All Forum Posts by: Chris Clothier

Chris Johnson - it is going to be a hard sell and I can tell you from experience. We have been approached twice this year about selling our company to a large purchaser. One simply wanted us and our knowledge - they were interested very little in our brand, people or business model, they thought they had all the answers already and simply wanted someone to run it for them. The 2nd was different, but they clearly saw a lot less value in the business. They valued a company like ours at 2x to 2.5x while we would sell for nothing short of 10x. That is the benefit of being good at what you do, enjoying what you do and being profitable at what you do. You get to set the price...doesn't mean anyone is going to bite though. They just don;t place a value on this type of model and we do hundreds of deals a year.

Good luck to you though - sounds like you have a good business model.

Chris

Hey Ed O. - I'm sure it wouldn't be the first time someone disagreed with me! No big deal. I'm not sure which posting you are referring to, but I try to make it a point in each of these to simply remind people that whether they are spending $1, $10 or $10,000...every penny is wasted if they are not learning and taking action. I don't advocate spending $35k, I can simply speak personally about some coaches or gurus in the industry and most of the the time the question is are they really doing anything or just selling coaching. In that question I tell what I know. As far as is it worth it, I go back to the earlier sentence. Even $1 is wasted if you do nothing with it, so $35k is a tremendous risk for anyone. If you are going to make it and spending that $35k spurs you to action, well maybe at that point it is worth it - to that particular person.

I completely agree with you on the point of gathering a lot of different data from 15-20 different people and I think it is a great idea to purchase resales on Ebay. I bought a $97 program yesterday (and immediately cancelled the recurring charge) on video marketing. I am familiar with the person who put it together, fully expect it to be mostly hype, but wanted to review some of the tips he talked about. It is worth it to me to spend the $97 to see if there is anything in it I can learn and implement. I think I am going to try your tip in the future and wait for it to hit Ebay!

Didn't mean to hijack the convo - I just wanted to compliment Steve Babiak for doing the same thing I try to do. Tell what you know.

All the best to you -

Chris

Ha! Always being a wise ***.

Two funny things about that mailer. 1. All but two of the envelopes that were returned for wrong addresses had the dollar bills still peeking out. The other two had been opened somewhere along the way. 2. When we opened the packages we got our first lesson in mailing bills this way...all the adhesive stuck to the bills and tore them in two when we tried to open them. ON every mailer after that we would clip the adhesive strip so it didn't stick to the bill.

Steve -

Thanks for sharing this information. So often - probably too often - these questions tend to get answered with indignation that the person asking would even waste his time learning from a speaker. I feel in my gut that most of the time that speaker has earned that reputation! But it is awesome that you had some good info. to share and hopefully Ed O. can get some great info. and tips from him. I have spent a lot of time and money making myself better and a site like this is only one resource. Sometimes we all need to be open to learning from others. Thanks for sharing.

All the best -

Chris

Wayne Brooks - That is the way i read it as well and I too have no idea when it first was added to the addendum. We have seen some with the blanks left exactly that...blank! J Scott is probably one of the smartest guys I know in this industry and he really helped me get my arms around this last week when i was first informed about these encumbrance restrictions placed on the loans.

We have since talked to multiple different closing attorneys and title companies in 4 states and all seem to be confused about the intent and purpose when it comes to an investor who is rehabbing to flip. In fact, none of the attorneys or title companies had ever actually advised a client that they could not borrow at the closing table. None could recall seeing it filled in. I think it is going to be a mess as it is ensnaring companies and buyers and tying them up when that was not what it was intended to do.

Wayne Brooks - Any idea how long FNMA has been putting this additional restriction on some deeds? We know it is not on all of them and have no idea when they started.

I wanted to add something. Hopefully, I didn't make it sound like no big deal that a title policy can cover. IF you buy a property from FNMA and several large banks are doing the same as FNMA, you must make sure of the language in the deed restriction. The encumbrance is in addition to the 90 day deed restriction that many of us have become accustomed to dealing with. This encumbrance is also not on every home purchased from FNMA. IT appears to be a random thing (as of right now). AND, investors cannot ignore this and rely on title policies.

I have to agree with Josh Rogan on shopping around. I think we have 3 or 4 different companies that we get rates from in the Dallas area and I will get those companies names and reply back to you on here. All I know is that insurance in Texas is between 2 and 3x what the rates are in Memphis. Not really sure why, but it is one of those hidden expenses that can drastically effect the performance of your properties.

You are smart to be keeping a close eye on it every year.

I'm not sure on a couple of your questions, but I think what you are referring to is a deed encumbrance. It does not state that you can or cannot refinance an REO purchase with this particular restriction. It states that you cannot encumber the deed with a lien greater than 120% of purchase price (i think this is the usual amount and it is usually the same as the 90 day sale restriction). As far as what does it mean if a title company misses this restriction and allows an investor to encumber the deed for more...? I'm not real sure and I don;t think they are yet either. I think a lot of it is going to be determined by the investors intent (did they borrow borrow profits?, did they resell?, did they also violate the 90 day restriction?) We've been trying to get opinions on this from different title companies and attorneys and many were not aware of the encumbrance restriction and none thought it would affect the investor depending on the intent. They all felt like any questions would fall back on the title company or attorney for missing it.

So I do not think the property can be lost, but again, these rules exist to prevent fraud so a lot of the outcome will be determined by what the investor is doing.

Chris

Leon D -

I've experimented with different things inside of lumpy mail. That is really what this is by the way. It is mail with something that catches the attention of the recipient and gets them to open. When you use fake money it does not work. When we have experimented with fake bills and even fake coins inside of tube mailers, the response rate drops well below the response rate of your normal everyday letter or postcard. I would not suggest using something that makes you look cheap or like you are faking it until you make it. At some things that is good but in direct mail marketing, I have tested it and it does not work. Stick to letters, postcards or yellow letters until you have the ability to test other things that are going to be more expensive like mailing dollar bills.

All the best - Chris