All Forum Posts by: Tim Winter

In Arizona you would have an enforceable contract and can sue for performance. I'd check with the local RE laws to see if your state is the same. 

I would get the title report regardless. If you have a good relationship with a title rep they can run this fairly easily for you for no cost. if you don't have a good rep, get one. They're worth their weight in gold for off-market purchases. 

If they are wanting to avoid title, they're either cash poor or something is up. I'd do your due diligence. If the property is tied up in probate, it could be months until they straighten out heirs and auth rep, so be preparted to wait, but get everything in writing to tie it up now before others descend upon it once it hits public record.

I always make offers like these contingent on in-person inspection, so you can get them on the line, then renegotiate after you find out the facts of the matter. Keep in mind, you can always renegotiate at any time upon discovery of new information, so keep that option open in your contract(s).

Where is the property located? That can effect alot of things as most laws are local. Sometimes all that is needed is a LOE or letter of explanation to the court that this is not an arms-length deal, and that you're getting a "family" discount. 

The other idea that was brought up was the carryback on the 2nd. This note would satisfy the courts sense of value, and then after closing, its up to the both of you how to handle that additional debt (sell it for cash at a discount after rehab, gift all or portion of it, trade for something else of value, hold until you sell at X date at reduced or interest free payments, etc.) The note I believe is the most flexible as its up to the two of you to agree on payment and terms and you're only as limited as your imagination. 

If the lender is okay doing a hold back, you could close at the higher value, payout the contractors from proceeds after close for work completed up to that date, and or pay out on a schedule as work is completed like a renovation loan depending on how good your relations are with your title person. Not all escrow officers are willing to act as private lender in this capacity though.

Having done this myself and helped others down this path, I would recommend starting out simple, and then going complicated as you grow. It sounds like you've started out right with wanting to setup separate bank accounts and clean books, changed over the insurance and rent collection the way that I would recommend. 

Something that a CPA or other gurus won't tell you is that the LLC, while it gives you some extra liability protection, may not be the best solution for every situation. If this is your first property, and you don't have substantial equity you're trying to protect or don't feel you need much protection at this point, a trust can give you some of the same protection you might be looking for at this point. If it helps you sleep at night, you can also get a blanket liability policy or up your liability protection to around $1-2MM on your landlord policy for less than a full asset protection plan.

Someone that is local I would recommend talking to at some point would be Christine Cracchiolo of Forakis Law Firm. They specialize in estate planning and creating asset protection legal blueprints from simple to mind boggling level fortresses and can guide you further on how best to protect your and our families interests in your investing journey. www.MyLegalHome.com 

@Ross Murphy, As others have stated there is no set standard on listing agreements. What the agent might have done is use a template that has 6 months but typically those are inserted by hand. You always have the right to cancel, just check the cancellation clause, should be X amount of days or immediate, if in writing, etc. 

If you are wanting to rent it if it doesn't sell, has your agent gone over rent-to-own options with you? You could carry the note if its free and clear and get a down or sell a partial of that note for any cash your needing, wrap the existing financing until they refi in a set time and cash out completely then, do a lease option/purchase if they just need more time, etc. This will drive more traffic, as there are many self-employed or people wanting to buy but held back by previous foreclosure/BK timelimites, divorce, etc hampering them from getting traditional financing, and if you're wanting to rent it again quickly, and sell eventually, this would be a good strategy for maximizing your cashflow during the turn. This also will pocket you several "I only want to rent" leads, that you can follow up on if you're not getting your price and your 90 day time limit is quickly approaching. 

If you are looking to just partially cash out without the hassle of the rental anymore, there are also other creative financing exits as well that you can do to maximize cashflow will minimizing management overhead. If you'd like to go over options and ideas, just PM me and I'd be happy to help. 

@Michael Puckett, I actually offer 3 options every time. Do the Starbucks trick where you put the option that you want him to pick in the middle, between two other options that more in favor towards you. 

For example, for the interest only option, you could also have one that does amortize, but over a shorter time period, at a lower interest rate to keep the payments about the same. 

You could also offer him a lease option, or master/sandwich lease where you'd lease it from him at a set price, and agree to meet his $150k price in the future at term (say 2- 3 years down the road) and he takes a lease payment from you. Ask him to credit you a portion of the lease payments and when he asks why tell him you're saving him all the hassles, and its your incentive to never bother him about the property (which if he's heading into retirement he doesn't even want to know he still has a property.. just wants a steady check automatically deposited to his account) 

Offer an all cash option that is not obscenely low, but if he were to go for it, that you could find a partner (someone with the extra capital) to make the deal still happen. The all cash option could be beneficial to both you and your partner as your over time net will be higher. 

It's good that you have a friendly seller, and have a relationship as that will make the deal go alot smoother over this negotiation phase. Just make sure, as friends, you are not making his end of the deal so good its at your detriment. Work out the numbers and make sure you both are getting something out of each option. 

Let me know if you need someone to bounce ideas off of. I'm always up for talking real estate and creative options.

@Jay Hinrichs  Yes, as I mentioned in my post its not anything completely new, concept wise, that I feel warrants $1500 investment, but they do claim 6-15% response rate with their marketing, and they are target marketing non-tax defaults which they claim is 80% of their responses. That information to me would be worth some money, but not the price tag they are asking,

@Ariel I'm sitting at one of Jack Bosch's live all day seminar after the cash flow 2hr session and it sounds good, but all I want from his system is the marketing materials and how to choose the areas to work. Don't see that being worth the $1500 but your needs and milage might vary.

The topic seems solid and I'm seeing dozens of people signing up for his course and 3 day live event going in more depth on his system. It appears he does these around the country, not just here in Phoenix where he lives so might check his website if this is something you'd be interested in.

I would have to disagree that there is no such thing as a multifamily house hack in Phoenix. Just a bit ago I was looking over a 7 unit downtown Phoenix that might have worked for me and my family. A along time agent was looking to dump part of his portfolio, and a few of the units in this complex were complete gut jobs. Not sure how he found people willing to rent two of them, with the ceiling falling in. 

There was a "fake" 4-plex out in the Arcadia area, not too long ago, that we found for a buyer who just had to be in that area. Thought it would take awhile, but there was a plex that came up that was wrongly converted into 4 units that the city was fining, and nobody wanted to touch it. It wouldn't be for the faint of heart, but with a few zoning tweeks and remodeling (ripping out a few ovens to make the county happy until its done) it would have been a no brainer deal for someone that's willing to put in the time and sweat equity.

Also, there is the non-traditional live in flip, with one of the units being a SFH. These can be found all over and are great if you have a higher standard of living that you can't find in traditional MF in the area you want to be, like Tempe or Chandler. There was an investor looking to move out here from CA that wanted something that was "updated", meaning everything almost new and trendy, which just doesn't really exist in the Greater area, but a nice SFH with Casita or duplex/triplex in the back can be a great income earner to either live frugally in one of the smaller units and renting out the house, or living in the house "rent free" as you fix up and rent out the smaller units in the back.

Lots of options, just depends on your budget and where you are looking.

@Walker Gibbin you can do property management under a broker, as an agent, but you have to find a broker that is willing to do that. West USA does property management for agents. There are also larger property management firms that enlist brokers in their target areas, and they have PM agents under them that do the management and working with owners. On-site property "management" on larger complexes is more of a "residential leasing or manager" which is typically a W2 position. Then of course you can always self manage any number of properties.  

Did you check out this thread?  How many rental properties can I self manage in Arizona?