All Forum Posts by: Jason Barnett

Most likely there is a legal minimum for your state and this will be the opening bid for the property. For example in Ohio the minimum bid is 2/3 of the appraised value of the property. Quite often the bank will bid up the price to whatever is owed to them on the loan and if there is a second lien then that lender might also bid the property up to cover their losses.

Most likely you can just call the county courthouse and they will tell you all about the auction rules... after all, they WANT to sell those properties for as much as they can and that means they need buyers like you.

I understand why you would want to avoid handing out equity. After all equity = ownership = management control of the business. But I would stress that private investor doesn't HAVE to mean straight equity... perhaps they would provide loans to you that you wouldn't have to pay back for a few years (say, a $2500 monthly payment loan with a balloon of $X in 3 years). If you can't afford to pay the balloon then you would give equity of Y% in the venture. You might try to google for "preferred stock" to get an idea of what I'm talking about.

Figure out your exact goals and plans. There is a financial package that you can create for almost any plan, but it's important to have the plan in place FIRST. How long will it take for you to open for business? (improvements, zoning, marketing, etc.) How many years before you make a profit? How long will it take to repay your loan(s)? If loans are impossible for your plan then you might have to give equity, but as long as you keep over 50% of equity then you can maintain control of the business.

I definitely think a full-blown business plan makes sense for this opportunity. Talk to your local SCORE office; they give advice for free!

In the length of my post I think something important got buried: you should really focus on finding a private investor to partner with you. I'm not saying that it would be impossible to do this the "traditional" route of down payment + loan, but it would certainly allow you to avoid monthly payments for the first X months.

So if the father and son are feuding then I have to ask... are they both owners? Also, have the current owners shown you a profit and loss statement yet? If you can forward it to me I will be happy to take a look.

I wonder if the outcome would have been the same if he claimed he didn't know about the laws prohibiting foreign ownership. I also wonder if it would have mattered whether he married the woman before moving to the Phillipines / getting the inheritance because that might have been considered "community property".

In any case... sucks to be that guy!

You're in a tough spot here. I hate to say it, but what you're looking to do here is a lot more than the typical REI "fix & flip" that are easy to get done. For example:

- You need about $2.5M for the initial purchase
- You need money for improvements to the property
- You need money for mortgage payments until you can get the place self-sufficient (e.g. "working capital")
- You need management experience for this type of location
- You need market analysis to determine if this location would work for the type of business you want to run
- You need to hire staff to run the place (unless you and your partner are doing all the work yourselves)
- You need to make sure you can subdivide the land (probably not an issue)
- You need to find out if the 54 acres of land would be marketable or not (and how much cash would it provide if you sold it?)

Now I'm not saying this is impossible because almost anything is possible in America! But what I'm saying is that this will be very difficult for you to pull it off. I think that because of the details of the transaction you're most likely going to have to find a private investor that is willing to invest in this project. Show them how much money you'll be able to make and show them how quickly you will be able to make it!

Also, what kind of experience do you and your partner have? It is possible to get seed money through the SBA for this type of transaction, but there are limits and restrictions. You might check out those programs at: http://www.sba.gov/financing/

Another thing I would mention is trying to get a loan from the sellers themselves. Depending on how badly they want to get rid of the property (and how badly they need the money) this might or might not work.

This leads me to the most important part. Why is the family feuding? Are they mad because the ranch has been losing money for a long time? Are they all trying to run the place? Did they receive a percentage interest in the property as inheritance and now they just want to sell? Or... ?

I can tell that you are sincere in your desire to do this. I get the feeling that this is not about making money so much as this is your ideal dream of what you'd like to be doing with your life. If you'd like to talk some more about this I will be happy to help answer whatever questions I can.

Wesley is right. There are a lot of bird dogs all over that would love to sell some deals to you. Just take a look around and I'm sure you will find a few that look enticing to you.

If you live in Chicago then you should check out WCRT. I traveled there for a talk and it was very well done!

Skelly,

This is exactly what I've done; feel free to give me a PM.

Personally the way that I went was I started out by becoming a landlord of a multi unit property. My goal was passive income as a way to transition from 9-5 to full time REI. I'm still not full time REI, but I've gained a huge amount of knowledge (some of it the hard way!).

All of that said: knowing what I know now I would have started out by wholesaling properties instead of trying to landlord. Use your skills for evaluating deals and exploit it as best you can. You'll have to work harder, but it's probably a better match to your current skill set.

Oh you can landlord AND wholesale... but good luck trying to do that while you still have a 9-5. I can tell you from experience... it's very, very tough to do that and it's impossible if you have a family. Just not enough time in the day.

Another member of the Ohio gang... welcome!

Take advantage of OPM, but yes you are pretty much right.

There are a lot of courses / "gurus" that talk about marketing to people that are facing foreclosure. I think Larry Goins is reputable and best of all he basically wants to give away his courses to people. You just have to do one deal with him and you've paid back the course.

In the situation above you could buy the house and then rent it to the homeowner. Obviously you could work it out instead that the homeowner pays no money for X months instead. I don't think you're legally supposed to do that if you're making a "short sale" with the bank... maybe someone else can chime in on this?