All Forum Posts by: Account Closed

@BJ Henderson Good for you for taking the step. The questions are: 

1) What makes it "Distressed"?

2) How much is the HOA?

3) Is it distressed because it is behind in payments? If so, how much?

4) Did you get a Title Report?

5) What is your exit strategy?

6) How long is the Option? You don't mention that part.

7) Are the Lease and the Option separate documents like they are supposed to be?

8) Will you be able to find the seller when you need their signature when you exercise the Option?

9) Do you Golf? (Just curious ;-)

10) Does it come with Golfing Rights? How much?

11) Is there an undisclosed Transfer fee for the community that you will only learn about when you go to closing?

12) Is it within driving distance or across the country?

@Patrick Kaufman @Bret W. pleased to meet you.

Decide which kind of investor you want to be (SFR, Commercial, Land, Tax Liens, HML, Multi-Family, Notes, Fix & Flip, Buy & Hold, "Subject To", apartments, duplexes, assisted living, REOs, Foreclosures, Short Sales), etc.. Decide how much money you have access to, & the zip codes, city or state you want to focus on. That will determine the next step. Outline where you want to be in five years. Put it all in writing. Start working your plan. There are plenty of people around to help you each step of the way. You can always PM me for more ideas.

@Anton Taylor Actually, that is all I've done for about twenty five years. It is a complex transaction but very effective. There are always people who have life changes that cause them to be "don't wanters". It may be job loss, job transfer, military move, they've gotten married to someone who already has a house, they are "reluctant landlords" and on and on.

@Savannah Hayes You need a consult with a bankruptcy attorney, you can not do this on your own.

@Eric C. This one needs a Real Estate Attorney IMHO for a variety of reasons.

@Jay Hinrichs The court can do a "claw back", usually taking anything that was transacted up to six months before the filing. There would have to be a reason for them to do that. It would usually mean that a motion has been filed (a challenge) to the transaction. If someone was trying to hide assets or otherwise not be honest about the transfer, the court gets particularly upset. The whole purpose of the bankruptcy court is to distribute fairly the proceeds and give the bankrupt a new start. The sale indeed could be set aside in those instances but it typically is more work than the (Trustee) of the court wants to go through.  The Trustee makes somewhere around $175-$250 per file as I remember, plus a percentage (6.5% ??) of easily recovered loot. So, their incentive is to transact the bk within as short as possible time frame. The Trustee is a private attorney who has an exclusive with the court and has staff and overhead to pay. For anyone else reading this: No, I am not an attorney, I simply lived in a neighborhood full attorneys and judges for twenty five years and heard some great stories at parties.

@Account Closed Well let's see, I am assuming you'd want to sell after rehabbing. That being said it is the Most Highly Taxed transaction. It ties you up for months. The real estate agent gets 5% to 6% - so, maybe $25,000 to $30,000 and you don't know for sure what your costs are or what the thing will sell for. 

If it's your first rehab, it will certainly cost more than you plan, your electrical guy won't show, your plumber will have you way down on his list so the project will just sit for a while, your sheet rocker will have to wait until the rains stop because the mud won't dry, your inspection will fail and you'll have to redo that, your refrigerator space in the kitchen will be two inches short because the counter is bigger than you thought, then the door of the refrigerator will swing the wrong way and you will have to figure that one out too. 

Then there won't be sod available for the lawns when you need it, the gardeners will disappear because someone yells "ice" and it's just someone that is hot and wants some ice but the gardeners think they mean something else. Then you will find that you used 12" tiles in the kitchen and everybody wants 18" and that the AC Unit didn't arrive when promised. And that's just the start.

In that same amount of time I can buy 2 houses a month using Subject To and Lease Option and get $25,000 down per house selling to Tenant Buyers getting a cash flow of $500 per house without having to rehab. I sell them as "minor fixers" to business owners who don't qualify for traditional banking. So, 4 months later, in about the time it will take you to do that project, I have bought and sold 8 houses with $25,000 ea down for $200,00 in my pocket plus  $2,000 per month added cash flow for as long as they take to get their credit together to refinance. It is usually for 2 years to 3 years. Do the math. These are actual and factual. To top it off, they do all of the rehab themselves. I do this in California, Washington, Arizona and Texas. "Don't walk past the dollars to pick up the dimes simply because the dimes are shinier".

@Account Closed In the states I do business, Arizona, Washington, Texas and California land trusts are typically legal but not used. I know they are more common in your neck of the woods. 

I use an escrow company and attorney, then I have the Warranty Deed recorded. It is so rare to have a bank call a note that I don't expect it to happen.  At any rate, I don't want to be accused of fraud or "trying to hide ownership" in the event something changes. 

For instance, did you know that if the seller files bankruptcy in the future you won't receive notice from the court (they don't know you own the property now) and the property becomes part of the bankruptcy estate? Anything you do outside of the court will be considered illegal. They can sell the property out from under you. Many more people file bankruptcy than banks call notes due. 

Also, Title insurance and chain of Title are important to me for future selling of the property. Also, you can protect yourself by making sure the payments are made on time, (or you shouldn't be doing Subject To in the first place. If the note gets called you have time to refinance, sell the property, negotiate a new loan with the bank, use hard money to pay it off, deed it back to the seller to cure the default, etc.

Actually, it's only a problem if you ever need to defend it. If it wasn't the attorney who filed the DOT, he is unlikely to stand before the judge and say that it is his document. ;-) But, save a few dollars here, spend a few ** lots more ** dollars there.

You should at least call the attorney and ask what, if any, liability you are exposing yourself to. 

This isn't actually intended for you Michael, you will do as you see fit, but there will be others who read this post and they need to know the huge risk and exposure of doing their own legal documents. 

@Michael Wentzel A judge friend of mine once told me to never draw up a Deed of Trust that I couldn't personally defend in court. Meaning, that since I am not an attorney, I shouldn't be drawing up Deeds of Trust or Promissory Notes that go with them. In fact, from what you are indicating, it would be well worth the price of admission to have a real estate attorney go over each of your transactions to be sure they are defensible in your jurisdiction. Just sayin'