All Forum Posts by: Greg Goldsmith

We buy SFR REO's, in small pools, continental US, 50-55% of FMV, resell fast at a discount.

We pay funding partner 9% APR, plus 9% of net sale proceeds. 

No fix-up drama, we resell "as-is"; Goals: Velocity, low risk, high annualized yield, capital growth. All assets are professionally assessed utilizing third-party resources. 30 years experience. 

More info and contact at: www.cascadecapitalnv.com

Disclaimer/Disclosure: I should have added this eight months ago, but have been busy doing real estate, in spite of being ‘retired’. The thoughts I have posted on this website in the past are only my opinions or ideas, to encourage further investigation. I advise people to regard them as such and to seek local, experienced, professional counsel on matters of legal and financial concern.

It may be a sound idea to remember that almost all the posts on here are simply opinions. Those opinions are created based on the writer’s own scope of experiences and beliefs, and sometimes are presented here as the ultimate truth and fact.

Understandably, it’s fair for them to think that they are bringing the ultimate truth and fact, based on their own personal reality. However, what is often overlooked is that no two sets of reality, experience, and beliefs (true or false) are exactly the same. For many people, their reality is their comfort zone, and they are convinced there is no other reality but theirs. If they are confronted with a reality that differs from theirs, they may react in a way to allow them to maintain their comfort zone and defend their reality, often by utilizing ridicule, insults, or derision to avoid further discussion and any facts emerging that threaten their position, beliefs, perception, comfort zone and feeling of authority. This is not to say their reality is wrong, but rather that it is limited to their personal experience, education, and beliefs, regardless of how extensive.

And just for the record, contrary to disparaging comments, I am not suffering from “cognitive bias”.... or “the effects of ... legal education at Internet University”. Wow. Stunning, thanks for that, I clearly shouldn’t have shared my opinion in this environment, but rest assured, if I ever elect to do so again in the future, well, actually, that will be an exceptional rarity. The personal smackdown was successful, I apologize for attempting to contribute and unintentionally trespass on someone else’s turf in this hallowed space.

How did I form the opinion I wrote? I’m not a guru, I don’t present myself as an expert or authority, I don’t have a website promoting myself, or late-night TV commercials. I’m not an attorney nor do I play one on TV. However, I have been a real estate entrepreneur for almost 40 years. I have done projects ranging from single family fix and flips to developing a 72 unit luxury town home community, and every imaginable strategy in between. I have learned from the school of hard knocks, and invested tens of thousands in education from highly successful real estate investors. I’ve been self-employed since my first business in the fifth grade. I love the business and learn new things every day. I’ve bought and sold properties or wholesaled contracts in multiple states, in person or virtually. In the early days I totally rehabbed houses with my own two hands and my own tools, although I almost never did roofing, sheetrock, or carpet myself, LOL. I have created all the contracts, notes, deeds, and closing statements, and docs needed to close and record many, many of my deals. All parties involved walked away satisfied, and no laws were bent or broken. I’ve written a book addressing the ‘Zero Down’ strategy; I have advised and educated, at no cost, attorneys, real estate brokers and agents, escrow officers, sellers, homebuyers, beginner real estate investors, and others from time to time, in the course of doing this business over the years. The sum of that results in, yes, just my opinion, based on my reality. At best, I see my opinion as only a springboard to create questions that form a starting point and set of questions from whence to launch a comprehensive course of due diligence.

So, I am suffering from “cognitive bias”.... or “the effects of ... legal education at Internet University” ?? Anything is possible, it depends on one’s personal reality and own cognitive bias. Which I understand is a condition often studied in psychology and behavioral economics.

Cheers

Lots of sound advice here.  You might find value in a book by the lender Sal Buscemi, titled "Making The Yield."  I think a downloadable version is available on the amazon site.  It is very detailed, not just a "How-to" book but also a step-by-step "What-to".   It clearly lays out the many issues you need to be aware of when private lending, to ensure a safe, secure, and profitable outcome.  Not covered in the book is a more aggressive strategy of negotiating an equity position in your borrower's project (a negotiated split of profits on top of your interest), but that's getting ahead of things here today.  Best of luck in your venture.

               Farewell and Best of Success in the New Year to everyone on BP.

A friend was reading this thread, and had some comments that may or may not be worthy of attention, but I'll pass them on for possible entertainment value. As for my own thoughts, I'll refrain. So, without further adieu, from said friend:

.........................

There are a lot of wonderful, well-meaning people on here trying to help others, that's a good thing… sometimes.

Sometimes they are, well, uninformed or misinformed. To paraphrase a famous quote, “It isn't so much that some people are ignorant. It's just that they know so many things that aren't so.”

Some points to consider on the topic of this thread:

The Texas laws, as originally written, regarding certain types of transactions discussed here caused quite an uproar.

What happened later was virtually overlooked, in that the laws were significantly revised before they were passed.

But almost everyone out there still believes that the original proposal with it's complexity and flaws, was what was signed into law. Might want to read the actual law.

There seems to be confusion as to some things, reminiscent of

Abbott and Costello's "Who's On First?" routine ( you younger kids can Google it).

So, in a listed property transaction (Which this WAS NOT), you traditionally have a SELLER, represented by a SELLER’S AGENT, and a BUYER, represented by, you guessed it, BUYER”S AGENT.

(We won’t talk about side issues, such as where a lender might fit in, or of cases wherein an agent is also the seller, or wherein an agent is representing both buyer and seller (dual agency), not important today, and, likely to make some folks dizzy).

In said transaction, normally, the AGENTS have NO VESTED INTEREST in the parcel for sale. They are NOT PRINCIPALS in the purchase of the REAL PROPERTY. They connected the BUYER and the SELLER, and rightfully were paid handsomely for their efforts when title transferred at closing from the SELLER to the BUYER.

To contrast that with the transaction conducted by astute real estate entrepreneur Josselyne Lugo (watch closely), the parties are:

*SELLERS, who have elected to sell on their own, thus creating the mythical and elusive deal, a For Sale By Owner (FSBO) situation.

*BUYER, the aforementioned astute real estate entrepreneur Josselyne Lugo, who is a WHOLESALER.

One will note, NO AGENTS were involved or even aware this was going down.

The BUYER/WHOLESALER finds the SELLER, evaluates the deal, negotiates an agreement with Sellers, and SELLERS and BUYER execute a mutually agreeable CONTRACT, wherein

the SELLERS and the BUYER are the PRINCIPALS in this deal.

BUYER now has Vested Interest via the CONTRACT, said CONTRACT is PERSONAL PROPERTY of BUYER/WHOLESALER, it is not REAL PROPERTY (Simple way to think of this, your mileage may vary: Real Property has a Parcel Number, a Deed, and Address, Personal Property doesn’t).

BUYER/WHOLESALER then elects to TRANSFER her interest in her CONTRACT, which is PERSONAL PROPERTY of BUYER/WHOLESALER,

to a THIRD PARTY.

BUYER/WHOLESALER transfers the CONTRACT, with all it’s rights, to THIRD PARTY, via an Assignment of Contract, for an Assignment Fee.

THIRD PARTY now holds the CONTRACT and ‘steps into BUYER/WHOLESALER’s shoes’, with the lawful ability to execute the CONTRACT under it’s terms and conditions. Still reading?

BUYER/WHOLESALER was NOT representing SELLER or THIRD PARTY BUYER in any capacity. BUYER/WHOLESALER was a PRINCIPAL in every step of the process. BUYER/WHOLESALER was never acting as an AGENT or “BIRD DOG”, rather only on her own behalf. She had no intent or agreement to charge any other party to act as their agent, rather she was a PRINCIPAL PARTY, contracting for an agreement to purchase Real Property, and also contracting to sell Personal Property (a Contract).

Sorry, Brokers and Agents, BUYER/WHOLESALER did NOT poach a deal from your part of the world, which also has free-range real estate entrepreneurs also making deals happen sans a real estate license (Gasp! The horror!), nor did she perform a dreaded ‘Commissiondectomy”, the source of terrifying nightmares for Agents everywhere. She conducted an ethical and legal transaction that was beneficial to the involved parties, by applying her resources, skills, intellectual capital, and hard work.

.........

Please don’t send hate mail, remember, this was the rambling of another party, who is actually quite fond of Agents, but likes to mercilessly tease them. I’m only the messenger, shucks, I can barely spell ‘real estate’.

@Jerry W., great questions. First, let me agree with you that trusts will not directly protect you or your assets from liability or lawsuits, that is correct, you always want your first layer of protection to be a corp. or LLC entity. Trusts have a different set of advantages for RE investors/owners, and to answer your first point, you would never want to be the Trustee of a Trust you created. That lays a trail of breadcrumbs right to your door. The best scenario is to have someone you trust explicitly named as your Trustee, ideally an attorney, as they have the expertise to handle wolfs should they come sniffing at their door.

Here’s a real-life example of how, as a real estate investor, you might apply this:

Your entity, The ABC LLC, puts an investment property under contract. You immediately create a new Agreement and Declaration of Trust, naming it perhaps the 123 Main St. Trust (after the address of the property, easy to track); Your Agreement names Al Attorney as Trustee. You direct the closing agent/escrow officer to deed the property to your Trustee at closing ("for tax and accounting purposes"). You also prepare an Affidavit of Trust, which basically states only who the Trustee is, what his/her duties are, and identifies the subject property, but none of the private details of the Trust's parties and terms. The escrow agent records the new Warranty Deed to Trustee and the Affidavit of Trust at closing, but never the Trust Agreement itself, in fact they have no reason to see the agreement itself, that's private.

Sounds complicated at first, but it’s not. All you have accomplished is another layer of protection that makes it very difficult for wolfs to see if you have any assets worth coming after, afforded a huge degree of privacy and flexibility in your transactions (to a degree far beyond what we could cover here).

As you review this example, you will note that the property was never held in the name of your business entity, the ABC LLC. Further, the deed/title transferred from the seller directly to the Trustee. Nowhere in any publicly recorded docs is there a visible connection between your business and the asset.

When a greedy shark is considering suing the pants off of you, the first thing they do is search public records to see what assets you have that they might want to take from you. With the strategy above, there is no paper trail, and they can deduct that you own nothing of value, or that you appear savvy enough to make them go after easier targets instead of you.

Yes, if they are convinced you are hiding assets and their client will pay them a big retainer, they could possibly depose you and try to find every penny you have. For the sake of brevity, if that bridge hasn't already been crossed here, suffice it to say a good attorney in this scenario can hold them off and have them chasing their tail legally until they give up... or, worst case scenario, they beat you up in court and wipe out your ABC LLC. That is why you want a separate entity for each property, with good business liability insurance and corp. or LLC records properly maintained so they can't ‘pierce' the corp veil and get to your personal assets, which, incidentally, should be held in a trust also, unless you want to make it easy for anyone to know what you have.

If you have more than one major asset in an entity, a problem with one of them can easily result in the loss of them all.

To review, good practice is to use a corporate entity with liability insurance, keep it up to date, don’t co-mingle personal funds or the entity will be disavowed for asset protection, secondly, use single-asset entities to avoid one problem wiping out all your assets, and third, incorporate trusts for an added layer of privacy from greedy sharks looking for a fat kill.

Something to ponder: Trusts are Personal Property, real estate is Real Property. Each has different rules, regulations, taxes, and endless opportunity for creative transaction structuring, but I digress. OK, Hint: Can you sell personal property (a Trust) at any time without there being any public record of that sale?

Lastly, regarding using trusts for your personal estate, yes, there are very good reasons

to use a trust or trusts (attorneys don’t want you to know this next part, they love to have a huge book of Wills and Probate business), it’s worth exploring how they can avoid Probate and all the related expense and drama (I’ve heard they’re still fighting over the Howard Hughes estate!).

@Emin Temiz, regarding finding professionals, I’d ask local investors who they have had good experience with as far as an experienced real estate specialist attorney, and when you find that attorney, he/she will know of a good CPA that works with RE investors. BTW, most attorneys will have no idea how to use trusts just for real estate, and might even tell you something crazy, like why they’re illegal, immoral, and fattening, and why you shouldn’t do that. Translation is, they don’t have a clue how to do it. Run away from them quickly.

And of course you have the great community here for answers to your other questions as they arise.

(As always: I am NOT an attorney or accountant, these are my opinions only, not legal advice, and quite possibly worth only as much as they cost you).

Emin, in my opinion, moving the property into your personal name does not offer any protection from lawsuits (I'm not clear on what type of lawsuit has you concerned.. something against the company, or you, or because of a liability related to the property?), and will guarantee that you, as the property owner, become the target of any lawsuit involving a property-related liability.  

You mentioned that the company has other properties.  That is a concern.  If a suit is brought against the company, then all of your properties, because they are assets of the company, are at risk if you should lose.  Everything falls like dominos.  I'm aware of two common solutions to avoid that...

The first is to create a single-asset LLC for/to hold title to each investment property. That way, if a suit is brought against any one LLC, the other properties/LLC's are not directly involved.

A much less expensive, faster, and simpler method is to deed each property into a separate Revocable Living Trust.  Trust details are not public, great for privacy, and done properly, make it difficult for those wanting to sue you, or for that matter, for them to even know that you have assets worth coming after.  ( Basic rule, to prevent asset loss to predators, is to never hold any significant personal property or real property assets in your personal name, instead, you want to control the entities that hold the assets ).              Assets in your name tend to attract shark attorneys.

For solid info about DIY trusts, visit nolo (dot) com, and also research: "using land trusts to buy and sell real estate" via google.  The use of trusts is one of those great, little-known secrets.  TIP:  Do NOT call your trust a "Land Trust", that's a sophisticated instrument for more complex situations, and the words "Land Trust" will sometimes set off bells, whistles, and alarms that will send your escrow agent's legal department into a frenzy, 'nuf said.

As always, seek the opinion of professionals that specialize in the RE investment world (atty. & CPA);  Get referrals, many of the professionals will tell you they practice in the RE space, but in reality have little-to-no experience there, and do not have the up-to-date specialized knowledge you need.

(I am NOT an attorney or accountant, these are my opinions only, not legal advice).

Happy investing!

Lots of good answers here;  I agree with John Cohen, look at why you are investing.  There are basically two major investment strategies, with lots of ways to do each...  or eventually, perhaps both.  

The first is to build capital as quickly and simply as possible;  A classic example of this is via finding, controlling, and then Assigning or Wholesaling deals.  This can be done with limited time and capital.

The second is for long term wealth building, via Buy & Hold Income Properties.  Benefits include Income, Depreciation and other tax write-offs, Equity buildup over time via loan principal paydown, Appreciation over time, and Leverage (with creative financing techniques, you can own/control a property with a small amount of your own capital).

Consider what your goals are, and what resources resources you have (time for the business, knowledge, working capital, skills, interests, a mentor, etc.) and make sure there is good alignment between any chosen strategy and your resources.

You might want to learn about other ways to put your capital to work while you pursue other interests or study real estate investing further, by becoming a Private Money Lender with short-term loans to experienced investors, or becoming a short-term joint-venture money partner with an experienced investor.  Another area to look at is multi-family (apartment) investing as compared to single-family rental investing, it can be done by beginners with limited resources if you learn the strategy, and can accelerate your income and wealth building goals. 

By all means learn everything you can to minimize risk before you jump in. There is a wealth of educational material here on this site, as well as ready access to helpful, experienced investors.  RE investing, done properly, can be accomplished with minimal risk and great rewards.

Have fun, good luck!