All Forum Posts by: John Hyatt

Hi Jason, Usually wholesalers either do a double closing or an assignment. There is no rule saying you can't get a non refundable deposit (at least I don't think there are laws against it), but as an investor that would be a hard sell to me. I know a wholesaler down here in AZ who requires $1,000 EM to open escrow (first come first serve), but again that's refundable assuming the deal doesn't go through. The reason I would have a hard time with non refundable deposit, is what if the seller "changes their mind" and doesn't want to sell? Non refundable you can pretty much make up anything and keep the money. -John

Hi Alexxa, Is this a phone script or door knocking script? If it is a phone script, personally I would say less is more and the goal should be to get appointments. A lot of times sellers will say one thing over the phone and then in person be more open. Just last night I met with someone who said they weren't interested in seller financing and now they are excited to do it! That being said, I think if you would rather take the low hanging fruit and just speak to people who want to sell regardless, script is good! I think it's just a matter of numbers. -John

Originally posted by @Jay Hinrichs:

@John Hyatt

  this model is fraught with peril I have seen more than one company get totally fubared with it... you buy sub too put basically a glorified renter or sub prime borrower in the property they don't pay ( which happens a lot if not to almost all of them.. you then have little to no cash flow to start you have no equity really.. and you have a night mare.. I would rethink this whole model.. I bailed out a group of investors here in PDX listen to the same guru or who ever espouses this model...  it got so bad because they were defaulting on the underlying sub too's and those folks go their credit trashed and they turned them into the AG and they got in a heap of trouble.. I ended up cashing 20 of the 30 out.. the rest went down the toilet.  bottom line is just rent the place's do not give them any equitable ownership so when they want to leave they just leave instead of claiming an ownership interest.

 Hi Jay,

The guru you are referring to is John Burley? The guy who invested Robert Kiyosakis money (author of rich dad poor dad)? 

Originally posted by @Robert Davidson:

Two sources for foreclosure leads are RealtyTrac and Property Radar.  Both are subscription but IMO very reasonable.  You're wasting a lot of time with Zillow and checking tax records.

It's irrelevant if the house in foreclosure is owner occupied or occupied by a renter (maybe not paying rent.)  You may have a couple of hoops to jump through on non-owner occupied but check your state foreclosure laws with an attorney.  Paying for an hour or two consultation with a real estate attorney will be well worth it.   In California if a tenant is occupying a foreclosure they have to be given 60 days notice to vacate.

Thank you Robert! I agree, Zillow has been getting me on a lot of dead ends...also very time consuming!

Originally posted by @Carl Mcknight:

Hello John, and good luck on your endeavor. Can you elaborate a little on your strategy; 50 units for $5k in passive income? That's $100 /month in income per door. Have you factored in fix up costs, title fees, insurance, taxes, possible foreclosure on the buyer, (holding costs) etc prior to finding a rent to own purchaser? Not saying your plan can't work, just would be interested in a few more details. Thanks and good luck!

Hello Carl,

My goal is $100/month per door after everything, all costs, yes. I know not every deal will be able to cash flow $100/mo, quite honestly I would probably take a deal even if it didn't cash flow if I could get some equity or if they already paid several years on the loan. My dad and his investors are financing the deals if for some reason we need to fix it up or renter is late, etc. We want to get as many properties as we can over the next couple of years.

Hi Steven, 

Long story short, I didn't get to make it last week. I am going on vacation this weekend, but will be back at it next week full force! Thank you for the follow up, I did get one FSBO that I am going to go look at the house tonight before I leave tomorrow on vacation. Crazy how a little bit of effort pays off, I want to not only continue but door knock more and longer.

-John

Hi Brianna,

I think the only tax implication I can think of is you wont be able to right off the interest. Personally, I would rather own more houses, but if you are afraid of paying off a house because of Tax write offs I would think it wont make much of a difference on a house that is worth 165k and I am assuming you interest rate isnt higher than 6%? you should of course always check with an accountant or tax attorney, because I dont know your entire situation.

-John 

Hi Daniel,

I have worked for 3 different title companies over the past 5 years and it really all depends. Usually, the smaller Title companies will run the search for free to try and gain business. I worked for two small companies and one large one and the large ones will make exceptions if you bring them a lot of business or have the potential to do so. I would recommend talking to a marketing rep or someone in the company and see if they can do a limited title search for free or something similar (I am in AZ so I am sure it is different where you are) I know down here we charged $65 for a full title search and most people just want to know if there are any liens etc. Worst case scenario though, $65 is well worth it if it saves you from buying a deal that will cost thousands though right?

-John

Hi Brianna,

It depends on how much your houses are currently worth, I see you purchased them for $100k, but I am assuming they are worth more than that? You probably can qualify for a loan and if a lender tells you that you can’t I would keep looking. I have a lender that I use for my personal loans that thinks outside the box, but with all the regulations in Dodd frank here is what they advised me:

Regarding my current house (Primary): 30% Equity to offset payment with rental income for FHA purchase or 25% Equity for a conventional purchase.

Regarding my rental: same thing, income they can account 75% of rental price as income (in your case they would account $975/mo as income (1300*.75 = $975))

Debt to Income Ratio: 43% is her new limit

Savings: Need 6 months PITI (Full payment) in reserves after close for all financed properties, and two additional months reserves on the new primary if using a down payment less than 20%. These reserves do not need to be liquid, it can be 401k.

I hope this helps, it helped me! now I know what I need to do to get another house. Of course you can always do seller financing or raise money to find a deal, but if you just want to use a conventional lender this is what they advised me.

-John

I know there are ways to do it in a FLP and LLC, but you would most likely need an attorney to set that up and it would cost you several thousand. Might be worth it though to be safe and also avoid steeper taxes later on.

Your mom could gift you a percentage of the property each year worth about $13,000, unless it is worth a ton of money and will take too long to get the full house. I personally would just speak to a real estate attorney. I knew a guy who wanted to buy a mobile home, but didnt want to pay California sales tax or luxury tax so he told the seller to put the mobile home in a trust and he would buy the trust from him. I am not sure if that is legal or not, but he did it. I would check with an attorney, personally.

I found this online, might be helpful: http://www.elderlawanswers.com/should-my-parents-g...