All Forum Posts by: Jared Orme

Interesting points from both of you.

I believe Georgia is a leading state with banks going under. The reason for this is the sheer number of lone standing banks. The 80's-90's saw many investors starting banks then selling them and moving to start a whole new bank. Georgia banking laws made this a fertile ground for such.

Most of those were bought out by a couple of large banks (Bank of America and Regions).

As stated above if the FDIC did step in on this bank as it is going under then they would have the ability to regulate the asking price. Given this happens alot in GA it is not out of the realm of plausible.

Though on the flipside I also nod my head to the fact they are unlikely to concern themselves with a mobile home and acre.

I may never know the details in the background but I thank you guys for the insight!

I myself have done many 'pay by click' advertising in the past via google and such. I never received a sale and the clicks were outrageous. I began to doubt entirely if they were legitimate clicks rather than just bot crawlers surfing the web. Needless to say I stopped.

Directly to social media, we use Social Media to find investors and such for our programs. However, it requires involvement and not merely spamming on twitter and such.

Ads do not get a response rate that is worth the spend. It is great for branding for people like Car Makers etc...

If you need to brand, visual ads with no expectation of clicks is great. If you need direct sale conversion, other methods would be better spends.

Exactly what I was thinking. I figured the agent did the BPO at some point and was very wrong and is covering now to the potential buyers that push back.

The other option is as you say, the FDIC created some generic policy to mitigate a distressed banks losses, and the bank is now trying to comply. I am largely unaware of this policy and cannot find reference to it.

I stay away from Short sells myself, due to them being notoriously prolonged and fall apart easy. But I would make a suggestion on the payout.

Assuming you have assessed that the lender will indeed agree to the short sale, or all lenders if there is more than one (many of the underwater homes are due to more than one loan) and that the mortgage company agrees the seller is in a situation of financial hardship...

You will still need to realize that all lenders will have a clause within the sale agreement that the buyer or seller will NOT unduly profit from the sale. It will require all parties affirm that there are no undisclosed payments to any parties involved.

To go around this agreement is fraud and you are open to prosecution if the payment is discovered. No language or contract etc will get around the prosecution should it be discovered.

Here is a quick view of these types of scams:
http://www.nolo.com/legal-encyclopedia/short-sale-fraud-three-scams-33440.html

Now - the legal way:

The proper way of doing this is to disclose a payment to the seller and citing this payment is for the express purpose covering the sellers costs to 'move out'. Many mortgage companies already make these payments, sometimes you do not even have to as the seller can directly request the payment (needed cash) from the mortgage company as a part of the closing.

This is a fully disclosed payment and is acceptable to many companies. There will be a reasonable cap. The payment needs to be justified in its ability to cover finding a new place, moving etc...

You cannot give say 50K or some such without the mortgage company balking.

This is not to say the mortgage company has to agree. The key will be to ensure that the seller does their diligence in proving they are financially distressed and will likely default within the near future.

and the seller will need to show that they also do not have the finances to move out. In other words the payment needs to be warranted.

Hit me with any questions.

J Scott,
Thank you for the discussion point.
The typical 'no money down purchase' is for the express purpose of not putting any of my own money into the purchase. That any actual cash would be reserved for capital improvements or cash flow increases and not toward any wasteful spending.

As I purchase 10-20 properties of this type in a year, I will easily be out around 5K a year and up to 10K, that adds zero value to the property or cash flow on the front end.

Though I do realize to many investors here 5K-10k is not of great significance, to most new investors and myself who is truly dollar conscious, it is an upfront loss.

To your second point of dropping the purchase price, the issue for a no money down purchase is less about the purchase price (I will in fact pay a premium to close a deal) and is goaled at eliminating any needed money down. Though you are correct that it would equate to the seller paying for it.

I recently had a real estate agent inform me that FDIC had required a bank to set the asking price for the property at the loan value and not the actual property value.

Basically the 1 acre lot andmobile home is worth right at $8,000 but they were unable to accept any offer below $17,000.

Is the FDIC getting involved in the property value floating? or is this a special case where a bank is distressed and the FDIC is exerting its influence?

The ‘newish’ intangible recording tax in Georgia (and coming to a state near you if not already) is a tax upon any long-term loan that involves real estate.

Given that many of my deals are owner financed, this additional cost represents thousands of lost dollars and a huge upfront cost increase for when I source no money down loans.

I have several real estate lawyers who suggest ballooning the loan at 35 months to then have the seller keep renewing it. This is completely legal as a part of the excemptions from the tax.

My question is for anyone that has developed this work around and are using it or even if you might have some suggestions.

Example: Buying a property for $179,000, no money down over 30 years. This requires a intangible tax of $537.

If the buyer does write a note with a balloon at 35 months what is to be certain a renewal will occur? Can I write a clause into the note that, I have the ability to action the renewal? Or in otherwards if I cannot secure financing for ANY reason the seller must renew?

Would this be valid?

This is especially challenging if there is capital improvements upon a particular property I purchase and the seller stands to make out significantly to force me into default.

Another option is to be or be a part of a CPL. That is a private lender to rehabers. Sometimes called hard money lenders. You basically loan them money for a 5%-8% return over 1-2 years. They then source the rehabbers to loan the money to.

or

You can directly loan small amounts of money to project based real estate developers (like my investment group). It is kinda like prosperity.com or lendingclub.com but with professionals and experts instead of the random bloke. These programs pay out quarterly to you directly 10-20%. You make a good bit more by cutting out the hard money lender, which is the middle man.

These are all private loans and earn great, reliable income without the risk being the rehabber, the work or the need for a team.

Lynn,
I just thought to look up a LPOA document as an example. Here is a florida property management firm with a LPOA document online.

http://www.definitivegroupllc.com/PDF/Power%20of%20Attorney.pdf

Sure, lynn.

The easiest way to determine the laws in a particular state are to directly discuss the issue with a non broker property management company within that state. They will be intimately aware of the exemptions within that state. Now they may not be forthcoming fearing a competitor or would be competitor, but still should point you in a direction.

For some examples:
In florida, a property manager does not need a broker license if they are salary based. Only commission agents need licensing. So a flatrate fee/salary is an allowable operation...
http://www.allpropertymanagement.com/propertylaw/property-management-law-in-florida.html

The second you can do is consult a knowledgable estate attorney (an attorney who handles peoples estates) in your area to validate the power of a LPOA.
A power of attorney (not lawyer) is literally a document stating that a client gives you the right to be...you. A limited POA is stating concerning just that specific property and specific duties pertaining to that property that person is legally... you.

Most Real Estate commission boards will not address this exemption but most estate attorneys will know the legal laws governing this type of document within each state.

All states allow you to appoint people who are not licensed, to buy real estate for you, sell real estate for you, manage real estate for you etc...

Though each states LPOA form may require specific tailoring to each states legal requirements to act.

Hope this helps.