All Forum Posts by: Jay Hinrichs

@Ted Schmidt

@Phil Z.

Most states have passed laws that preclude the general public from engaging in this activity.. I would bet CA is one of them I know for certain Oregon and Washington have those laws they were implemented back in 08. Now they are violated everyday especially when a Guru has just come through town and the bandit signs go up.

And the AG's in all states have been putting the ( we help you out of foreclosure crooks ) out of business.. Many were headquartered in Florida.

And they were out and out bad actors... They would charge 1k or more and promise to help and more people lost their homes because they were so naïve as to believe these people .. I had personal experiences with more than a handful that fell for these low lifes.. they make seminar gurus look like choir boys :)

In most states you need to be a licensed foreclosure agent.. In our state that means a RE broker, Mortgage broker or attorney.. As well as there are companies that represent the banks in the mandatory face to face meeting lenders are now required to have with borrowers who are in foreclosure. ( again this is the law in Oregon and Washington)

I just helped a buddy out of one of these he went to the meeting with the rep. they worked out a plan,, I provided the capital and we are good to go.

Its a double edge sword for sure... Many people could get a benefit from an investor stepping in instead of them losing it all. But so many have abused this scheme that as I stated the states really have come down hard on those that do this...

@Maceo D.

Due on sale is not often caught, and I only had it happen to me once. And that is because it was a local credit union and the seller went and told them what they did... I got a demand letter forthwith and paid if off.

If your buying this to just flip then its a matter of timing.. However if the Seller is not aware of what can happen... you could take a seller with good credit and put them in a bad position if the lender called the loan they would then have a NOD on their personal credit... And your going to have a upset seller on your hands.

Its rare but can and does happen.

@Aaron McGinnis

Agreed and if you see J Scott and my comments.. those that do rehab are in a completely different ball game than subs that work for new home builders and have years of relationships built up. Although this does not insulate them from being burned many builders went pear shaped in 08 and 09 and the subs got crushed ( when there was no money to pay them)..

And to get credit from one of the building supply houses you do need to have them check your credit then personally guarantee the account.

In my world Plumbing, hvac electrical all have accounts and provide all the materials and we get one bill, I do pay for lumber package Truss and Windows directly. So each is different.. The roofer roofs and charges us one fee, the painter paints and its one fee... WE use one outfit to provide all flooring tile work cabinet tops.. they provide all materials and give us one bill. landscaper gives us one bill.. Out here landscaping can be a pretty big number not unusual to spend 20 to 40k on landscaping 10k average.

When we are doing rehabs out in the mid west or deep south.. its the same thing we have to give them a 1/3 to start 1/3 rd in the middle and 1/3rd when done. And yes if they finish on Thursday they want a check on Friday and we accommodate them. Its the trickle down effect.. their workers are Friday to Friday and need to be paid weekly we understand that.. So we do get better pricing from those you in advance or as you go then contractors that can bill you later.. Although not in all cases.. For instance we get custom paint jobs done for 2.25 a foot including paint inside and out... So 2000 sq ft home would be 4500 bucks total and its a kick butt job.. not rehabber slap the paint on a rent in KC type of job.

I have just started building new homes in the Carolinas. And sub cost are almost double for labor then what we pay.. When it comes to skilled carpenters. We frame a house including nails for 3.50 a foot.. its double that or more.. WE side a house for 2 bucks etc etc.

NOw go to Texas and its even cheaper... So everything is relative and regionalized in my mind.

@Chad Clanton

If you buy your plumbing supplies from Fergusons you can be assured they are state compliant as that is where the licensed plumbers buy their materials by and large at least in our neck of the woods.

That cheapie shower pan from HD cost me 3k to replace... So lesson learned... After 100's of fix and flips and new builds It had not even been an issue all these years. I just could not compute that non state approved Items would be sold by a national chain... But they do and they are and they will let you know it if you ask them...

@Brian Mathews

working direct with homeowners your policy is the norm I am sure throughout the industry.

When your working for a developer builder on a new construction do they not pay once a month? your bill in on the 1st paid by the 10th?

that's how it works here.. And if you miss getting your bill in by the first you get pushed to the next billing cycle. that teaches subs to get their bills in on time every time as they don't want to then wait 70 days to get paid.

Its the same for us when we get draws from the bank.. We need our draw requests in on the 1st and they transfer funds to us by the 10th... If we miss the 1st we can't draw until the next month. Of course this is with banks not HML or private money, and I am sure its regionalized its just how they work it in our state

@Scott K.

Wow Net 90 we don't see that out here on the west coast.. Net 30 yes and a 1% discount if paid before the 30 days.. In the last few years were houses have all sold at completion we will pay the last draw from the sale proceeds and not have to borrow from our credit line.

If we had net 90 in our market.. Title insurance would be an issue.. Title would want to pay all the subs before they issued what we call early issue title insurance which is mandatory in our market..

The reason is that properly effected mechanics liens take priority over all other Liens including your first mortgage construction loan. Most states the liens are junior to the loan but not in our state.. So we need this gap insurance for the buyers lender, and the title companies got burned in the last melt down so they need proof of payment before they will issue the policy.

So our state is a good state to be a contractor as long as you follow the notification rules you will always get paid... Now you still have contractors that never follow the notification rules and lose their lien rights. But the they can sue for UNJUST enrichment and they will win, but that is a lawsuit and more expensive obviously and does not go senior to the debt.

@Rick H.

Rick this will be interesting as I have not done or been a party to an adverse possession claim... But in this case the property has been improved to a certain extent. IE fencing.. grazing of Lama and goat that got all the weeds and noxious plants eaten down..

WE know it must happen at some point as there would not be a law that address's these issues.

It is entirely possible that one had no Living heirs or next of kin.. but I certainly get your point.. and at what point would a 4th cousin have standing in a case like this.

@Matthew Paul

you make a great point about warranting materials you did not buy. Many do not know this but a lot of the materials you buy at home depot and or lowes are not state approved. .especially with plumbing items. can HD sell them yes.. But are they state compliant no.. I had this issue on one of my rehabs were we bought a HD shower pan that cracked.. buyer wanted it replaced. I said no.. lawyer said its not approved in the state I went to manufacturer and sure enough not approved in my state.. I had to replace it at my cost with an approved one.

I think the real issue here is rehab contractors by and large do not have the funds to carry a job they need money up front or at least weekly.

In the home building trades. We pay once a month. And the subs can float their payroll accordingly and they have their own credit at the supply houses.

When you dealing with rehab contractors they usually are not in a position to float payroll for 6 weeks and have no credit accounts. there for you are forced to either buy the materials for them or pay in advance.

As well as from Matthew's point of view he does not want to start a job unless he is paid up front.. AS you don't want to get stiffed by the rehabber.

If there is a bank loan then or HML I think a rehabber just needs to ask the question were are the funds coming from.. If its out of pocket then for sure you want some financial security.. Maybe put the contract amount in escrow with draws... If the funds are coming from a HML or bank then just be in communication with your client know who the lenders are so if you have an issue you go right to the lender.

I would never pay a sub up front on new construction.. IN the mid west and east coast for rehab we have to pay draws in advance to get the pricing we need to be competitive. You just need to really trust your guys.

Yes,, that is a risk for sure... however given where the property is unless Aunt Thelma has a big 4X4 and can read quad maps and GPS not to worried about anyone actually finding the property :)

@Rick H.

My brother is in the process taking title to a neighboring property to his.. the owner died has no Known Heirs at least any that have stepped forward.

He has paid the tax's now for 5 years on the property. and is in the process of doing his quiet title action. I think he is going to get this property...Its in CA. and is 5 acres next to his current 5 acres where he lives. He might get this property for maybe 5k total out of pocket.. It would be the only one I have personally seen when someone dies intestate and someone buys it through quiet title and paying the tax's and open and notorious use.

Have you seen any others?

Now this property is out in the country but still within 90 minutes of SF so it has value for sure