All Forum Posts by: Derek W.

Also remember LLC's are state specific, so check with your local State laws to see.

Greg, if the offer is written under a trust and beneficial interest is transfered during escrow from me to the new buyer, then the house closes under the same trust, there has technically not been a transfer of property or a "wholsesale flip." So your wholesale fee would be a third party service fee (like a home inspector or termite company would charge during escrow) would that still be classified as a real estate transaction?

Hey! I was misquoted! What is all that nice stuff he says I said about Biggerpockets! I told him it is fun to flame newbies and criticize everyone's deals. LOL
Congratulations on the article, I bet that signs a bunch more people up to add the knowledge and networking.

p.s. Rich, are you posting on B.P at 3 o'clock in the morning?

Rich, I agree with you 100%. That is why I am saying affordability will reach all time highs. Riverside County already has reached affordability in terms of housing prices and median income. And if they drop another 20-30% it will create a reverse bubble on housing that will produce some excellent cash flow rentals and very low mortgage payments. We are seeing 2005 built 5 bed 4 bath 2800 sq ft homes selling for $170,000. If it drops another 26% they will sell for $125,800. That will be a piti payment for FHA borrowers around $1,100 month. These houses previously sold as new construction during the boom for $400,000.
The older inventory is well below $100,000 now. I am seeing 4 bed 2 bath 1,800 sq ft inventory for $74,000 straight out of the MLS. They just need paint and carpet and a renter! So in past market crashes does this actually happen where prices drop far below the affordability index? At what point does positive migration from surrounding higher price counties stop the price decreases? I am pretty sure we will continue to decrease 1-3% a month well into 2010, but I am trying to find the best way to profitably work this market.

There have been many article and posts lately about the faltering economy. We will/are seeing record foreclosure numbers, record descent in home prices, and giant losses of equity everywhere. But with all of the turmoil and grief won’t there also be record opportunities? All economic indicators point to us heading for 1970’s era stagflation, recession, inflation, and eventually rising interest rates. It seems that in 1977 in California we had very high affordability at 45%. By mathematically calculations, we should pass this sometime in 2009-2010. If prices continue to fall 1-3% in most California Counties, we will achieve 50-55% affordability by 2010. And since foreclosures aren’t doing anything but increasing, and unemployment is increasing to double digits we aren’t going to stabilize anytime soon. With these new foreclosures, prices are continuing to be driven down. For instance, in Palmdale, California according to krunching.com there were 110 new REO listing on the local MLS in December 2008. But there were 893 trustee sales. That means there are 783 new foreclosures that haven’t even hit the market yet! So prices will continue to go down until the volatility is decreased. When do we hit a numeric bottom? I thought it was when houses were sold cheap enough to cash flow. But I am finding tons of property that meet the B.P 50% rule and still no takers because people believe things will continue to go down. It feels like we are entering a reverse bubble on Real Estate where houses have become the turd in the punch bowl. Where are the positives and what are are the opportunities that come out of such an historic crash?

I agree with Joshua. I have been doing short sales for about 2 years now. Thankfully the market is shifting back into rehab/retail which is my 1st love and I passed on some referrals last week as the “flipping†business is now occupying my time. I learned how to do short sales and eventually set up a short sale processing company to process short sales for other agents and investors for a small fee. Cost? Free. I learned 100% from reading the internet. Read for a while and get tips for what to do first, and then do it. You don’t need a course to tell you that you need to get a home owner’s most recent w-2s, last tax returns, most recent pay stubs, etc. The lender will give you their list of requirements when you call the first time. And how do you get the lender’s number? It is on the back of the mortgage statement that the home owner will give you. No magic there either. All of this info is right here for free. Just read. Read the best ways to lead generate for short sales and do it. Once you get a home owner who wants help with a short sale, figure out the next step. It is the best way to learn as you can only mess it up if you don’t follow the steps the lender gives you. They will spell out EXACTLY what they need you to do every step of the way. Then you just do it. Watch one, do one, teach one, right? There are no secrets that a course is going to tell you. It is a pretty simply process…just very time consuming. It takes patience and persistence. You can do it, I am confident!

Here is a point of view from the other side. Hypothetical example:
I am an agent who has just met an investor that wants to purchase discounted REO properties (say 65-70% ARV) He/she asks me for lists of REO listings and wants to drive around and see them. Since I could lose my license for giving him combo codes or access information, I meet him at all properties he has driven past that look interesting to him and write up offers on the ones he is interested in. We do this for 4-6 weeks. I write 39 offers before finally getting one in escrow. He changes his mind and backs out of the escrow. Repeat house showing and offer writing another few weeks. Now, his offer price of $85,000 actually pays a full 3% commission (getting rarer lately as 2.5% is getting as common as “commission paid on net price only†listings.) So as an agent my commission is $2,550. Of course I have a split with my broker of, say, 70/30. So the final cut is $1,785. I have gas and other expenses to deduct from that. Then the investor asks me for a kickback on the commission when the deal closes to help with his hard money closing costs. Just a hypothetical example, you understand.
There are lots of agents that I know that would be very happy just to close a deal now and then, but they aren’t going to be the ones that have much investor knowledge. The agents that are extremely savvy in investing are probably writing their own offers on property. So assuming the 80/20 rule and of the 20% assume only a small portion of those are investor savvy, it really narrows the agents who could be helpful to an investor looking for the next deal. Understand that an investor is possibly the most time demanding client who is usually looking at very low priced inventory. That is the meat behind what Mark said “And most Realtors don't like working for investors.†Unless an agent REALLY understands RE investing, why wouldn’t they just take that first time home buyer out, show them 8-10 homes and write up a full price offer for the same money?

Wow! Do you think Jennifer Aniston is a Real Estate investor, too? I love this site!

$270,000