All Forum Posts by: Justin Kay

Do you want a closing attorney, or a real estate attorney? I can't throw a rock without finding a closing attorney, but a good Real Estate attorney is difficult to find, and those that are great move to the commercial arena quickly.

@Dominique McDonald if you saved that up post-filing, congratulations! If you were able to save it through a wild-card exemption filing through bankruptcy you're one of the lucky ones. 

If you keep saving, you should have enough to apply toward a FHA loan in a year and a half-ish. In the meantime, look at some other real estate investing options that don't involve direct ownership, including REITs.

Feel free to try some hard money lenders, but I don't think that's enough of a down payment to be able to give a hard money lender sufficient cushion and comfort, especially 2 months post discharge. But if you find the right property and the right lender, it's possible. Keep trying, and don't say no for an answer. Just make sure you run the numbers very conservatively, and you pay special attention to the fees and interest rates being charged. I've seen dozens of people post-bankruptcy get taken advantage of.

Good Luck!

@Dominique McDonald Most likely yes. It is a possibility with hard money loans though. It depends on the lender, the property you're looking to pick up, and a number of other factors. But honestly, I wouldn't even think about it.

Two months post-discharge is a very short time period. A hard money lender will likely use that against you, and present some significant interest charges (if not loan origination fees and other expenses). It'll be much harder to cash flow a property with 15%+ interest rates. If you filed a Chapter 7 you had to pass the Means Test, which means you probably didn't have a 6 figure regular job, so being able to pay for repairs with high interest rate loans in a non-cash flowing property will be difficult. You'll need to find a pretty good deal with significant built in equity in order for it to work. But if it doesn't, you're stuck with the judgment (you have to wait 8 more years to file another bankruptcy, if you need to). It's high risk for everyone, both you and the lender.

How much do you have saved up for a down payment? 

@Dominique McDonald Obviously the most challenging issue you have is financing. The most common post-bankruptcy financing route people go are FHA approved mortgages. You can qualify for them 2 years after filing bankruptcy (1 year if you can claim an "exception" although it is fairly rare). There are some other financing options, but honestly the terms are typically not good (high interest rates and short term balloons), unless you can get a good cosigner.

I'd focus more on investment options that don't involve direct ownership of RE for the time being. I think you need to let your credit rebuild a little before you go for an FHA mortgage. Then let 7 years pass before you go for a traditional.

@Dominique McDonald how long ago did you file bankruptcy? Chapter 7?

@Jacoby Ihejirika Ask yourself, what do they add to the deal? 

Do you need help identifying a deal, finding a property, determining its value and appreciation, or do you need help and advice navigating the process from creating an offer to closing? If so, a real estate agent makes sense. If not, I'm not sure what you're paying for.

Same thing holds with a real estate attorney. Do you have questions about title history, contract issues, the market you're buying from? The legal issues are different if you pick up a property from a former investor, as opposed to an estate, as opposed to a bankruptcy proceeding. In the first the attorney likely adds little value, the second maybe some, and the last the attorney likely adds considerable value. But it depends on what you already understand and feel comfortable with.

I'd never want appreciation advice from an attorney, and I'd never want title advice from a RE agent. Some deals you may need one or the other, some deals you may need both, other deals you may not need either (other than to record the closing docs).

@William Boeklen I'm assuming you're looking for an ROI for Charlotte (where you're located) correct? The market (and expectations) in Charlotte will be VERY different from Raleigh, which is also very different from Greensboro, and miles away from Caswell County.

@Ian K Laszlo LLC's have a number of pros and a number of cons. I won't list them all here, but a few that will point you in the right direction:

- Pros: limited liability, estate or asset protection planning, business credibility, property management benefits (I've heard landlords state its easier to put an LLC on the lease form and tell the tenant "you just work for the company" as they'll give you less issues, but I don't know if it's really true), and business growth potential (easier to hire employees and file state/fed reporting forms [940/941] as a corporation).

- Cons: increased costs (for filing and maintaining an LLC, for filing separate tax returns if you choose to do so [but don't have to]), depending on your state increased legal fees (you didn't put where you're from, but in some states only attorneys can represent corporations in evictions and small claims court), financing "challenges", insurance "challenges", contract and lease "challenges", not unlimited limited liability (you can still be sued individually), and loss of TBE protection (tennancy by the entireties) if your state recognizes it.

If you're doing it for limited liability reasons, you're better off getting a good insurance policy. It'll cost you less, and will cover more. I tell people to look at it like this: you're flying a jet [your business], and you have an ejector seat [limited liability] and R2D2 sitting in the back to fix your problems [insurance]. R2D2 will fix the small issues, like an oil leak or a misfire on an engine, mid-flight to keep you going. But R2D2 won't help you if the jet is exploding. An ejector seat will protect you in the event the jet has a catastrophic failure and you need to ditch it, but it won't help for a "check engine light." If you pull the cord [invoking limited liability] when the "check engine light" comes on, you'll lose a multi-million dollar jet over a $100 problem. So you're forced to pay the $100 to fix the problem anyway, not really gaining protection from limited liability. While an ejector seat is nice, I'd much rather have an R2D2. If I can't afford both, I'd get the R2D2. If I can afford both, go for it.

While I am an attorney, this is not legal advice for you. I don't know your specific facts and circumstances, so please consult an attorney.

Sure you can sue for breach of contract, but the judge isn't likely to award specific performance if the state and bank don't cooperate. But what do you win? A paper judgement against a company that can't pay it's bills. A real winning situation.

Can you force them into bankruptcy? Nope. That's called an involuntary and it doesn't pass the test. Even if it did, the court would be brutal against you and would view you as an overly aggressive creditor. 

Can you force the sale in a bankruptcy? Nope. You have no rights to the property better than the bank, state, owner and other creditors. 

You seem to think someone can "make" them sell it, but it doesn't work that way. Secured liens are created for just that reason (assuming the state is secured). If it didn't work that way, everyone that's about to be forclosed on would sell their home with a $100k loan for $50k on the fly. 

Let them file a bankruptcy and buy it with a superior title. Or sue and piss the money away. Not much of another option. 

@Zocky Zhang get a bankruptcy attorney on the line that focuses in creditor rights and pay him a few hundred dollars to ask some questions.

I don't know how MD does their Grants, but it typically involves a Grant Agreement between the State and the entity receiving the Grant. It typically isn't in the form of a lien against the property. Which means the only lien on the property should be the bank note. So the owner's goal is to file a Chapter 11 bankruptcy, and as a First Day Motion present what's called a 363 Sale Motion, where they are trying to force a sale on the property for less than the debt amount of the entity (not necessarily the land). You're the buyer. If the Judge approves the sale, the buyer gets the property, liens are satisfied at closing, and to the extent they aren't satisfied the "liens transfer to proceeds" meaning the property is free and clear. 

It's actually a preferred way to buy the property, as you get a Federal Court Order saying there are no post-closing liens on the property, and you get a number of protections as the buyer (including being a BFPFV).

Alternatively, instead of selling the property to you, they may want to auction off the property to ensure they get good value. If so, tell the owner you want to be the "stalking horse bidder." Essentially, you put a bid down equal to your current offer as the starting bid (or maybe less, up to you). If you win, the property is yours. If you don't win, you get a "breakup fee" usually a few thousand or a hundred thousand dollars for "your time and effort." It's a win-win for you.

All of this is somewhat complicated bankruptcy stuff though, so get a good attorney.