All Forum Posts by: Bruce Lynn

@Nick Perret Efferson   I love it.

Do you know what they own before you call? Any way to start with the people that own 50 units first?  If they're not selling, do you also try to get the buy side?  Some people just buy, never sell?  Are you pitching 1031s to one of your team's other listings?

Do you think these two examples of 10 and 50 units is using PM?  If so, how do you bridge that gap?  In my market if they are occupied properties with PM in place, the PM agreement normally will not allow them to be listed for sale with a different agent.  Maybe that is different in your market?

Are you also developing a robust targeted database, so you know if the future which ones might be interested in selling, which are still buying, which want to rollup to bigger properties, which one want to network, which ones want to fix and flip, etc.  Are you also planning to follow up with email and snail mail?

I don't look at notes, but everything everyone here has said, I am feeling or seeing.  For the first time I can ever remember, this year I am seeing a lot of flips that are 80-95% finished.  I never take the time to see why, but I'm expecting either their HM timed out, market not supporting their optimistic exit price, lost their full time construction jobs, got deported, or their trades are trying to make up for other lost jobs.

I'm also now seeing our HML wanting $30-$50,000 reserves from fix and flip investors. That's a surprise to mean who thought they can borrow everything and flip with no money down. They lenders have good insight I expect or have been burned, so increasing requirements.

Did you pay?  Just checking back in with you for your success story.

@Dhiren Ahir  

Several considerations.

#1 you will want to check with your lender to see if they allow this. I think that will be your first challenge. I often see people go pay an attorney to create an LLC and move the properties only for the lender to request a month later for you to move them back under your personal name. This of course depends on the lender.

#2 Very few people set up and operate their LLCs properly to provide asset protection.  While there are probably some people that do and can accomplish this, it is tough.  

#3 I think it will be very tough for you to gain REPS status. Very very tough to do, especially if you are working a full time job. You accountant can advise you, but not easy. I don't think the LLC matters in this regard. How much time are you spending managing 7 rentals? Do you use PM or managing everything yourself. I like @Stuart Udis advice and one of my attorneys says the same thing.  For most people LLC will not provide liability protection.  Being a good or great landlord will help you.  If stuff is broken at your homes, fix it.  If there are hazards, fix/remove them.  Be good to your tenants.  Have great insurance, not the cheapest.  Have $5million umbrella policy.

#4 I don't even think in most cases the LLC provides any anonymity. It can, but normally in 2-3 minutes I can figure out who owns most LLCs and all their contact info. Attorneys are probably even faster. From what I see for most people the LLC also adds virtually no tax savings, but costs more money to have your accountant prepare taxes for the LLC. The one place I do see some potential benefits if if you want to employ your wife or kids and set them up with some retirement plan contributions. I doubt most people do that, but some potential interesting options there to get wealthy slowly.

Best wishes for your continued success and prosperity.  I enjoyed meeting you a few years ago.

 Congratulations, 

I think the best thing to do is to get with a great loan officer and let them look at all your details. How much equity you have in the current home, what your DTI is, if you can qualify for a new home without selling the old one and plenty of other details. It sounds like a great plan, it just depends on a whole host of financial details. Call @Andrew Postell here on bigger pockets and in the DFW Metroplex for assistance determining the best option for you.

I'm a broker, but not interested in being that broker.

However I do have clients that might be interested in your rent by the room PM service if you get up and running.  I'm in DFW area.  I think most are using Roomie or Padsplit right now.  Is your service similar?

Best wishes and good luck.

I am in one deal and to me it is a capital call without saying it is a capital call.  Basically pitched as if you don't participate, you'll be diluted.  If I remember right they were asking for 40% of the initial investment and it was basically a preferred equity fund of 3-5 properties if I remember right.  Paid back as those properties in the fund sell and above initial LP payback.  

I get it....prices depressed, loan extensions, new interest rate caps, somewhat stable rents, fighting new build inventory concessions.  Not what people projected either operators or investors.  I think they've been subsidizing some of these properties for a while to try to avoid capital calls, but that probably couldn't last forever.

Austin probably has some exceptions due to home prices there, but in general I don't think tiny homes are a good option for almost anyone.  I don't think they go up in value in most situations.   You'll probably have to sink a lot of cash in it, and also to set it up for sewer/water/electric.  By the time you have all that invested and value diminishes, probably better off to end up waiting.  You'll have a lot of rent collection used to pay back the infrastructure.  Also may make resale tougher and a more limited market.

@Abigail Joanna  The amount of legit owner finance deals you will find are likely to be very very slim in Texas.  My general thought is to stay away from them and not to focus on them.  What I normally will see on the legit ones are seller wants 10-20% down and right now probably 12-15% interest.  Tough for you to make money doing that.

What we often see is an arbitrager will come in, lie to the seller, get them to leave the financing in place as a Sub2 deal, try to take a big cut from you as a down payment, maybe even try to arbitrage the interest rate. Maybe the original loan is at 3% and they want to charge you 8%. A year or two later, they quit making the mortgage payments, you don't figure this out for a year or two and the whole deal goes upside down in a foreclosure. You lose all your money, the arbitrager is long gone and has no money any way, and you lose the house too.

Many of these guys are very very slick talkers, they will convince you it is a great deal and stays off your credit and whatever.   Probably the most legit deals are the ones you will source yourself directly from an owner occupant.  Maybe grandpa has been in the house 50 years and you talk directly to him, house is paid off, and you're going to give him $1000/month for the next ten years and another $50,000-$100,000 in ten years as a balloon payment.  It's your deal, you and the owner/occupant are cutting the deal together one on one.   You're not calling off of bandit signs or responding to facebook ads.

Earnest Money and Option Money are different.  Earnest money typically held by the title company and refundable under certain circumstances and different timeframes.  I call this your serious money.

Option Money is normally more of a nominal amount and while now delivered to the title company is non-refundable and belongs to the seller if you back out of the contract for any or no reason.  Really the idea behind this is time to do your due diligence like a home inspection.

While there are some legit owner finance deals in Texas I will just tell you most are a scam.  My general thought is for most buyers to stay away from them.  They're full of risk of you losing all your money and the home.  Probably 95 out of 100 I see are just downright fraudulent.  When you are asking all these questions, it makes me even more nervous.

@Ko Kashiwagi is correct.  If you do find a true owner finance deal, you want an attorney and probably better yet a title attorney who is familiar and experienced with owner finance to assist you with the transaction and paperwork.  You should be using a servicer and not paying directly to the owner.

Plenty of things to check on.  Like is the property paid off, or is the seller trying to do a wrap.  Is the person you're working with even own the property.  Many I see do not own the property and are trying to arbitrage or come up with a scheme they think will work and it doesn't normally turn out good for the buyer.

@Jay Hinrichs @Chris Seveney @Andrew Syrios   Our normal Texas contracts have two sets of money involved at the outset.  One is Earnest Money and normally held at title company where they function as both the escrow agent and title insurance provider and researcher.  The second set of money is Option Money.  This is different.  Option Money gives a buyer the right to tie up the property for a certain number of days...right now probably 7-10 days.  While it is not stated in the contract, the idea with this is really to do a home inspection and negotiate any repairs.  If the buyer backs out during this time period, they can back out for any or no reason and they get the earnest money back, but the option money gets released to seller.  Great for buyers, normally horrible for sellers in my opinion.  Lots of reasons I think it is horrible for sellers....for $100-$200-$500 a buyer can tie up a property and bail potentially after 10 days...(both money and days are negotiable) and seller gets the $100 after keeping the property off the market for 10 days.  To confuse things even more, we used to write two checks, one to title for earnest money and one to the seller for option money.  Now both amounts can be in one check or draft or wire and title company splits the money out.  Both EM and OM can go towards the purchase price if it goes all the way to closing if the right boxes are selected.