All Forum Posts by: Randy Thomason

But if you loan money to the LLC you still need to secure your funds. You are playing with fire. I don't know the people but I do know people. when things a re good there is never a problem paying bills and loans. But when things start to go bad then people take care of themselves first. It is just human nature. Get your attorney involved and tell him to secure your position.

It's your business and you run it like you want but, Me personally, I wouldn't lend on it without security collateral.  Just asking for trouble.  It might be fine the first time and maybe the second time, but somewhere down the line you will get bit.  Just my opinion.  Murphy's Law 101. For example,  What happens if he has a heart attack or a car wreck and is injured or dies?  Can't work, can't finish the deal.  I bet your are screwed.  Or the IRS seizes his bank account for back taxes.  So many things can go wrong. Set you business practices up and your rules and follow them. It is when you deviate from your standards you get burned and fail.

Without the mortgage filed you have no security for the note. It is considered an unsecured investment. With that being said, who is the note from? His company or him?  or both? 

A mortgage even in a second position, it is better than no collateral. If he signs personally guaranteeing, then you could tie up all his assets if he defaults, that is if he has any that you can find and he doesn't file Bankruptcy. The property (collateral) is what you want. CLTV (combined loan to value) of the first and second mtg should not exceed ___? my suggestion is 75% tops but preferably 70% or below. A lot depends on your market there. When the market turns down, and if it goes quickly, you only have a 30% buffer. Remember how fast it went down in 2007 and 08?

If you are in the second position and he pays the first but not the second then you have to foreclose and still have the first mtg ahead of you. Do you have the money to take it over?

@Deonte Palmer  ahh  You had a realtor send it. That's fine. There is always a place near the end of the realtor's contract that you can write any additional terms or conditions.  Anything written in there supercedes anything typed before it.     You should always write your own terms you want and not go by the realtor's contracted terms unless they serve all your purposes.

One thing I would like to point out to everyone on this discussion.  Those of you who have suggested using a state specific Realtor or real estate commission approved contract need to be aware that these contracts are copyrighted. They are designed to only be used be licensed realtors and you could have a problem if you use one without permission. My state definitely frowns on it. 

Hi Joseph,

In reality, who cares?  we make money in up markets, down markets, and sideways markets.  Yes, you need to tweak your strategies some but money is there to be made always, and in my opinion, I have always made more money in down markets.  Less competition, more motivation on the sellers part, and I am one of the few that will take on properties during panic times.  Buy cash flow.  Invest defensively if the market is dictating that.  The pundits are never right in their predictions- timing wise anyway.  If you are always afraid of the market you will never do anything.  Good decisions on properties and cash flow if holding.  Don't over leverage and buy cheap enough for a buffer if rehabbing.  Lower risk by adding a partner to a deal and split the risk if you are worried.

Happy Hunting!

Very true @Jay Hinrichs.  Sub 2's aren't for everyone and you really need to know what you are doing so you don't get  into trouble.  But there is always a market for them in up and down markets. There are always divorces, probates, job loses or transfers and of course foreclosures (yes I know some states have a distressed homeowner law).  There are more of them in down markets as financial hardships create more divorces.  Many ask why divorces are a good reason.  It's because two earning families can pay the mortgage but when a divorce happens neither can afford the house on their own so to save a foreclosure or bankruptcy this can be a good strategy. 

There are many great strategies in this business as you know. Everybody just has to find their niches and become the best at them.

No we don't have anything in the Philippines currently.  We feel its a little too rough for us currently and we have better opportunities elsewhere with less risk. But that is just us.  

This focus group meeting from ArkREIA is about wholesaling legally and structuring deals creatively.  We answer your questions and will help look at potential deals you have.  We will be discussing marketing, comps, talking and negotiating with sellers, and how to create deals where no one else see them.  Network with other investors and also have some great pizza, sandwiches or salads.

You are looking at the wrong marketplace then.  Look for different neighborhoods at lower prices.  Look for motivated sellers with problem and trashed properties that you can buy cheaper and fix up and have equity in.  You have to adjust to different environments based on what the market is or look for different markets or strategies.

I know some markets are just that way like California. I would never choose to to negative cash flow.But there are exceptions. I buy houses Subject to the existing mortgage. I have bought some, especially 15 year mortgages, that negative cash flow. But a great strategy for that is sell the negative cash flow to someone else for part of the deal. Meaning sell part interest to a doctor who wants to invest but needs no headaches. If you negative cash flow 300 per month maybe sell the Doc half the deal for the $300 or maybe 400 per month and at the end of the payoff you sell and split the deal. Everybody wins that way. BUT you have to know your numbers. This is not about real estate. It's a financing game. Newer investors won't get it usually but over time with continued education you get there. We all started right where you are. Just keep learning and networking. Learn you financial calculator well. It should be your best friend. BP is a good place to start as are your local REIA's.