All Forum Posts by: Champak Shah

It all depends on your strategy and what is long term goal. Yes --backdoor strategy to buy a house works --in mid 70's --it wa svery common to approach second mortgage holder -and buy note
at discount --then foreclose OR if the house is foreclosed and at auction usully bid was higher than first mortgage amount and get paid full price on second. Of course you buy second at discount.

For average person --to invest Millions or more to buy Notes from bank is not regular thing. Most people are thinking about investing $30K to $100K for house or notes . So seocnd mortgage
or first mortgage owner financed note is good. At present there are over 33 % homes are free and clear-- mostly owned by retired people --who bought homes in 70s and 80s -- and are selling with Owner Financing --which are good to buy Notes--average expected return is 12 % -- You can also use IRA / 401 K to buy NOTEs.

My first two rental homes I bought ( 1981 and 1985 ) had owner financed second mortgage --I did to avoid PMI and better leverage- with 10 % down. Also - I refinanced house every five years and bought other with cash out. So Invested only one time --and had four houses for 18 years with over $150,000 equity by 2004.

yes--I did not like $2000 rent on $400,000 house-good to refinance every five or seven years to max cash out -- but if negative cash flow --time to sell --
being an accountant should check IRR --Internal Rate of Return or ROE --Return on Equity -- better use the cash to buy REOs or Mortgage Notes --

Yes --many invetsors make multiple offers --but they buy --also -- know an investor in Atlanta who bought 18 houses in one month -- from a bank --REO - all in one subdivision -- at $15,000 each Bulk.

champak shah -- [EMAIL REMOVED]

Hey Tim -- do not need to get to top attorney -- with big banks --you have to buy a pool --or portfolio from banks except short sale as said before -above -depending on where you are, you can buy several small loans from Mortagge Brokers or Private Investors -- ask attorney or go to court house --check yellow pages for second mortgage loans --also buy Car loan Noets -with higher return --there are some hard money lenders too--they all need more cash --investors --if you want to invest in notes --or advertise in paper and offer loans --to invetsor/ rehabber in your area..--creat your own note -- make sure to have good attroney to do title check and good paper work and record deed etc --

To make good return buy partial notes --

champak shah [EMAIL REMOVED]

Note Buying / Brokering is nice and lucrative --if you have cash to invest.

Why bother to call wrong departments --unless you are working on short sale or
a pre-foreclosure --in this case --yes paying attorney is worth it to start conversation --or negotiation fo a short sale-- as soon as the short sale price is approved-- then have your attorney tactfully mention that --how about we buying NOTE at that price and save all paper works and head aches-- that time lender's attornet will say yes

Then you have a chocie to foreclose on house or work out loan modification and let the people stat in the house --
Now you are a banker not landlord and have no title.

If you just want to invest --then you can get lot of info from County court house-- such as Owner finance --- contact them and offer to buy note-- Its a numbers game -

Like anything else --there is a learning curve and precautions to be taken --

I have sold several notes as a Broker
includinga gas station business note - and made good money

I had quit --but now I am getting back into it as well as wholesaling .

champak shah

Hello --I just wrote nice explaination for novice --about transactional funding process. Check other Question --form JO of NJ in this forum.

I assume that you only want to wholesale deals and make small profit.
You have two types of end buyers --An Investor ( who may be rehabber also) and an owner occupied.

To find Investor ( rehabber) --check my posting yesterday --here in BP forum under Building a Buyers List.

As far as Owner Occupied --you can have from your Realtor or Mortgage Broker who is already pre qualified for your asking price and has downpayment.

Yes-if you are planning to do this full time and make lot of money --good to have investors lined up --and also make many offers same time to buy REOs.

Only FHA requires 90 days seasoning -- however other lenders have started -- in that case you need hard money not transactional. Also read my commnents to JO ( NJ) why be better to sell to investors and make small but quick profit and do more deals per month.

If you get an Option Contract --as Ted suggetsed --make sure to record a " Notice of Option" at court house. Again read my post to JO --about option.

Some one mentioned that 30 day seasoning is waived --regradless --there are some lenders who make 30-32 days transactional funding --just more expensive.

Private Lenders and their attorneys are smart and always stay ahead of game --against new regulatuons --they will find a way to make money for them and for investors--similar to hedge funds -- in Europe and Africa --they ( investors) pay up to 5 % and 10 % per months --

I like the suggetsion about Auction --if info is provided upfront and included in auction. and also about asking attorney --for a local private lender.

For last comment - question --Everything is disclosed upfront to buyer and seller. End buyer if Investor may have hard money or cash --and knows that wholesaler makes profit -since he found and negotiated dela with Lender or Seller ( short sale) --on the other hand if end buyer is regular - Conventional or FHA,
he does not have to know what a wholesaler paid--buyer go with appraisal and asking price. Lender may or may not know -- since they are two different tarnsactions - closings. OR if they may know -- nothing they can do --thats the reality. Thats why banks agree to short sale and discount any way.

There is NEW twist to short sale --now a
day --it is suggested to BUY note from Bank ( Ledner ) at discount -- that will reduce the time involved in processing Short Sale. Lenders have so much inventory --bad loans-they will agree to sell note-- again all cash reuire.
champak shah - Georgia

Hey -JO --It seems like you have no concept of REO Flipping. There are two different issues. Yes --simultaneous closing can be done --only if your buyer has cash or Private lender. Most of the requirements are incorprated to avoid -- Investors ( and some crooks) taking advantage or cheating on Consumers
( First time home buyers) -- so called mortgage fruad.

Now a days - to do any Flipping --Short Sale or REO --where one Investor --a wholesaler buys the house from a Lender and Sells to other investor or owner occupied home buyer ( called end buyer ) -- it is done as Two Separate Closings -- Not a simulatneous or double closing. So you need to have all the cost --purchase price plus closing cost to do first closing.

Then you have to wait at least -24 hours --some lenders require 30 days waiting --to do second closing with second buyer.

However, if you sell to first time home buyer --who may get FHA loan--then you have to wait 90 days.

Okay --now -yes - you can do double closing w/o trans fudning --if you have your own CASH - and your buyer has cash or private lender who does not object to you making profit. It has to be disclosed to your buyer and Seller.

Buyer will never give you a Non Refundable deposit - because you dont even own the house. Attorney will not allow --if you get in contract --it may be considered fraud --RE Agent will not allow. So it is not a good idea.

Also - earenst money is less than 1 %
of purcahse price for end buyer -- not enough for down payment.
Downpayment only ? How much ? Is not enough --you have to buy the property and pay full purchase price plus closing costs. So NO it will not work. You need to understand the process.

Dont fee bad-but have you bought a house ?? a rental house ? have done any refinancing ?

Kim is write --good comments Kim.

If end buyer backs out --who is going to do closing ? Investor ( meaning you )
need to pay full price plus closing cost to close the deal --other wise cancel contract. There is no time in option --

Which option ? You are mixing Apples and Oranges. If you are talking about Option on property --then you still have to find another end buyer. Most REO are listed by RE Agent ( Broker) and will not
accept an Option Contract -- may be in Pre Foreclosure --current home owner ( selelr ) may allow. But seller's Lender may not allow.

Transaction funding is only for 24 - 48 hours. Some lenders now starting to go upto 30 days --but expensive. They will not wire money to closing attorney if you do not have approved end buyer.

Closing attorney is responsible to follow
transaction funders directions (instructions) - and will not get in trouble.

Like Kim said --most attorneys ( Title companies) will not do simulatneous closing--they do not want to go to jail.

What are you trying to do ? It will be good if you can talk to few attorenys and investors --go to REI Club meetings in your area to learn the process.

If you want to get in RE Investment --and have good credit --Find Hard Money Lenders -- they do 100% funding for up to 90 days or even six months.You can buy an REO --fix it up and then sell it at profit to end buyer or rent for few years.

Make sure to check prices , ARV and LTV and repair and carying costs.

Sorry --may be some comments may be bold. But seems like you not experience and hopefully you will not get mad at me and learna nd make some money soon.

Just stay here --and read all other forums Q & A --and understand more.

champak shah -- [EMAIL REMOVED]

First thing --Is it a 2 Family --meaning a Duplex rental house ? Can it be converted to a single family home? In Brooklyn-is that a rent control area ? How much rent can you get for two family ? what is real price ? How much repairs will cost ? What is your asking price --
"as -is " compare to ARV ?

In my opinion--your friend has over paid --55% ARV -- as a wholesaler and needs lot of work --also Lender thew it in --then price he paid is high--should have rejetced or offered 30 % to 35% --

Now since you already owned it --be positive and find a solution. First --get read of at same price paid -- with minimum profit to cover closing costs --meaning keep your price to quick sale price --Second --I agree 150 % with Mr Investor's comments about builing buyers list first. Third --yes --if you are becoming a wholesaler --then first have the Buyers list -- here are some suggestions --
a. Check " For Rent" sign in area and call them - they must be investors
b. Advertise in local "Penny Saver" free news paper-
c. Contact some mortgage brokers -- may have list of investors or relationship
d craiglist is also good --but do not use -- " all cash buyers only " --you may get calls or inquiries from end buyer -- for your future sells-
e. go to Home Depot or Lowe's --and ask -
at " Commercial or Conractor's desk person for referals -- or make a flyer and give to Contractors --who work for investors. Wait out side - near door --early morning --
f. You may not like it --but if you have a " HomeVestor" franchisor in your area --ask them to look at the property and make an offer --so you know what will be a good price to ask for -they may buy it --even if you loose couple thousands-

Same time --consider keeping the house --find a local doctor or attorney to come in as silent partner and let him invest cash to do rehab --then rent it out and manage for him --give him tax shelter --do a good equity sharing partnerhsip.

Also you can get Contractor to do repairs at his expense and give him good return or profit sharing --will be lot easier to sell -once repairs are done . Keep us posted what happens . Good Luck.

Yes - I agree with Jason Scott-- wait and see -depends on how good the price is -
Also get your own attorney to do title check-for $100 or so -- May be if he was a wealthy man --may have divorce or loss in some business deal and may have this townhome as lien along with other properties or business --so complicated title --but can be Resolved through your own attorney talking to lender --Also do not get too attached with any one property --if you are going to live in --have your own Mortgage approved ==Pre Qualified and buy a smaller house--live there two years --do some improvements and convert to rental and buy next REO --good luck