All Forum Posts by: Mary Cronin

I'm an investor in Stockton. Connect and send me your email and I'll add you to the San Joaquin Real Estate Investors Association (SJREIA) emails - infrequent due to Covid but we used to meet for lunch every week - so maybe soon. 

@ Ari Hadar

A renter under a LO may (negotiable with seller) get a credit toward the down payment eg $1,000 rent every month and $200 is credited by the seller to the buyer's down payment (so $2400 per year). Some desperate sellers will give a 100% credit ... so $1,000 per month = $1000 per month credit towards down payment. 

Minimal cash outlay - sandwich lease option - you lease option from owner and lease option to your customer. In most places you can use this ... say a pre-foreclosure where seller will sell for amount of loan ... you bring loan current (your only cash outlay) then lease option to buyer (who will pay you an option fee - probably more than you paid to bring loan current, so no major outlay until you exercise the option). 

I don't understand what you mean here. I've never told a title company the name of a tenant - I'm not sure that with privacy laws that it would be permissible to do so. 

Anonymity .... trusts, LLCs, corporations, other (trusted!!!) people's names (also called "straw buyers"). Some of these might have dire tax consequences so check with lawyer and accountant before you do them. 

And if it's a lease option, there's no title company involved until the purchase. 

If you haven't read it, get a copy of Nothing Down by Robert Allen (the 1985+/- version NOT the newer ones) and he covers all the different ways to buy real estate. Ignore the 11% interest rates and $25,000 houses. 

And regarding saving - very few in US can save a penny. Most people spend every penny they earn (and more?) by the end of every month. 

I'm reminded of a saying "pay yourself 5% first then live off the rest" with FIRST being important - and after complaint that they can't make it on 100% - the response "if you can't live off of 100% then you can't live off the 95% so why not try it". But most people don't do this and have no savings, no emergency fund and no way to survive if they lose their job or if COVID shuts down their business.

A friend did this, putting $100 in a brokerage account on payday - so she barely noticed that she had it. She expressed total surprise a couple of years later to find she had thousands in cash (plus stocks that I invested for her). 

I'm guessing with the cost of living in Israel, that many are in the same boat.

Also consider owner finance and lease options.

Did you send estoppel letters during due diligence? 

PS and a seller's reason - they can't sell any other way - usually overpriced, or problems with the property. 

Any number of reasons ... 

Most common: 

No money for down payment. LO with rent credits give equity = down payment. 

Bad or no credit and can't qualify for a loan - LO allows them to gain equity while renting and either fix or create credit. Just renting doesn't yield equity.

Investor wanting to minimize cash outlays - one could buy multiple properties with LOs and maybe only 1 in normal purchase. 

Property has no equity - so down payment would be required with bank loan - gain equity until you reach 20% then finance purchase. Often a "sandwich" lease option - investor LO property from owner at less than market rent and in turn LO property to end buyer at market rent. (overpriced properties, foreclosure properties, properties that went down in value so mortgage too high).

Less common: 

Buyer has liens and can't have property in name. (Child support, judgments, IRS liens, etc.)

Buyer doesn't want property in own name - pending LLC or trust formation, or just because. Maybe more sensible than putting property in ex-spouse's name (yes I know someone who put at least $6M in ex-spouse's name - and it worked out well - in spite of what it sounds like. Investor had multiple properties, multiple businesses, multiple bank accounts, and feared multiple lawsuits over at least 3 continents.)

Buyer wants to be invisible.

"Do you go to the tax assessors site and it is there?" 

Some counties (most?) are online. Yours may be different since I think some East coast states tax by town? 

As a sample I'm familiar with, search on Google for San Joaquin County tax collector, and follow instructions for a search and here's a defaulted property APN for you to look at  ... 163-220-44 ... I found this on the recorder's grantee/grantor index searching for "Notice-Power to Sell" which shows APN and owner, Tax Collector omits name but gives you everything else ... look at the tax bill which shows assessments, taxes, miscellaneous bond payments (mostly schools) and the mailing address for owner. (Names are omitted per CA law but not from the Notice-Power to Sell.)

Don't ask me why Deutsche Bank has defaulted on the taxes. I think it's land. 

Your jurisdiction may have similar search functions. If all else fails go to tax office (COVID permitting) and get the info in person (maybe by phone???).

Find someone who attended and follow the trail. Find the former pastor and maybe he/she will know. 

I think a non-profit can sell a property to anyone or, alternatively,  distribute it to another similar non-profit. (Don't hold me to that - that's what I remember when I worked for a non-profit bar association in 2009.) An accountant or attorney should know. 

Sounds likely. LLCs are registered entities and should show up (if local or foreign (out of state) and registered in your state) but trusts aren't registered anywhere. Some people fail to register their out of state LLCs or corps in the local state (especially here in CA) but if your state's tax authority is as efficient as CA's, they'll catch up to them sooner or later. Check the tax collector's listing for an out of state address. 

You can name a trust anything you want. As far as hiding identity, naming a trust the "Joe Smith Family Trust" as many attorneys do totally defeats the point of anonymity - don't know why they do it. So "1234 Main St Trust" hides the owner (unless they live there). So would "Doberman Trust" assuming you were naming the trust after the dog breed and not someone's name. 

Is seller going to produce enough income from property to pay the mortgage? That's the key isn't it? 

A lender would want to see the business plan (you'll be a lender, no?) and would expect somewhere between a DSCR of 1.2 to 1.6 (or higher) in order to agree to the loan. Often they require a buyer to escrow reserves as well.

The down payment is almost irrelevant. (it's skin in the game but there are a lot of ways to have skin in the game besides the down payment). 

I see lots of FSBOs asking for 50% down thinking that that will make it more likely that the buyer/borrower will pay the mortgage. 

I think otherwise - they're making the buyer go out on a limb by paying all that cash up-front and it seems they will then not have the reserves to make the payments, if anything gets tight. Sounds shortsighted to me. 

If business plan produces the returns to pay (DSCR), then why not assist buyer into making a profitable deal for everyone.