All Forum Posts by: AG Gupt

INVESTORS READ THIS CAREFULLY:

As you probably know under the CAREs act most borrowers can request upto a 12 month forbearance, meaning you have the option of not making your monthly payments for 12 months; this is available for investors not just homeowners. Obviously this is for people who’re genuinely facing loss of incomeBUT this post is about what happens after you get on forbearance. Below are the 4 options available to get back to ‘current’ status with your loan.

1. 1. Bring ‘Current’: Payup all payments due. If you do that your clock to re-request forbearance is set to 12 months.
   
2. 2. Request a ‘Payment plan’: Your missed payments will be divided over 12 months & added to your new payments.
   
3. 3. Request ‘Deferment’: Missed payments are added to the back of the loan. So for ex. if you’ve 100 payments left & have missed 6 payments - you will now have 106 payments. This does not include Escrow payments (taxes & insurance) that you will have to pay over 60 months. 
   
4. 4. Get a ‘Loan modification’: The bank will take the unpaid principal balance plus the interest payments you missed & give you a 40 year loan. This IS NOT a re-finance meaning you’re credit is not getting pulled & you don’t have closing costs. In many cases your interest (& hence monthly payments) may be reduced given the low interest rate scenario.

IMPORTANT - Once you get off forbearance using option 2-4 you can still get back on it IF you have not missed all 12 months. BUT YOU CANNOT get these options again, they’re essentially 1 time deal.This information is applicable mostly for Fannie/Freddie loans - but may be applicable to other loans as well (check with your lender)

Number of US homeowners in forbearance are now at ~4.1M, which is a 4th consecutive weekly drop despite the surge in COVID cases.
You will however see a 'paradoxical' figure this week as banks are starting to show losses on their books - my interpretation is that these loans are being moved from books of mortgage servicers to banks.
There is a similar uptick in rent collection where most landlords are reporting record high collection & occupancy rates.In summary, if you're a Real Estate professional waiting for a flood of foreclosures so you come & scoop crazy deals - you will be waiting for a long time. 

If you're a wholesaler educate your buyers that the price of real estate is going to go up not down in the next few quarters.

Just to add perspective to the conversation -  this is not a new thing - many cities & municipalities have bans against what is called in the landlord world as 'winter evictions' for many years. Chicago & Washington DC are a few of many such cities.

Sorry for the weird formatting above - Bigger Pocket's word editor has turned my 4 suggestions into 6 ;)

2020 Update – License requirements for investors?

It is now becoming a vastly acceptable reality that within a few years the ‘wholesaling’ industry like we know it, is going to stop. Why? In a nutshell – the big government is coming after Real Estate wholesalers :) No this is not a scare gimmick, legislation against wholesaling has been passed already in states such as Illinois & more states are following suit. You may or may not agree with this change coming, in fact, many will flat deny that this crack-down will even happen. But a smart entrepreneur expects the best while preparing for the worst. Here are a few simple steps you can employ to stay compliant & get ahead of the game:

#1 Open an LLC brokerage & get an 'LLC Sponsored' brokerage license.
Most states allow you to hire a ‘sponsoring' broker as an LLC/Corporation. This a very quick way to be a part of the Agent community and rid of the distrust that most agents/brokers view the Real investors with. Many investors don't get a license since they believe they may be held to a ‘higher' standard or could be accused of ‘taking advantage' of un-represented sellers – but all these concerns can be handled by proper disclosures. (See point 3 below). A brokerage gets you on the right team without changing your operations much.

#2 Get your Assignment contracts reviewed by a Real Estate attorney & your (new) broker.

Many investors are using one-page assignment contracts with minimal explanation of what they are attempting to do. Remember one thing – Sellers don’t sue, BUYERS do. By having the right verbiage reviewed by a RE lawyer, a wholesaler can stay complaint with the law as well as explain to the buyer the nature of the assignment and what exactly they are doing.

#3 Double Close Versus assignments.

Simply put, double close to protect the wholesalers & all related parties much better than assignments. No doubt you will have to work with a competent title company & escrow officer who knows how to efficiently manage two closings. Higher closing costs can be passed to the buyer. Further, if you’re worried about ‘transaction funding’ costs – there are many title companies that now allow table funding (essentially you can use the funds from the second close to fund your first close)

#4 Add disclosures to your Assignment (for buyers) and purchase contracts (for sellers)
The myth that buyers will freak out when they see the large assignment fee that you’re making is misplaced. As more and more buy & hold landlords are pouring in RE, no one really cares about how much of the assignment fee you’re making, as long the deal makes sense for the buyer. If it still bothers you, follow this simple rule: assign contracts where assignment fee is below $10k; else double close (see point 3). Simple disclosures to sellers indicate that you reserve the right to market and assigning the contract to another party for a fee. For buyers, two important disclosures in the assignment should be that the buyer has had the real estate contact being assigned by a Real Estate professional AND secondly, the property condition is AS-IS with wholesaler not making disclosures about property condition


Regardless of where you are in your Real estate career, I hope this thread encourages you to leave behind complacency and look into taking this new challenge by the horns.
Happy Investing!

Regards,

A.G Gupt

Learn More Here

You are new to Real Estate investing and you've heard from your fellow school mom that the way to make money in this business is to flix & flip homes that are going on a 'foreclosure' because you can buy them really cheap. I can't tell you how many people get started in our industry with the above premise. While quite true - finding 'cheaper' or below market value homes should absolutely be your first step, there are much better & more reliable ways to find these homes than a typical foreclosure.
Read below to see how professional Real Estate investors find these deals; and trust me anyone can employ do all these tactics irrespective of experience :)

1. Foreclosures

Essentially, owners did not make mortgage payments for a while and the banks are now selling these homes (or sometimes the liens) at a public auction. These foreclosures legally fall under the category of 'trustee-foreclosures'; also called Pre-foreclosures

2. Tax-Sales

Properties being sold at a constable/sheriff run public auction because of unpaid property taxes. Beware you could be buying a 'lien' and not a 'deed' to the property at the auction (varies by state)

3. MLS Listings

Multiple Listing Service is basically an internet-board where your local agents & brokers list the properties for sale. Often these listings are combined by aggregators such as Zillow or Realtor.com

While above are great ways, 90% of the new-investors compete in these 3 categories above.
The pros operate in the categories below :) 
Most times you can find deals 2-5 years before they will land up on the MLS or a foreclosure

4. Property Tax Delinquencies

Constitutes people who are behind their property taxes. Folks could be in these stages - Delinquent/Suit/Judgement

5. Loan Modifications

Folks who can't make their monthly payment & are asking the bank to 'modify' their loans. This is years BEFORE foreclosure proceedings begin

6. Appointment of Substitute Trustee

Bank appoints a local trustee (law-firm) to start foreclosure; typically a couple of months before the actual foreclosure proceedings

7. Probates

When a person dies, an executor appointed as per the will (or the state in absence of a will) begins the process of 'distributing' the assets of the decedent

8. Estate properties

In these cases, the probate cases are typically settled and the property is in the 'estate' of the deceased and hence (often dis-interested) heirs

9. Divorces

Couples going through a divorce and realizing that one spouse can't afford the house monthly payment

10. Evictions

Landlords filing a case to 'evict' a non-paying tenant. Caution - stay away from NON-landlord friendly states like California

11. Neighborhood citations

Local cities issuing a ticket to homeowners for various nuisances such as - weeds & overgrown vegetation, trash, abandoned homes etc.

12. HOA Liens

Homeowner associations pursuing home-owners for association dues; often made very powerful in deed-restricted communities with strong HOAs

13. Hospital Liens

Hospitals filing liens on homes because major medical bills could not be paid; often a pre-cursor to other delinquencies

14. IRS & State Tax Liens

Unpaid uncle Sam bills, encumbering business and homeowners assets

15. Absentee & Out of State Owners

Landlords, often accidental, who may be emotionally detached from the houses

16. Utility Disconnects

Homeowners with no Water on the property, indicating often abandoned properties

17. Recently flooded

Properties affected by a natural flood event and homeowners have been made whole by the insurance payout. FYI- stay away from properties with a history of 2 or more prior floods

18. Expired MLS listings

Homeowners who tried selling their properties with a local Real Estate agent with no success; this also includes homes currently listed on the MLS for an unusually long time

19. Over-65 Exemptions

Typically older homeowners looking to scale down. Different states have different similar exemptions. 

So all said & done there is a tremendous upside to using methods 4-19 versus 1-3, where you will be shoulder to shoulder with tonnes of newbies competing for pennies on the dollar. 

@Ted Schmidt We get an average of 15% response rate.
What we advise Real Estate Investment community in general to do highly targeted & local marketing & stay away from Foreclosures & MLS listings (since everyone & their uncle is going after them anyway)

Kay - we (RealAcquisitions) send out about 3000 letters a month & close about 4-5 deals in each of the markets we operate in.

Here are some thoughts:
- Diversify your distress criteria. Some of our distress criteria -Tax Suits, Loan Modifications, Divorce, Canceled Auctions, high Days on Market etc. (we use about 30 various combinations obtained from RealAcquisitions)

- Our messages are highly non-threatening & have a very simple message - basically 'I' want to buy your house, cash & can close fast

- Don't come across as a hot-shot business (no matter how big you get); "I am a regular person & not a corporation" - people like dealing with people & not companies

- Have a local number & a local return address (not a PO Box)

- Most importantly, buying with a low-ball cash offer & assigning contract to a high bidder (classic wholesaling) should be ONLY one of your strategies. There are MANY-MANY more ways to 'wholesale' a deal (ex. assigning a sub to purchase contract to an owner-occupant). Learn these strategies & your close rate will go through the roof.

Cheers!

Thanks Kathy. I had a great time speaking at the event.

If any of the attendees are interested in the copy of the presentation or would to talk more - please have them email [email protected] or call (855)732-5328

As I had mentioned at RealAcquisitions we specialize in helping investors find off-market deals & construct offers creatively.