All Forum Posts by: Account Closed

@Quentin Forbes "Danger, Will Robinson, danger!" (Those of you old enough will remember "Lost in Space", the rest of you will just have to wait for reruns.) Wrapping an FHA loan in good standing is legal, but risky enough. But, wrapping a pre-foreclosure FHA loan is a recipe for disaster. Then wholesaling it is monolithically stupid. (Sorry, not being personal.) First, no Title company will insure a Wrap on an FHA loan. They can legally, but they won't. (for reasons too complex to go into here). Secondly, the risk of the bank carrying through with the foreclosure is very high. Third, the poor snoock who buys the wholesale'd FHA loan in pre-foreclosure probably doesn't understand what he is buying or getting into. When the house of cards falls, it is only a matter of lining up everybody who touched the transaction and suing each one.

Why not do things the clean way? **Bring the loan current**. Give the seller some travelin' money and do a Wrap or Subject To and treat it professionally? Have **reserves** to make sure the payments get paid or sell the property to a buyer. (Not being hard, just trying to keep you and anyone who reads this for the next 5 years out of trouble.) I have done a **LOT** of these and made my first mil $ doing this very technique. It works, it saves the seller a lot of grief and actually helps the market. Done properly, it helps everyone involved. Done improperly, well, just look up now disbarred attorney B radford B arneys who did bad & stupid things. I think he got 30 months for it. 

So, please either seek help from someone with experience in these complex transactions or don't even touch the transaction.

@Simon Stahl Sometimes it helps to see actual numbers when you are deciding on a course of action. 

I was asked by a couple of people (students) to compare doing a Buy & Hold Rental using conventional financing and buying Subject To with selling to a Tenant Buyer and what that would look like.

This is an actual deal I recently did. I bought a 4 Bed 2 Bath 2000' property in a decent neighborhood in Mesa AZ that was built about 1985.

Here is the post. Click on the link.

https://www.biggerpockets.com/forums/12/topics/471302-looking-for-flip-mentor-jv-partner-wizard?highlight_post=2909466&page=1#p2909466

@Michael Rodrigues  I can give you details if you PM me, but we're not allowed to self promote in postings.

@Hunter Thompson If your initial contact is construed as a "public offering" that would be a problem. As in, "I flip houses. Want to make some money?" That would probably be a problem even down the line. The SEC would ask how you **Initially met**. 

The example is "this for that". I will give you "this" (interest in a real estate flip)  if you give me "that"  (money).

However, say you met on a steelhead fishing website, and over time developed a "reasonable" relationship, probably no problem.

@Paul J. Of course you need to see proof that he has the authority to sub-lease to you or you can be immediately evicted and lose any money you gave him, once the owner finds out.

@Hunter Thompson The intent of SEC compliance on raising funds is to have a "substantive relationship" with the individual. Though, not specifically defined, if you've known someone for a month or so, it is unlikely the SEC would find fault if the individual chose to do business with you. The best way is to join a service organization and meet "like minded" individuals. Or, you can do an SEC syndication which runs around $10k to $15k to form and do general public solicitations. There are attorneys who specialize in this field. There is a cheaper SEC way now called JOBS Act that is a little easier on the pocket book but takes a little longer to put together

https://www.sec.gov/spotlight/jobs-act.shtml

@Kyle Merritt If it is an auction, have more with you than the opening bid. Find out what forms of "cash" are acceptable. Some Auctions require a Cashier's check from a local bank. There are likely to be other bidders. 

Most financing from banks will require both an appraisal and an inspection if called for. Then it will take another 30 days or so to close. If it is an Auction, they probably won't wait for that time period. It is better to borrow the funds personally, bid at the Auction and then refinance the property if you are a successful bidder. Keep in mind that most banks and credit unions, which are better than banks, require some "seasoning" anywhere from 3 months to 6 months of ownership before they will refinance your property. 

Call whomever is putting on the Auction and ask for the "rules".

@Bobby Vernazza Hi Robert, I bought pre-foreclosures for years and I am very familiar with what you are saying. Guys on the east coast however, have a different process for foreclosures than on the west coast and probably wouldn't have the experience to deal with this narrow of a problem. It may be MERS but there are other factors at play as well. Go to the assessor's website and see who is paying the property taxes. Once you let me know that, I'll tell you the next step. Ken

@Brendon K. Hi Brendon, was this put on by John or by Phil? My partner in Austin goes to those meetups so if you'd like his take, let me know. Send me a PM. If it was somebody else, my partner may be aware of them but you'd have to check with him directly.

A lot of partnering is about what you bring to the party. If you have lots of experience that is one thing, if you have lots of money, that is another thing, if you have lots of connections that is something else. Make sure things are in writing and cover the normal contingencies. It is really easy for one side to assume things based on a discussion but really helpful when the questions come up to have put them in writing.

@Tim G. Very cool! Did the title Report come back clean?