All Forum Posts by: Steve Wilcox

Hey Guys, just wanted to give you the final update-

I closed on 1/09 finally (original date October 24th). We gave the bank the HUD1, and a list of all repairs we made. Finally served the buyers a notice to perform, asking for $100 per day every day they did not close after 1/10 and they got it done (should have served the notice a long time ago). While we are done carrying the property for a long time and taking a huge discount due to low ball appraisal ate a hefty chunk of profits.

Lessons learned -
1. don't bother to fight with the idiots at the banks as there is nothing to win- everyone wants it to close, that's how we all get paid
2. don't cut people any slack, should have served the buyers a notice to perform with financial consequences a long time ago to force them to put pressure on their lawyer and lender
3. expect the worst, make sure you are prepared to pay for it

It depends on your goals and how actively involved you would like to be with your investments. If you have no other debt, and no mortgage on your own home then you can finance a few properties assuming you have some provable income. Until you have 2 years rental experience that you have paid your taxes on banks will not count the rental income towards your gross for calculating how much you can afford to borrow.
Sounds like you are looking for a place to park some cash for a somewhat passive return? In that case I would look for the largest building you could get for around 350k that in good shape and does not have a ton of deferred maintenance. With a large building your management costs are lower than a portfolio of single family homes all around town, and your more protected against vacancy, because even with 1 or 2 units empty others will still be providing some cash flow.

If you want to be more active you could buy a single family home at a deep discount, rehab, and resell for a larger profit but this requires much more involvement.

You need a plan before you go out an do a deal, that way you know what a deal looks like when you see one.
What are your goals, are you looking to rehab and flip, buy and hold for cash flow, wholesale to other investors, or something else? Define what your niche will be, what it takes to succeed in your niche, how your would define successful deal, and then figure out how to connect the dots. Put numbers to pencil and paper and see if they make sense, sort of like paper trading with stocks, you dont need to actually buy but it you did how much would it cost to buy (including closing costs), how much to fix up (including a contingency for when stuff goes wrong), and how long would it take (be very conservative here especially when starting out), and how much could you sell it or rent it for QUICKLY (also be very conservative).
If you have potential investors, how much are they willing to invest, what sort of returns do they expect on their investment, and is that money enough to execute your strategy or will you need additional financing?
As far as realtors go, as long as you have either a pre-qualification for a mortgage or a proof of funds you will find they are more then willing to help as stated they make money when you buy as well as when you sell.

A flood in itself is not htat big of a deal, I live in a flood area.
The issue at the shore will be how resale prices will be affected by other flooded homes. Also I know many towns like ortley beach, have not even begun to issue permits to rebuild as they are not sure what new building codes will allow, and they re considering making everyone build up a few feet off the ground to make properties insurable. It would really suck to sink a ton of cash into a home to find out it was not up to current codes

Once inspection period is over I believe that buyers loose their right to ask you for money based on issues with the home. As long as inspection period went and you got their requests or their acknowledgment everything is good you should be set.

In all honesty if you never got the addendum signed when all contracts were initially signed you are to blame. There are too many dollars on the table to risk allowing someone else to be responsible for your success.

If they went through inspection and haven't asked for anything in the way of repairs or concessions then I dont think it really matters.

What tax benefits are you seeking?
An LLC is a pass through entity, and flips under 1 year are treated as ordinary income. Expenses incurred are the cost of doing business and can be written off.

hey Lauren, another fellow nj investor here. Best of luck getting your feet wet in REI, the info on this site is invaluable

Steve Cook is 100% right in my opinion that we as investors need some sort of national voice. I also couldn't agree more about the clowns on TV who are either amateurs, or flaunt bad business practices and poor quality of work, to get the job done. Also the fact that none of the television shows come even close to showing the real #'s such as carrying costs, short term capital gains tax on the sale, ect the public view is that we are all getting filthy rich without doing any real work. Unfortunately for many people these shows are the closest they ever get to real estate investing.

We need more advocates to explain how we improve neighborhoods, help provide quality homes to first time buyers, increase tax revenues, provide jobs and stimulate the local economies, ect.

Many homes that are bought by investors would not qualify for traditional financing anyway, so they would either sit vacant which attracts vandals, druggies, and other undesirables, OR an investor rehabs and resells.

Many investors and gurus trying to sell programs post pictures of large checks online showing off earnings from deals flaunting money they might have made on a deal. This only makes us look worse. You would never see stock brokers, investment bankers, or doctors posting their annual earnings online (and even though we all know most are crooks) they hardly ever receive any of the bashing we get in the media.

Not Closing Today, gave the bank my HUD1 as well as signed list of improvements. Now the bank demanded an updated addendum confirming that now the closing would be on or before 1/07 and claim this is what held them up, as the previouse one listed the original delayed date of 12/20.
Hope to get closed and move on

The purchase addendum has some pretty strict language, especially about the previous mortgage insurance company can take possession of the title.

One would hate to shell out the $$ for inspection, tank scan, ect to have the previous mortgage company come in and take the property. Has any one ever had any experiences with this, or heard of this actually happening?