All Forum Posts by: David Dey

Originally posted by @John Hamilton:

@David DeyThanks for the scenario and the actual progress through this very lucrative deal.

It was easy to see how real estate investors have to be good at chess, develop a plan of attack, know how to play poker, and make the most of a situation. All while minimizing the liability and maximizing the benefit. 97.9% of investors would have walked from the deal with the amount of hurdles to overcome. So, I guess an REI has to be a track star, too.

 It's true John.  And btw, did you know that 82.6% of all statistics are made up right there on the spot?

I think this may be a case of tomatoes and orange cake.  

At first I thought it was a case of toMAYtoe toMAAtoe, then I thought it was apples and oranges, then I thought, if you want your cake and eat it too, there is a simple solution... Buy two cakes!!

Then I realized, it's all great advice so I put it all together!!

Ok, so I'm going off of 3 hours of sleep but the point is that it doesn't really matter which way you go as long as you take action.

You could buy with FHA and live in it, which would be less out of pocket but also less cashflow from the condo or you could stay in the condo and rent out the house which hopefully was at a better price so it cashflows better, (who's profits will go toward the paying of the condo) See? Tomatoes and orange cake!!

Now, you do have one more option of making your tomato-orangecake A-LA-MODE.

Why don't you buy a 2-4 unit, buy that with FHA and live in it? That way you can live in one side and rent out the other 1-3 units and also break even with the condo.

BAM!!!!

(Full disclaimer:  I'm not sure how appetizing tomato orangecake is, even with ice cream)

Originally posted by @Bill Florence:

Since there is no magic template for every property and your detailed analysis violated about 6 of my business model 'must haves' - my strategy is (drum roll ##### plz) to walk away and make money somewhere else. That is success.

 No argument there.  You have to follow your specific criteria.  

However, that is the beauty of an open problem solver.  No competition!!  😜

99% of the other investors would have passed on the deal, frankly no one did go after the deal but me.  

And the profits speak for themselves.

That being said, let me clarify, I am not calling you someone who doesn't solve problems.  If you get deals done consistently you obviously do.

I just meant that you have specific guidelines to your criteria as to which problems you are willing to solve.

@Annette A. @Jett Rao @Manny Cirino @John C S. @David Faulkner @Jay Johnson @Alec McCullough @Account Closed 

Thank you for your kind words.  Make sure you peek through the others who offered ideas on how to resolve the situation.  There were some that I thought may have been at least as effective and a couple that may have been more so.

Either way, the idea is for us all to stretch our brains and problem solving skills so we all get better at it. 

And of course to see that there are soooo many ways to skin the cat!!  (Man PETA is really gonna be on my case after all)

I like what many have put on here about never chasing the deal. That absolutely applies everytime.  There are sometimes, that you have to put in your highest and best offer to get the deal.  

In those situations, keep in mind that most people work in 500 and thousand bumps, so by making the offer at your number plus $601 will beat out most identical offers.

Originally posted by @Account Closed:

I have found several vacant properties during my driving for $$$. Some properties are owned by other real estate companies/LLC.

What is the best way to approach them if I do not have a telephone number? Yellow letter? Business letter?

"Never give up. Never surrender"
-Dee Dee Huey
Aiming to be the best wholesaler

 The mailer may work, but I usually can find the number.

First, look up the corporation/LLC on your states Secretary of State corporation lookup. Look up the name of the owners of the corps and look them up on google/anywho/ zabasearch/ Facebook/Twitter/LinkedIn/ these guys are usually easier to find then normal homeowners.

If you need anymore help, let me know

@Kimberly Jones @Brent Coombs @Bill Gulley @David Maleski @Benjamin Pekarek @Manny Cirino

@Steve G.

Thank you for playing this round.  If you liked it, let's do it again soon!!

@Lari A. @Michael Malitz @Michael Nocella @Michael S.

It's not a party without you!! 😜

ok time to eat the frog, or boil the frog, or kiss the frog, or whatever the book tells you to do with the frog... Within limits. (PETA would be proud) It's been a lil bit since anyone had added to the scenario so I'll go ahead and tell you what I did. So as mentioned, the property consisted of a 4 bedroom house and a 2 story garage duplex. With 77k in code violation liens growing by around 100-200 per day and the city had just authorized the demolition of the property. The buyer was in foreclosure and had gone into chapter 13. Well you know what they say on how to eat an elephant, one bite at a time. (Ok maybe PETA won't be so proud) So I went to my seller first and asked him what he needed. " I just want this behind me," was his response. So I wrote up a contract to purchase the property for the payoff to all liens and encumbrances, subject to permission by the bankruptcy trustee. (Keep in mind, I have not put any money down as this is subject to acceptance) I then went to the lender who had been the prior owner who had owner financed the property to my seller. I offered him 25k for the purchase of the note. The problem was that he also knew about the upcoming DOT situation. "Why should I settle with you for 25k?" He asked. "The DOT is coming and should give me all my money." "The problem is," I replied. "There is a demolition order on this place, and If you don't accept my offer, you will have to finish your foreclosure and by then the place will probably be torn down." "If that happens, the DOT will only offer you land value, which is around 25k. "So you can accept my 25k offer now, or you can spend money on finishing your foreclosure, have to deal with the demolition lien, wait a year and still receive 25k." Long story short, he accepted my deal. (Again keep in mind, I have only written up the agreement, I haven't actually spent any money yet) I then went before the board at the next meeting and asked them to reduce their lien from the 77k to just their hard costs, and to give me 90 days to bring the property back into compliance. "Why should we do that?" They asked. (I seemed to be getting that question a lot in this deal. "Because," I responded. "I control the first mortgage on this property, and if you don't work with me on this I will just foreclose you out and you won't collect anything." (Kind of like @bill gulley said) "However, if you accept my plan, you will get your hard costs back and won't have to eat the demo lien and will end up with a property that is up and running and a good tax base for your municipality." Thankfully, they saw it my way, and reduced their lien from 77k+ to 1k. (Again, I just got the agreement from the city. I haven't actually paid anything out of pocket yet) My last stop was to the bankruptcy trustee. Now keep in mind, the trustee goes off of the property assessed value of 67k. He still sees the 50k first mtg and the 77k plus code lien. There was no equity for him to pay against the creditors so he had already released the property from the bankruptcy. However, because it was still an active bankruptcy I needed permission from the trustee to complete the deal. "I need your authorization to take this property back." I said as controller of the note. "Why don't you go ahead and foreclose out your lien?" The trustee asked. "Because," I responded. "There is a demolition order on the property." (Which there is, until the 1k is paid then a 90 day repreave) "If you don't work with me, I may lose my property." "You are supposed to work with creditors, I need this help." He did see it my way and for 2k he released the property to be sold. Now that I have a clear passage to ownership, I took the completed package to my title company, borrowed 53k from my private lender and closed the property for 28k. The repairs were actually relatively nominal. The issue had been how long the violations had remained latent. It only took me about 12k in rehab to bring everything into compliance (my employees doing the work) and I actually walked away with 13k in overage that went into my pocket tax free!! (Proceeds of a loan) I then rented the 4 bedroom for 800 through section 8 and rented the duplex for 500 per unit for a total rents of 1800 with monthly profits around 1k per month. About a year later, sure enough the DOT showed up. There was one change though, the map had moved over in the plan and all they needed was pie shaped sliver of the property. The problem (for them) was that the pie shaped sliver ran right through the duplex making it so that in order for them to take the property they would have to tear down the duplex. The DOT made me their initial offer at 67k plus I would keep the house. I said, "no." (You never accept the first offer) "Why won't you take that offer?" The negotiator asked me. "Because, right now I have an income property generating 1800 per month." "You will be taking 2/3's of my income (never mind anything so trivial as math) and leaving me with a rental house backing up to a highway. (This is what we call presenting intrinsic damages) The final number we agreed to was 97k with me keeping the house. So with the numbers in hand, I went to my private lender and asked her if, since I would be keeping the house which was more than enough collateral to protect her interest in my offer, if I gave her 13k, would she do a partial release on the duplex and leave the remaining 40k on the house. Since she liked me and was mainly interested in receiving a return on her money, she agreed. So instead of making a measly 44k on the property, I was able to actually keep 84k. That with the initial 13k I had pocketed at closing and the 1k per month profit I had been receiving for over a year, gave me well into the 6 figure profit on this little "cracker shack" @Manny Cirino that most people would have passed on, while still being in a positive cash flow on the house (which I later sold for a separate profit) Not bad, eh? The point is, if you are a problem solver and are willing to eat your "elephant" one bite at a time, you can make an incredible, ethical living in this business. Thank you @Kimberly Jones @Brent Coombs @Bill Gulley @David Maleski @Benjamin Pekarek everyone for playing this round!! If you liked it, let's do it again soon!!

Originally posted by @Derek W.:

@David Dey I like the first half of your post, but Do you think that the second part is good advice to a newbie? He is not sure yet how to pull comps, and you think that buying out fractional interest in the estate is a good idea? My advice would be he finds a local expert in probate investing and partner the deal with them. That way he can learn and earn.

 I was not suggesting that he buy fractional interest in the deal, I suggested he do his homework to make sure he wasn't buying fractional interest in the deal.  I apologize if that didn't come across.  I have bought fractional interest in deals before, but only in specific situations.

I would absolutely agree that he should work with an experienced probate investor.  (Though even most experienced investors might not think of taking the interest of the heir and doing their own probate)  I still put the concept out there so it will help not just our OP, but also others in a similar position.

Originally posted by @Jay Hinrichs:

well I tried. Time to order that Mai tai.  Aloha

 I both want and need a Mai Tai!!!