All Forum Posts by: Account Closed

Question. Assuming you have the insurance policy, it is a good policy from a good company and that they will pay as and when necessary...

Further assume that you own more than one property, etc.

If and when a suit happens will your policy cover the value of all your assets? If not are you expecting any such suit to be settled for less than the value of the policy?

As you have no debt and very visible assets you appear to be a rich target. Deep pockets is the term used in the corporate world.

I am expecting that you operate in an above board fashion, use good lease agreements, hire workers who have the right workers comp and other prudent things. Hence your risk is partially managed by good operating procedures. Still, stuff happens.

I was renting from my mother-in-law a unit in a duplex. My wife and I had the upper unit. The lower unit was rented to a women and she had a boyfriend. They got into a fight that was a bit loud. For what ever reason the lady decided that she was going to exit through the window. There was about a 10 foot drop. Easy enough except she sprained her ankle.

The insurance company was going to pay out something like $5,000 rather than fight the issue. My mother-in-law asked if we knew anything. As I happened to have been watching from above given the noise I said that I saw the whole thing and there was no possibility that she fell on the steps (her claim while leaving the building). The insurance company got me on the phone and recorded what was an interview. They had me state my name, etc and then asked a series of questions to document what I claimed to have seen. That was the end of the suit.

Suits do happen and there might not be a lawyer hustling for business.

John Corey

Jim has a point. The term is generally used by most investors to mean something that is clearly illegal. The small number of investors who know how to legally bird dog or work with bird dogs will rarely be noticed.

Similar to the term hacker. It started out as a complement for technical software developers who were good at writing code. The term had no connection to illegal activity or breaking into systems. Over time the use changed and those where used to be hackers in the legally correct way stopped using the label.

A bird dog can operate legally. Most newbies and others who are not aware of where exactly the line is tend to use the term when operating as an unlicensed agent.

Inventing a new term and defining the activities correctly will be a challenge if you want the new term to be broadly understood.

John Corey

I want to say thanks to the folks who are putting in the time to move threads. Some of the time a thread really is in the wrong topic area.

The fact that a move thread can be visible to the old location with the Moved label is a great feature. One click and you are looking at the thread but in the new topic area.

Nice feature. Not one I have seen on many forums. It seems to work well if someone has the time to scan for candidates and then do the move.

:clap: :clap:

John Corey

Buying and selling can happen seconds apart. Some do deals like this. A double close is an example. I close in one room on the purchase and I close on the sale in the other room at effectively the same time. Legally there is an order as I can not legally sell until I have finished buying. One is recorded before the other.

What risks lenders want to take is another thing.

Seasoning is the term used to describe how long someone has been the owner on title. If the value jumps and the time since the last sale is short the lender might object to financing the subsequent sale. Their view is the market determines value and the prior sale was too recent for there to be a jump in value. Some of the time it can be resolved by showing how the prior sale was for a different situation (burned out shell vs. completely remodeled home). Most of the time the lender wants time to pass.

There is no legal requirement. It is a business decision. Many of the fraud cases involve rapid sales and resales at higher and higher prices. If a lender has a 6 month seasoning requirement they will eliminate a lot of fraud while missing almost none of the mainstream business. Most lenders do not do that much investor business so ignoring a slice of the demand (from the seasoning) makes almost no difference to their income.

Risk vs. Reward. Return on investment being secondary to return of the investment capital (money provided by the bank as a loan).

John Corey

A quick comment as I do not have the time to read the full thread before running out to the store.

If there are junior liens then consider their position. A hospital bill is likely to go unpaid if there is a foreclosure. These liens are really judgments that will continue to exist but will not be attached to this property any more if there is a foreclosure.

You can sometimes get a very steep discount on such liens.

Two strategies. Short the junior liens as part of an overall short sale process.

Or buy the liens if you truly expect the auction to result in a sale that will cause 1 or more of the junior liens to be paid off. In that case the best strategy would be to agree a deal where you lock the price and then have 30 days to perform. An option. Many times the hospital or others will not have the time or the interest to check to see if the house is being sold. Hence they will not know that they are likely to be paid in the next 30 days. A sophisticated strategy where timing and negotiations are important. A friend buys judgments for deep discounts and then works out deals with the people who owe the money. He is not focused on foreclosure related judgments.

I will see if I can get some time later to read the full thread and add any comments that make sense.

John Corey

Ryan,

By a double close I am expecting you are indicating that the buyer will take down the property using the hard money. They will pay the points and other fees. That way they close on the deal they agreed to with the lender and then they resell to the end buyer.

To all. With a double close the end buyer's lender could have an issue as they will see the title vested in the name of the bank when they look at the preliminary paperwork. Some lenders will then look back to the prior sale price (1st leg of the double close).

Be prepared for the 2nd leg to fail at the closing table with a late underwriting block if the end buyer is getting a conventional mortgage.

Other lenders will not care but you do need to be prepared to end up with 1/2 of a double close. You will be the owner with carry costs and no exit nailed down.

Eyes open when driving in a dark tunnel.

John Corey

As the numbers and the replies indicate there is no real deal here. At the same time it could be a great project for someone looking to get a home cheaper and then do some improvements.

Any update? GreenHorizons did you buy?

John Corey

If you can get in and out quickly with little or no money involved and little or no binding commitments that can bite you then any deal is fine. Little hassle and you make a few buck - go for it.

If the deal is messy, not likely to close, will tie up your funds then you need a bigger reward for the risk.

Some folks work a year in a job for $30K plus benefits. Others do 1 deal and make the same in under a month working part time. Others get stuffed with a bad deal they can not unload, time wasted and cash lost.

You did not say a lot about the actual deal and if you have buyers waiting in the wings. Hard to say if the deal will go smoothly. The numbers imply you can make some money IF you get the deal done from start to finish.

John Corey

I can not really tell what you want. It seems you are considering selling the property.

How about getting 2-3 of the local agents to come buy and provide comps. Ask them about recent sales. Get their views on the alternatives (sell as is vs. tear down, rebuild and sell). Good agents will know the numbers and will know what people have been doing.

The actual profit margin is always suspect on a tear down and rebuild given that stuff happens that you did not plan for. Hence there is a degree of risk and hassle involved.

If there any possibility of making a duplex of larger on the lots? Zoning around a university sometimes allows for small multi-family buildings. They can be a real money spinner when held as rentals.

Otherwise you are going about it the right way when you look at the costs. Do expect some issues related to paying off any existing financing, new financing so new closing costs, carry costs during a build phase, etc. If weather can be an issue expect delays or extra costs during the winter months.

John Corey

Ryan,

I assume you are implying you can make a guess as to the purchase price but still can not tell what it was given there is no way to tell how much cash was used.

Is there anything else that is specific about TX which will provide a clue?

Note that I find that the past sale price has little bearing on the next sale unless the past sale was very recent. Hence it is a bit of a waste to put much time into trying to find out.

John Corey