All Forum Posts by: Account Closed

@Kevin Romines  @Randy Hallowell  Sure, I start with the assumption that I am *not* going to put more than $25,000 into a property, "All in." 

So, for instance, if the seller has $8,000 in equity, I give them $8,000 out of the $25,000 I have allocated and use the rest, $17,000 for the expenses. I Purchase (I take over the loan), pay escrow, pay title, pay carrying costs, pay utilities, pay for marketing, pay for property clean up, I do *very little* rehab and I keep $5,000 in reserves from that $17,000 in case I need it later. I've developed a spreadsheet for this model and I can tell pretty quickly if I am within my "safe zone". I assume 3 months to sell. Usually sells within 30 days though.

My typical houses are in the $150,000 - $300,000 range. I invest & coach in multiple states and In the Tri-Cities the numbers are a bit lower of course but relative to the same percentages. Say a property has a PITI of $1,200. I go to rentometer and see what rents are going for in the neighborhood. I then mark up the payment into the first quarter of the "red zone" on the chart, say, $1950. So the difference between what I pay and what I get is my monthly "cash flow" or $750 in that case. (That's from an actual deal.) People are willing to pay more if they will actually own the house rather than rent forever.

I do my comps and mark the sales price *up* beyond what things are currently selling for. Say, $30,000 above market. (Less of course in the Tri-Cities). It's "whatever the market will bear". I don't use real estate agents so I am saving the 6% fee, $12,000 in the case of a $200,000 property.

Then I offer the property on Owner Financing/Lease Option/Wrap/etc to business people who have great incomes, some money set aside and want to own a house but can't get financing because their Tax Returns don't show enough income. (Self employed get *great* tax write offs but that doesn't help when trying to get a loan from a bank).

The first Tenant Buyer who has $25,000 to put down and qualifies under DoddFrank gets the nod. If they have the money to put down, if they have a job that will support the payment under good lending guideline Ratios,  (I used to be a loan officer and that is how I was trained), and If they don't have *unpaid* child support, if they aren't *delinquent* on student loans, if they aren't currently in a bankruptcy, if they aren't currently in a divorce, if they aren't currently in a lawsuit, etc. I don't care if they had a bankruptcy discharged last week. I don't care if they have lates and long ago write-offs. 

So, I get the $25,000 back when the Tenant Buyer comes along, usually within a month or two. I get the $750 a month ($9,000 a year) cash flow and I don't care how long he wants me to carry the financing. Each year that goes by is another $9,000 to me plus the principal is being paid down. When he eventually does do a refinance, the difference between his payoff amount and my payoff amount I get to keep. This is a more *complex* technique but anybody can be taught how to do it. I read at Realtor.com that the average gross return on a Fix & Flip is about $25,000.  This is *far* easier, faster, less risky and more lucrative. IMHO

@Young C. Two considerations: 

1) I don't like 5 year adjustable loans. I've been around long enough to have seen 18% interest. That was a very uncomfortable time for many people. Rates are extremely low right now, but with the way things are, I can't imagine they will stay that way for 20 years. ;-)

2) If everything is under one loan and you run into trouble you have to *try* to sell the set to get out of trouble. The bank probably won't allow you to sell parts of the security of their loan. You'd have to sell the whole thing.

However, If each parcel has it's own loan, you can sell them off individually as you need to or want to while keeping the others.

@Quinton Washington "He has been in the house for 14 years and he is unsure of the final number owed on the house. His motivation is saving his credit." "house is going into foreclosure and he owes 4K in back payment"

His credit is already trashed if he owes $4k in back payments and is facing foreclosure. His credit report will say "foreclosure" if he receives a Notice of Foreclosure or Sheriff's Sale Notice. 

If the goal is to "save his credit" you would want to take over his mortgage, make the payments to bring the loan current and make sure the payments are made on time going forward. After a couple of months, they *usually* reset the mortgage line on the credit report to say "paid as agreed*. You can do this Subject To and take the Title into your name but he stays on the loan. 

This is an ideal situation where you can help someone out and acquire a property. He needs to know though, you are not removing his name from the loan until it clears up the credit by making payments on time. 

The related, but not the same issue, is the question on the Uniform Residential Loan Application Form 1003 that everyone fills out when they take out a mortgage. 

Under VIII. DECLARATIONS: The question is asked: 

"c. Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?"

If you let the property go to sale, that is *YES* and that is a *very bad thing*. If you reinstate the loan, you then did not go to sale, so the answer is *NO* and that is a *very good thing*. Lenders don't like it when people won't move heaven and earth to make their mortgage payments. For some odd reason, lenders like to get paid back, and they want it "as agreed". A Pre-Foreclosure is not a Foreclsoure. You are currently talking about a Pre-Foreclosure. The house has not yet gone to sale.

@Wes Butler Hi Wes, Decide which kind of investor you want to be (SFR, Commercial, Land, Tax Liens, Passive, 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. Drop me a line if I can help.

@Jay Hinrichs I got a warning too. It's worth ringing the bells over, To Let everyone know.

@Scott Dykshorn Hi Scott, have you noticed any tax difference between Chicago and Scottsdale? 

Sounds like yo may a plan, but if you don't Decide which kind of investor you want to be (SFR, Commercial, Land, Tax Liens, Passive, 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. Drop me a line if I can help.

@Randy Hallowell if you want more info send a colleague request and PM me. Regards, Ken

 You realize you are only a few hours away from one of the best markets in the country right now? Phoenix. Of course, the guys here think the market is tightening up, but they have never been in a "tight" market like L.A. Here is cheap compared to L.A.

@Harrison Liu I never said that I never lived there. Well, Tukwila was recently listed as one of the most violent cities in the US. Have you ever shopped at South Center? Don't. As Seattle grew and people bought houses in the Central District to rehab, the people who sold moved to Skyway, Renton and Tukwila. There was a big influx of poor people from out of state that also landed in those areas. If you search the Seattle Times you will find "cars exchanging gunfire". It wasn't always that way. But, neighborhoods change and that sometimes means investing elsewhere. I just read the news. And let  @Corey R.  have the headaches while you go elsewhere and make some real money without getting shot at.

http://www.king5.com/news/crime/tukwila-named-amer...

And:

Reported Annual Crime In Tukwila

http://www.areavibes.com/tukwila-wa/crime/

@Moises B. "So I'm still in search of my first deal...and making good progress. Building my team slowly"

And you want to do your *First* private deal on your own? I've been researching airplane flying and I think I won't let the instructor know I'm taking the plane out for a spin tonight. What can go wrong?