All Forum Posts by: Kathryn C.

Does anyone have any recommendations for a good preforeclosure list service or advice on where to get good data?

Great idea!  Someone from our group will be there.

@Will Barnard while I am not sure what kind of returns you are getting or what the typical ROI in CA is, I can say we have a TON of investors coming into Atlanta from NY and CA over the last few years and most state they get better returns here when all things are considered. Not having the experience investing in GA or NY I cannot say why that is though... I think @James Park  said it best about the point @Gerald Harris was trying to make and why you may be getting better returns than others in your market. 

In regards to being surprised a developer with $1 million can't find anything it is because the price of land in the areas he wants to develop.  Developing can be exceptionally profitable and if done correctly your risks can be mitigated significantly.  In his case he puts large tracts of land under contract in a good area, finds a large national builder that will takedown the developed lots (so he has a pretty solid deal before a dime is spent), then proceeds to engineering, rezoning, etc.. and immediately sells the developed lots once completed.  So in pretty low risk vs the reward in this scenario and difficult to make the numbers work in good enough areas to do this...

Does anyone know of a good buy and hold calculator?  I know BP has one but I am looking for one that takes into account the expected equity increase during the hold period and factors that into the yield along with the cash-flow.  Here's a good example of what I'm looking for http://www.gainvesting.com/Property-Details.aspx?ID=234&c1=eval

I ask because one of our partners is meeting with a capital investor that has $1 million he is looking to deploy in some type of RE investment.  The investor is a developer but can't find any suitable development projects.  So how would you invest it in todays market?

We bought a pre-foreclosure one time several years back where the owners were hoarders. It was a bad divorce situation and the lady was a self proclaimed witch.  They had lived in the home for 25 years and I don't think they had ever thrown anything away. There was an entire bathroom dedicated to the cat where the bathtub was basically his litter box that hadn't been cleaned in a decade.  There were only pathways in the house to walk through and I kid you not when I say there were piles everywhere from floor to ceiling. There was only a place for one person to sit on the couch and the rest of it had stuff stacked to the ceiling.

We gave them 60 days to move out. The day before the 60 days was up the witch lady called and said she needed more time but we couldn't do that. It ended up they left EVERYTHING in the house. So we start trashing out the house and I notice that a lot of this stuff is in unopened packages and the more we start cleaning out the place the older the stuff gets.  Turned out they had enough collectibles in that place they could have paid off their mortgage. I'm talking original Beatles albums as well as dozens of other collectible records, all in pristine condition.  We found almost $300 in change alone laying all over the place.   We sold everything off which pretty much paid for the rehab so it was well worth the extra work...

Hi Roy,

I am assuming in my answers that things operate the same there as they do here which for the most part is a pretty safe bet due to the way mortgages work.  

Q: Would it be best to pitch an offer on the property before the short sale or wait until it is listed as a short sale? 

A: Really depends on your local market. If properties are selling quickly then do it before. If they usually take long time then you may be able to wait for a price reduction. Best thing you can do is get in with the broker.  Since it is a short-sale the owner has little incentive to choose one offer over another because the bank will generally set the minimum acceptable price after they do their appraisals, etc... You just need to convince the agent you're the buyer they want to sell to.   

Q: How would one find out the mortgage balance owing on the property? {I tried asking the broker, but that went no where}?

A: The only way you can get this is from the owner or if they don't know get an authorization to release information form executed by him to you can speak to the bank about it. Really since it is a short sale I'd be more concerned with what the property is worth because, in general, you will only get about an average of a 20%+/- discount off of that amount statistically.

Q; How would I find a list of any other leans on the property?

A: Title search.. But wait until after the short-sale has been approved so you do not waste money if it doesn't work out.  In fact, start your due diligence upon receipt of the short-sale approval letter if you can negotiate it that way.  You want to at a minimum make sure the house is substantially in the same condition as when you went in contract. This will also allow you to preform all your home inspections etc.. after approval.

Q: Is it possible to negotiate down the balance owing the lender and/or purchase the note at a discount to obtain control of the property? If we were to do this, is it possible to execute a transfer of title/deed from the owner to avoid a foreclosure?

A: Yes this is possible but depends on the lender and many more things and I am not sure you could get the note at a 20% discount but it is all based on the property.  I am not a note expert so I will leave this one to someone else who is but I know it can be done. And to answer the second part of this question you can offer cash-for-keys or they may walk to avoid foreclosure... 

Good luck!

Real estate agents days are not numbered, but the days of higher commissions are for sure. As stated previously the average agent closes 4-5 deal a year and is part time. For the most part these are the agents most people complain about getting paid 6% for just forwarding emails.  To be honest the real estate education industry is just as bad as the real estate guru industry.  Agents are told they can make big money working part time and sold a licensing course and exam that is too easy to pass so you attract an industry full of the people that want to make a lot of money for doing very little. 

Real estate will evolve into an industry where you will have to do a lot of volume as a listing agent or you won't be in business because listing agents fees are going to decrease and already has in many markets. I do not believe the selling agent (buyers agent) side of the business will see much if any lower than the current standard 2.5% to 3% though. There is a lot of work on both sides of the transaction but being a buyer agent involves a lot of leg work that is time consuming so a single buyers agent cannot do as much volume as a listing agent.

We have seen all of the methods here done and they all work. Depending on the buyer and how seasoned they are it may be harder to sell the LLC.

As mentioned above if you have a large profit margin a double close will probably prevent problems with the seller seeing you making a huge profit on the HUD (which we have seen kill deals).

Assignments can be hard to do with bank-owned deals and/or short-sales (the paperwork you sign may prohibit this).  Assignments are generally cheaper though than double closings.

If you can find an attorney/title company that will double close (if you have a local REIA join or at least get a monthly news letter and look for title companies/closing attorney's and call to see if they will do this as they are the ones most likely that will and the ones at our local REIA advertise they do double closings) there are a few things you can do to minimize your costs. Make sure you are not being charged twice foe the same title. If the end buyer is paying the closing costs then the fee they pay should cover your title exam on the first side of the transaction however you will want to get title insurance on your side of the closing. If you are paying for both closing then split the title exam fee on both HUDs. If there is an HOA fee make sure the end buyer is paying an HOA initiation fee and or HOA dues and it is not being paid twice.

I agree with most of what you said @J Scott but was just looking at it from a different perspective. I took it as the property was at the stage it was ready to be marketed. I will say it seems a bit odd that an investor would just randomly show up to a house with an offer and POF in hand. In addition we are only getting one side of the story here and in my experience there's usually more to it. Maybe the agent took a cut in commission on the sale side to make the deal up with the promise to list on the back end to make it up... It's really all just speculation here and I'm just giving a few possibilities.

To say whether or not the relationship is over at this point I could not say.  Sometimes miscommunications can be worked through just by talking it out. I will say again though as an investor it is in the best interest of the OP to try to repair the relationship. If you have someone bringing you deals consistently one good deal missed could mean more more times the disputed amount in lost profits.