All Forum Posts by: William Morgan

Take a breath J. You have yet to clarify what you are asking and what you are alleging.

Previously I asked you to clarify and I will now repeat this question. You have made comments spanning different transactions. You need to clarify this before I can provide you this - got it? Here it is again:

I will also add the question::

What actions in the transaction in question constituted fraud?

Please be clear and specific in your allegation or I will not participate in this game of yours.

Hi Manuel,

This was the context:

Jon: Are you planning to actually move in? That always makes rehab a challenge.
Will M: I do not intend to move in.

To my knowledge most DOT's - even those with minimum occupancy time frame clauses- provide 60 days after the date of purchase for the Owner to move in. This is true, as far as I know, even with occupancy clauses that require the owner to be the resident for at least 12 months. The provision is likely to allow renovations such as those I will be making.

I understand how it could sound like fraud, but in reality I could buy this place, make it my primary residence and not actually have to occupy the premises for 2 months while it's being rehabbed.

Regarding your hypothetical, I would agree that is fraud and all parties involved would face the repercussions. I've disclosed everything to my lender in the past. And why wouldn't someone? What is the actual rate difference between an OO and a NOO loan anyway? .4%?

Your claim of fraud based on either one of two things:

1) A prior sale I described to Jon where I sold a property i lived in with an OO loan within 90 days.
-or-
2) A theoretical future transaction where I relate I plan to make the subject property my primary residence until its resold in a similar fashion as the sale described in #1.

Please clarify exactly when you suspect this fraud occurred?

#1 was perfectly legal.
#2 is describing plans for a future - yet to be transacted - purchase. I don't know what to say other than the obvious - fraud can only apply to something that has actually occurred as even a child knows. Ridiculous.

"So, we go back to my original points...either:
1. It's not really an OO loan; or
2. You're committing mortgage fraud.
So, which is it?
Perhaps if you tell us what kind of loan it is, we can help you determine if it's #1 or #2."

Your "original point" was that I publicly admitted to mortgage fraud. You mean you made an accusation but you don't already know? You threw that out there so you tell me the basis of your claim. Or is your quest for more details a tacit admission that you spoke hastily before having all the facts?

You've already derailed this topic by alleging I "publicly admitted to mortgage fraud" - thanks. Now it appears you require more details of a future theoretical transaction ostensibly to support your basis. Sorry, not going to give credence to you juvenile diversions.

Next time resist the impulse to speak without all the facts. And if you can't help derailing a post, just move on. I am sure there are other topics where you can make a meaningful contribution.

PS - I see you didn't provide any examples of a borrower going to jail for selling their residence in the same manner I did. Forget?

And if it's #2 and you're disclosing your intent to your lender, then your lender is committing mortgage fraud as well.

I see. And exactly who would the lender be defrauding - themselves? Interesting legal concept. Kinda like calling the cops for hitting myself and them charging me for assault.

Do some research, and you'll find MANY investors and lenders/brokers who went to jail after the real estate boom for this very reason.

It's clear you have not. Investors, homeowners and mortgage brokers found committing occupancy fraud possess a few basic commonalities;

Homeowners who claimed OO when in fact it was intended as a rental occupied by a tenant from the start.

Homeowners who claim OO but instead have a family member occupy the residence in their place.

Investors who claim OO to get lower rates when in fact they have a primary residence elsewhere.

Mortgage brokers who falsify records in order to obtain loan approval from the lender.

You claimed I have "publicly admitted to committing fraud." Bold statement. Please cite me one single case where a homeowner received an OO loan without occupancy riders or HUD and was charged with Occupancy Fraud for selling the house they lived in, shortly after purchase - as was the case for my sale. You implied there were many, just one will do. It appears you're out of your element.

When you discover no such case law exists, as evidenced by the conspicuous absence in your next post (if any) then perhaps reflect on the wise adage:

"When you know a thing, to hold that you know it, and when you do not know it, to admit that you do not--this is true knowledge" ~ Confucius

I'm pretty sure you just publicly admitted to mortgage fraud...

With all due respect, you're being dramatic, if not misinformed. The selling of my house having an OO note , without an occupancy certification rider , was not a rental, and I actually lived in, all within a few months of the purchase does not constitute occupancy fraud, not by a stretch. I am sure you are good at what you do. I'm also sure Law is not it.

Regarding my reply to Jon, I do not intend to occupy the house during the rehab. After its rehabbed I plan to count the property as my primary residence until it is sold. I plan to fix it, resell it, profit and pay taxes on any proceeds I receive from the sale of my house. *here's the important part* I disclose ALL OF THIS to the lender I work with as just I have in the past. If this time I cannot obtain OO rates based on the information provided so be it.

But nonetheless, thanks all for the cautions surrounding the issue.

I appreciate the constructive input. Honestly, I'm kinda surprised to see (the few) snarky remarks pop up in response to someone merely seeking some advice, thankful for that advice, and actually planning on heeding much of it as well. WTF guys ??

But whatever, that's sometimes the nature of online forums.

Happy Holidays all.

[/i]How are you getting away with 3% commissions? Are you an agent?[/i]

I've used flat fee MLS offering 3% to the buyers agent. Has worked good for me so far.

I do not intend to move in. Regarding a OO loan, I've done it once before and sold in just under 90 days. I've spoke with others who have as well. My impression is that the lender isn't as concerned about it as some may think. I 've used the same lender for 3 NOO loans and 2 OO , one of the with a short turn around. While I don't plan to do this every time i recently sold my primary residence so i plan to take advantage of that. If he balks i can go elsewhere. Honestly I'm not too worried about that.

Check out "occupants from hell" for a little glimpse at the games that can be played in CA. This deal is terrible. RUN as far and as fast as you can away from it.

Run Forest RUN!!! Really. Just up and run? My theory is that any deal is doable...at the right price. And the right price is what this topic is about. Not to be cavalier about it but this is just a 12 yr old worn rental that needs freshening up. I bought a house at a sheriffs auction a few years ago that was a real heap. Now that one I could understand, But run from this one though??? Think I'll just reduce the offer .

Tenants issue was covered previously.

Thanks for all the input!

BTW, I misstated one of the figures , the Comps are $195-265k and I place ARV at ~$230k. Again, $230k is substantiated by pulling the comps, driving the comps, a recent sale 5 doors down, as well as input from a broker I have a working relationship with (not a BPO though). Not to be arrogant but I'm comfortable with that valuation.

Even if you get $229K, $192K all in is 84%. There's not profit there. You need to be at 75% at the very highest, which means you need to be paying no more than about $148K. Even in CA!

Valid point and sound advice it is too slim, thanks.

As far as there being "no profit" I'm (was) still expecting to clear ~15-20k (gross) providing my assumptions are correct. What am I missing? Here's how I'm estimated my costs, rounded up to the nearest 500.

$1500 Inspections (termite +Home + appraisal)
$2500 Closing Costs (Title ins + Lenders policy + Escrow + Loan srv fee)
Note, closing costs are split on the buy and the sell so $2500 represents both halves.
$2000 Conventional financing ( Owner occupied w/ at least 20% dwn)
$12,000 Repairs *see below
$4000 Holding costs (assumes 6 month vacancy on a 4.5% OO 30yr fixed)
$7000 RE commissions (3%)
___________
$29,000 total buy/sell transaction costs.

Is there something big I missed or are you rather saying that even if my assumptions are correct $15-20k is not worth the risk? Either way thanks for the insightful advice.

Regarding repairs, this of course is the biggest variable. My estimate is based on the following:
New carpet/pad (900')
1 new interior door
1 new exterior door
1 screen door
Yard clean
Fence fix
2 stucco patch areas painted to match
Complete interior paint
Misc minor things like interior door knobs, outlet covers, bathroom fixts etc.

I plan to pay for a home inspection and if any defects are found that would affect resale I intend ask the seller for concessions on these. I expect at least one or two faucet, toilet or appliance issues. If it's over $250 I'm going back to the seller.

All the work except for the carpet and help with the yard clean will be done by myself and a friend of mine. He's a retired builder who's partnered with me on 3 other deals and charges me $20/hr cash more as a favor for opportunities I've sent his way in the past.

Question: I ball park $12k for the above repairs with price concessions from the seller for those discovered while under contract - reasonable estimate? J Scott?

Some additional info:

I anticipate 2-3 weeks to bring the property to sale condition once vacated.

I plan to make closing contingent on vacancy and allotting 60 days to close for this in the contract. If there are problem tenants I'd either extend closing or walk away. They are on a month to month lease. I know CA evictions can be a nightmare. Believe me I know.

I plan to list the property while under contract. The contract I use (via Michael Quarles) includes that provision. (BTW where'd he go?)

One last question:

I am curious why use a flat percentage (75%) vs a flat dollar amount? Most houses in my area start in the low-mid 300's. Given that it sounds like you would walk away from a CA deal if you couldn't book at least $80k but elsewhere - say the Midwest - you'd settle for less than $80k on a deal. seems like a lot of money to leave on the table, just curious as to why?

I will be making an offer in two days on a property. I ran the comps, drove the comps, inspected the house and have a good feel for it's value. She has two other properties she also wants to sell me that I'm hoping get so I'm giving her my best price.

Comps (with .5 mi, 15sq', same bd/ba etc. ) show a range of $195-230k.

A near identical property with slightly better features (larger yard, driveway and a little prettier) sold a week ago for full price, $235k with multiple backup offers according to the agent.

The property is 12 yrs old and feels like a worn rental. Renovations will include a few doors, flooring, int paint, stucco repair, ext fencing fix, and the like. I didn't find any major structural issues and I plan to have a home inspection sniff out component defects which will be deducted if found.

I am anticipating a generic 'lipstick' remodel to the tune of $10-12k max.

I plan to list flat-fee MLS for $400 with 3% to buyers agent $6900 .

I'll have to evict tenants.

I'm factoring a 3 month holding time (although I suspect it will be less from what I've been seeing w/ properties at this price point).

I'll be financing it.

I'm paying closing costs (Title, escrow, etc) $2500?

All totaled I'm figuring no more than $25k in costs.

I should be able to sell it for $229k fairly quick.

I plan to offer $180k

Sound offer? Too skinny? What say you?

I found a tired Landlord who wants to unload 3 of her (distant) properties. I would like to make her an offer on all 3 thereby solving all of her issues at once. I believe by doing so I can negotiate a better price.

She owns them cash and I will need to finance them. She is not interested in owner financing them to me. I'm wondering if there is a better way to finance the deal than to get three separate loans (and duplicate fees).

I can't see any way around it though. Anyone come across something like this?

Hi All,

So far all of my deals have been with local sellers however my latest marketing has targeted absentees. I'm curious of how you handle absentee owners (sellers) when it comes to doing a physical walk through and/or offer?

Most far away sellers have a means for me to enter the property for me to inspect and estimate repairs without them being there. Alternatively I could try to delay it until they are able to make it there in person. My instincts say to not let the deal grow cold due to logistics so I'm inclined to get in there size up the property and make an informed offer.

Q: What do you do? Do you insist the sellers is present at the walk-through?

Q: Regarding making an offer. If the owner is not in the area how do you handle it?

I have considered sending a packet including my inspection sheet (with repair estimates), pictures of problems, comps, etc. and then discussing an offer on the phone, following up with a contract via fed-ex.

Anyone have a better way ?

Thanks for the insight.