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Buying from A Hedge Fund Company
Hello, BP. I'd spoken with a gentleman from a hedge fund company. The company has inventory that it's willing to sell, but in order to secure the properties, they'd have to be purchased via a quit claim deed. Has anyone bought directly from a hedge fund company? In addition to selling some of its inventory, there are properties that can be acquired via a land contract. Most of us hear/read that these types of companies are taking certain markets by storm and purchasing a significant amount of properties, so it's refreshing to see that one can tap into the company's inventory and get some great deals.
Unless you know how to research title and are willing to self insure (take risk), do not buy with a quit claim deed. Write a contract and close the deal using escrow and title services. Quit claims are not worth anything when it comes to a legit transfer and marketable title. You could be buying from someone or entity that has no ownership or imperfect ownership.
If they are selling with a quit claim deed, it means they aren't guaranteeing title. You can offer to pay for escrow and title to make sure you don't buy something that you can't refinance or re-sell.
Just out of curiosity: what makes you say these are good deals? Hedge funds are like anybody who buys in volume. They have acquired some non-performing junk they are ready to get rid off. Selling that off with no title guarantee and with CFDs does not make them good deals. Those are acts of a motivated seller or someone trying to get rid of problems. In fact, IMO you should scrutinize those offerings extra hard. There might be some deals, but be extra, extra cautious with anybody selling off stuff with quit claims and CFDs.
Hello, K. Marie Poe. Thanks for responding and for the input you provided. Just to clarify, what I meant by good deals pertains to two of the Philly properties the gentleman and I were discussing. He gave me a bottom dollar amount, and the amounts he mentioned would be incredible deals for that particular area. I've diligently studied that market, so the price point is really "on point". For instance, one of the properties being sold can be bought at $11K. There are shell properties in the same area being sold for $25K at a minimum. He did mention that some of the properties can be purchased traditionally. He also has a few seller financing opportunities available. You're absolutely correct about being very cautious, and I will do so. I may not decide to purchase anything from the company right now, but perhaps in the future.
I agree with K Marie, get title insurance with a warranty deed. If he wants to sell via quit claim, he's got something to hide and likely wants to unload a problem on you.
@Account Closed gave you some excellent advice. If you do decide to go forward with any of these deals in the future a very thorough title search and title insurance are imperative! Btw which hedge fund is offering the properties?
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Not sure what kind of "hedge fund" you think you're dealing with, but they don't resemble the hedge funds I see. Sounds like either a wannabe hedge, a fake hedge, or an outright fraud. Business professionals don't sell $25k properties for $11k, and hedges don't do "seller financing". Do some quick research on this guy, the supposed hedge, whose name the deeds to all these properties are in, with what type of transaction they acquired them with, etc. No warranty deed with title insurance, no deal. Curious, how did you find this guy, or did he find you?
Thank you, gentlemen. I may not purchase anything at the moment. I was more curious if anyone has actually purchased inventory from a hedge fund company. I agree that title work/insurance is imperative. My partner and I just had to be released from a contract due to various title issues, and my title company would not insure the property.
@Cal C. The company is Stonecrest out of California. I can send you the contact information via private message, if you have an interest.
Originally posted by @Account Closed:
Your questions suggest you don't the know or understand the details or risks of how title works. IMO these deals would not be a good place to learn the ins and outs of title research. The seller can sell anyway he wants, but you control the buying end. Make your offer and pay for escrow services and a title policy. Don't buy without escrow and title insurance. Period.
Hello, Wayne. Thank you for your input. I found the company upon researching an expired listing I'd been monitoring. The company was mentioned as the seller in public records, so I contacted the office and had been forwarded to this particular gentleman. He mentioned that the company is a hedge fund type. I will definitely do as you suggested and research the information I'd been given thoroughly.
Stonecrest works in a couple of my farms. I wouldn't call them a hedge fund, but maybe that's their current hustle, or one they've added on. They definitely buy bulk low-valued REOs and resell them, hence the quit claim thing. These days they also appear to be pooling private investor funds and placing money in real estate and paper.
Regardless, if you like what they are selling, buy it your way.
@Account Closed Thanks again. I know all too well some of the misfortune that comes with title searches and the issues that pop up. We closed on a bank owned deal this past March that we had under contract since December 2013 due to the various liens. The waiting game was horrid, but we had gotten everything resolved, even though it took months to do so. My question was aimed at those who actually have purchased properties from these hedge fund companies. I just wanted to know what the experiences were like for those who have purchased in this manner. The rest of my first post was centered on my thoughts of being able to reach out to these types of companies for potentially profitable deals. It could be another avenue that folks use in order to acquire properties. I agree with everyone's statement - title search and insurance and diligently researching your lead source are very important.
@Account Closed Thanks for that bit of information about Stonecrest. I honestly wouldn't consider buying via a quit claim based on the wisdom given to me by you and the others. I'd prefer to be as safe as possible.
I've probably looked a dozen deals offered by sellers like Stonecrest in the past year. They don't usually have what I consider great deals. Usually very low valued, major rehab properties. I just looked at what they sold in one of my farms last year. I wouldn't have wanted any of them, but most have owner occupant buyers in them that paid cash. So sweat equity is alive and well in Central CA. :)
My experience dealing directly with resellers of bulk REOs ranged from idiotic to almost civil. Lots of expediency and not great communication skills. You may have more patience for that sort of thing. Some of their margins are thin, which IMO is why there is no listing and no escrow. The fact that Stonecrest had an expired listing in your area says a lot about their idea of value vs. mine.
@Account Closed I definitely understand. Thank you for disclosing your experiences. That expired listing is what led me to the company. The person I'd spoken with told me that particular property (the expired one) has a squatter residing there. It was on the market for 93 days with a list price of $26,000. The listing expired last summer. In today's market, the "as-is" value is around $20K. It's also in a region of South Philly that's quite rugged. I won't touch that, mainly because there are certain areas that scare me, to be frank, lol. Well, thanks again for the wisdom. Everyone, have a wonderful night.
@Account Closed It amazes me how you speak about a company you've never done business with. Someone needs to hold some of these BLOGGERS accountable for the misinformed info they spread about companies they have no clue about.....
@Account Closed I can speak from experience about this company...I dont work for them, ive never mentioned them in any post. But ive done several deals with this company...The owner of this company has bought literally all my wholesale deals, ive bought several properties from them and they have funded some deals right here in CA for me...One part of their business is asset liquidation, they simply liquidate properties for hedge funds and banks, and they sell them as is with no warranty. Its just a small part of what they do. Last year this company liquidated more than 4 thousands properties worldwide. Yes some were trashy but they have tons of great deals, thats just what liquidation is. I can personally tell you they dont have alot of inventory left, there down to the bottom of the barrel so your looking at the stuff everybody passed up so keep that in mind.... Speaking form someone who has bought a nice amount of them. And yes they do finance some of them. Just keep searching if your working with a budget they will eventually have something that fits you...You live in a total different market than anyone who left a post..Do your due diligence in full...They are not a Hedge Fund, they are a full brokerage company from real estate to mortgage. And they also liquidate assets, and they do pool private investors funds too.
They have been in business since the 80s'...Great reputationt. I apologize for this long post, theres not much that gets under my skin especially online because we know anyone can say they know about real estate and pretend to be a sucessfull investor...But throwing a company i work with under bus to potientially destroy their name that dosent sit well with me....smh
Nicole,
I've bought with a quit claim deed from a bulk REO buyer-reseller (econo homes). I paid a local title company to do a search and INSURE it for me. It was a very good deal, no surprises, just a two month lag in time to wait for the deed to be transferred. The house was worth $45K, I paid $21K. My house was bought in purchase of 100 homes all over the country, they paid $12K for it. I had just missed the bank trying to sell it at $39K when they bulk sold it.
Quit claim deeds are norm with these large companies, they are just pushing paper and money and are not invested in these properties enough to warranty a deed. Sure some might have title problems, but a local search you pay for should find it, or insure it if everything is ok.
What good would it be getting a warranty deed from a corporation that might not exist in six months, two years, etc... A warranty deed isn't everything in situation like that if the corporation vaporizes and a title claim comes in, that's where your title insurance comes into play. In theory a seller who warranties a title is supposed to make you whole if an issue arises, I wonder how often a seller has "fixed" a major title issue that pops up long after a sale?
Originally posted by @Jason Farmer:
Jason: What did I say about Stonecrest that bothers you or that was inaccurate? I said I wouldn't call them a hedge fund. You confirmed that below by saying they aren't a hedge fund. I said that they appear to be pooling and placing funds, which indeed their website shows them to be doing. They have bought and sold REOs in my farms of which I can see the purchase and sales price.
What do I need to be held accountable for?
@Jason Farmer Wow, thanks a million for your input regarding Stonecrest! It definitely helps in my evaluation of the company.
@George C. Good afternoon, and thank you for commenting. I appreciate your feedback. Thank you for the education on quit claim deeds! Based on your experience and Jason's experience with purchasing from these types of companies, it's nothing short of a bonus to view these companies as a solid lead source.
@Account Closed
Its clear your a very smart person, so lets not act like that's all you said. I didnt mention anything about the advice you gave but acting like you know what this company does and who they are and what they represent is wrong because you have no idea...
Lets put this perspective first off....Your taking about a multi million dollar real estate firm that works very heavily in your area (central CA) and many areas here in CA as though they are the ones that are idiotic and dont have good communication skills and they dont have good deals...smh.....But I know where this is headed and i just cant entertain it...
@Account Closed
You can look at them that way. ..@George C. said it perfectly, Thats how i planned it to come out on my head but i was a little disturb and my fingers type something completely different...Apologize for that...
Originally posted by @Jason Farmer:
Its clear your a very smart person, so lets not act like that's all you said. I didnt mention anything about the advice you gave but acting like you know what this company does and who they are and what they represent is wrong because you have no idea...
Lets put this perspective first off....Your taking about a multi million dollar real estate firm that works very heavily in your area (central CA) and many areas here in CA as though they are the ones that are idiotic and dont have good communication skills and they dont have good deals...smh.....But I know where this is headed and i just cant entertain it...
@Nicole Armond
You can look at them that way. ..@George C. said it perfectly, Thats how i planned it to come out on my head but i was a little disturb and my fingers type something completely different...Apologize for that...
Not sure what's got you ruffled. You mentioned bloggers and people pretending to be successful. Did you mean me? I'm not a blogger and I'm doing alright, thanks. Maybe I should be the one that's ruffled.
I said many of the REO liquidators I've worked have had poor communication and have been idiotic. I'll stand by that statement. I've not done business with Stonecrest and didn't indicate that I had.
The properties offered to me being sold by liquidators were not deals by my standards. And neither are the ones sold by Stonecrest recently in one of my farms. How is that headed anywhere? It's my opinion. The OP mentioned an expired listing. To me expired listings indicate pricing problems or issues. Hardly personal.
Regardless of Stonecrest's stellar reputation, my concerns and cautions to the OP are the same: Buy the properties on her own terms, to use escrow services and purchase title insurance.