear title.
Generally, funds held in trust by an escrow company don't result in a release of the lien. I suspect that only once the funds were paid to the bondsman would a release of the lien be provided. Now I guess it's possible the bondsman would agree to transfer his lien to the funds being held but that would still result in a release of lien being recorded. If I were in your situation, I'd check my policy and see if there is an exception for the lien together with affirmative coverage. If there's not, I'd probably check the Public Records in the county where the property is located and confirm a release was recorded, but that's just the worrywart in me from a couple years of experience talking.
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