All Forum Posts by: Jay Hinrichs

@Rick H. 

  And this is a very good point for those that are facing foreclosure.. Always go to the sale and watch the bidding like a hawk if you suspect anything then get an attorney.. And or file BK right after the sale and list that as an asset and let your BK attorney and or trustee know what happened the BK judge will stop everything while it gets sorted out.. I have seen that done personally.

Especially those with no junior loans or encumbrances the owner losing it is awarded the overage and in many foreclusres I have attended these overages would have equated to more than the losing party could have got if they sold the home prior to sale.

@Aly W. 

  Aly its nice to get an honest post about low end rentals and all that it entails.  There is far to much blue sky talked about with these types of properties.. Its a 50/50 proposition at best. And in my mind those properties are only suitable for those that live and work in the community and these assets are a commodity not an investment.. because they are not an investment per se as they never go up in value they go down usually and they are money pits when your in the super cheap ghetto war zones.. good job recognizing this and understanding that properties with hopes of appreciation because of area are to be considered in the full equation of investing in Cash flow rentals were ever that maybe.

@Account Closed 

  I got out of the game when I was competing with stay at home moms wheeling in their kids in strollers and hunting around in their pursues for 500k of cashiers checks   LOL.

My last sale I attended there were 30 bidders for a little rancher opening bid was unusually low 80k property worth 200k ARV it bid up to 160ish and that's before rehab so that was probably a 10k deal for whoever bought it. So basically 3 million in cash chasing one 10k profit deal... That's when I took my nickels and started my HML company.. Did not hit the home runs but we had consistency of deal flow and I much less work than chasing foreclosures.

@Stacey Olson 

  wow property trashed in 10 years.. this is also a good testament that one need not fly half way across the country to buy low end deals. they are in each state.  A rehabber that does volume will come in and pick that up with a goal of a 20 to 30k profit... so a sale number based on rehab would be closer to 60k not 40k I think that's your competition.

Good job keep at it....

@Account Closed 

wow in the bay area !! I remember my days in Oakland my office was next to Al Florida and Shep.. those guys would just flat intimidate you .. Brief case full of cash a load 45 and drove their Rolls... I remember in the front of their office they had a big table and kids cutting and pasting out of the paper the NOD's they bought most of the Oakland foreclosures for years :)

Its a dollar over in Oregon and Washington can't buy anything with a penny :)

@Tara Piantanida-Kelly 

  no Warzones or Ghettos in Wyoming or Oregon  good choices for out of state investing. at least for piece of mind :)

@Michelle Dixon    I think in this context your talking about the local guys that have been going to auctions for years.. they get together before the auction and pay each other money not to bid... In our market is was so blatant for years guys would just negotiate payoffs right in  front of the crier.

I do personally know of a couple of guys in Washington that got caught paying off the crier. How that worked was.

Crier would start a sale.. If there was competing bids he would cancel the sale .. then after all the action was done they would walk around the building together and sell it to the guys for minimum bid and these guys paid the crier off.  both got reported to the DA.. no criminal charges were ever filed but it made it to the papers.. The crier was fired the investor was shunned for years by his church.  Now they are right back at it. But all the deals are done before the sale...

There have been many caught at this and yes the FBI will nail them.. there was a case in NC 10 years or so ago were guys got huge fines and jail time.

basically if your at a sale and two or three bidders are going for the same property and they start whispering to each other then suddenly stop or the property gets sold for 1 dollar over you kind of know some deal was made.

In our market there were many that would just show up with cashiers check's qualify to bid with no intention of buying their only reason for being there was to get the 1 to 2k pay off. And sometimes much more depending on the property.

@Ethan Bowen 

 No I think its a RE investment if they wanted to park money they would just buy double tax free muni's  or @Account Closed   as they live in Honolulu they buy Hawaii state energy credits...

From your prospective Ethan your equating everything to % cash flow.. When RE investing is far more than that.. its cash flow  Its equity protection.. Its chance of appreciation.. Its sleep well at night because I did not buy a tough to manage property, Or like the first building I sold them they are perfect for condo converts down the track and they would make a 50 to 70% return on equity...

Its clear here in the states that Cash flow numbers  = RISK  that is for sure...so you have to weight all the factors.

Now these same investors bought in Vagas a couple of C class 4 plexes that do not produce very well and some SFR right at the bottom.. Even though the SFR only created about a 6% return they are going on the Market in the fall for very large appreciation gains.

@Curt Davis 

  I could not agree more that many of the bad buy's by foreigners was championed by their own people.. But these off shore marketers hooked up with some shady folks over here to feed them the house's. 

There was a lot of activity that was just plain criminal in my mind.. buying properties that were suppose to be Reno'd only to find out they never got touched and company is closed and moved on. 

Many of the Off shore companies also got taken because they did not know what they did not know vis a vi what Ghetto or Hood was in these towns.

But there is never ending inventory for the bottom feeders it has cycled like this for the last 30 years or so and will cycle like this basically forever.. As @Alex Craig pointed out once a street or area turns its done... You could have bought on a good street a few years ago only to have it turn bad... rarely in these areas do bad streets turn good.. you see this occasionally in inner city regentrification but not normally out in the burbs.

I think some of the reasons that inventory is tight is.

1. More educated buyer Not buying in the Ghetto hoods as much as they used to.

2. investors paying cash so there are less investors failing even if they only hit zero return because they made a bad buy they tend to hold the properties.  the next wave some day will be tax sales. As there is no debt but they still walk on the house.

3. The US buyers that get finance are buying better props and putting skin in the game so they are better capitalized. Were in years past when undercapitalized investor with 100% or plus financing met tough to manage mid west property defaults were rampant.

4. Sub prime owner occ have flushed through the system.

What is not creating shortage of inventory though is owner occ sales in these areas. The Minority buyer US wide is buying 25% less housing than they did 10 years ago, as credit for these types of purchases as we know dried up. As foreclosure rates were sky high in the sector.

@Alex Craig 

  the foreign investors by and large had no idea what a ghetto was or war zone... they were yield driven.. I would venture to guess that will walk away from 500 million or more in Ghetto dogs that have been sold to them in Detroit Memphis , Rochester, indy, Cleveland etc etc. Even Atlanta's hoods.. they just did not know what they did not know.  They were driven by such low prices and claims of 30% returns.. which we all know only happen for locals who buy at true wholesale and are in the bizz.