All Forum Posts by: Abdenour Achab

I am currently using Shasta county's web site to build a list of people who have lent money secured by real estate. My hope is to find investors who are happy with 8% or 9% return to sell a promissory note/trust deed in Shasta county to one of them.

However, it's very time consuming. And I remember that in one of the zillion webinars I have watched this year, somebody has already built lender lists using cheap virtual assistants, and is offering access to his database for a monthly fee. At the time I watched the webinar, I didn't need the service, didn't expect to need it anytime soon, so didn't write down who the guy/company was.

Do you know of anybody who has already built such a database and is offering access to it for a fee ? I only need to use it once (one mailing to everybody in the lenders list), so it would be cheaper for me to pay the fee than to build the list (I only own one note in Shasta county, California, and have no plans to invest there).

Abdenour

Yes. I will be buying at $3.823 (90% off it's first day price as show by Yahoo finance charts).

Abdenour

I was browsing probate files yesterday in Sacramento, California, and found a house worth $175,000 (according to the file - Zillow's zestimate is a little higher) with a $160,000 loan on it. The estate also owns $25,000 worth of personal property.

I first thought about making an offer subject to, but then got thinking that if I was a heir to the estate, based on what I now know about probate (which is not much), I would oppose it on the fear that, if the loan stays on the deceased name, the bank might go after the $25,000 worth of personal property by filing a claim after the sale closes.

Is there anything in the probate law that would preclude a bank from doing that ?

Abdenour

If you have donated assets to a Charitable Remainder Trust, and became the trustee of the trust, please share your experience regarding control and ongoing expenses. I am trying to go through a shoulda coulda woulda exercise regarding 2006, so I can make better decisions in the future.

Here is my shoulda coulda woulda: I sold a condo at the top of the bubble, tried and failed to do a 1031 exchange (failed meaning I didn't find a good deal to buy - I did NOT want to just buy any property). Using round figures, the sale prices minus sales cost was $300,000, the basis was $50,000, the profit $250,000, the federal taxes were $50,000, and California state taxes were $25,000. I used what's left to mostly buy promissory notes.

If, instead of selling and paying $75,000 in taxes, I am thinking I could have set up a CRT for, using GUESSED round numbers (GUESSED is the key here - that's where I need people who have actually done it to weigh in), would have had the following expenses:

$5,000 to setup the CRT: I would have wanted to buy promissory notes, so I would have wanted to hire my own attorney, not use the free or cheap services charities offer to would be donors.

$0 expenses for the gifted $30,000 (10%). While the gifted $30,000 was worth something, it's discounted at a much lower discount rate than the return I get on my money. I would have saved more in 2006 job income taxes than what that gifted $30,000 would have costed me.

$30,000 Net Present Value of ongoing trust expenses: assuming $3,000 a year for the administrator, accounting expenses, having to value the promissory notes (and other assets) every year, other expenses I don't know about.

$25,000 Net Present Value of the taxes I would have paid from the Trust income over the years: assuming $2,500 a year in taxes for taxable income from the trust.

So, the above UNEDUCATED guesses tell me that the CRT would have costed me a Net Present Value of $60,000 over its lifetime. Better than the $75,000 I paid in taxes for a straight sale (actually a failed 1031 exchange), but only $15,000 better. That is, if you don't count the value of my time learning and complying with CRT rules, regulations, reporting, etc. And if you don't include the risk of somebody messing up something that will unleash the wrath of the IRS on me.

Then there is asset protection: can you lose the beneficiary interest in a CRT in bankruptcy ?

I did a Google search on CRTs, but the only numerical examples I found are bogus (example: assuming the ongoing expenses are 0, which may be true if you let the charity manage the investment, but not in what I would have done).

If you have done a CRT before, or helped clients do one, please weigh in on the above numbers, and on my current tentative conclusion, which is: if I ever have a million in profit to protect and don't want a 1031, I believe a CRT is definitely worth it. For $500,000 profit, it's probably worth it. For $250,000 profit, as in the above example, I don't know. For $150,000 or less, it's NOT worth it.

Please include numbers in your reply. I found a lot of prose about CRTs on the internet, but I can't make decisions based on prose. I need to see numbers, even if they are hypothetical numbers.

Thanks in advance,

Abdenour

Hi Nathan,

I believe that you will be able to get title insurance now. In Oklahoma, the previous owner who lost the property through a county tax deed had 2 years after the tax deed to go to court and contest the foreclosure. Those two years have now passed, and, I see no reason why a title company won't provide title insurance.

If February, I had a contract to sell a shack and two residential lots in Arcadia, Oklahoma, to a neighbor of the lots. I had acquired the property in September 2010 by foreclosing on a tax lien certificate. I assumed the buyer was going to pay all cash (the price was only $6,500). When I found out he was borrowing money and the lender required title insurance, I told him "let's put the deal on hold until September, because the title company won't give you title insurance now".

Please give us an update about the title company says in your case. Specially if they contradict what I said in my first paragraph.

Abdenour

Let's say a property's legal is lot 1 block 2 of Abbottabad addition. And let's say John Doe owns a 1/6 Remainder Estate in the property, and the life estate is owned by my Roth IRA (tied to the life of John Paul and acquired from John Paul). If I want to buy John Doe's 1/6th Remainder Interest in lot 1 block 2 of Abbottabad addition, what legal description should I put in the Warranty Deed. Obviously, it shouldn't be lot 1 block 2 of Abbottabad addition, since John Doe does NOT own lot 1 block 2 of Abbottabad addition.

When I bought the life estate, it was a little simpler since we used a Quit Claim Deed. The legal in the Quit Claim deed is:
Interest of John Paul, but for his life only, remainder interest to John Doe, John Doe the second, John Doe the third, Jane Doe, Calamity Jane and Calamity Jane the second in lot 1 block 2 of Abbottabad addition.

Should the warranty deed from John Doe say:
John doe's 1/6 Remainder interest in lot 1 block 2 of Abbottabad addition

I could use a Quit Claim deed and simply list lot 1 block 2 of Abbottabad addition, but I would rather use a Warranty Deed.

I plan to have a lawyer review the deeds before I contact the 6 remaindermen and remainderwomen, but I want to get them as close to correct as possible before I have the lawyer review them.

Also, how does marriage affect who should sign the deeds. The 6 "kids" (as in 60 year old kids) acquired the remainder estates in 2000. They were about 50 back then, and at least two of them were probably married (women whose last name is different from their father's name). But the deed mentioned only the 6 "kids", not their spouses. One of the women is in Oregon, the other in Washington. Do their husbands have to sign the Warranty Deeds too, assuming the two states have community property ? Do I have to pay attention to who was married to who between 2000 and now ?

One last thing: I am looking for a free Iowa Warranty Deed form. More precisely, the Official Form # 101 of the Iowa State Bar Association. I can type my own from recorded documents I saw online, but would prefer not to.

How about for a private promissory note holder like me, who only needs to check credit and report late payments to all 3 credit bureaus ? And who only needs to do the above about once a year. Is there a service without setup fee, that still offers reasonable one time prices ?

Hi,

Somebody I loan money to has signed a promissory note, but not an authorization to check her credit. As her lender, is it legal for me to pull out her credit report now without her authorization ? Both of us live in the state of California. My motivation is to make sure that the social security number she gave me is the correct one. I know her name and address are the correct ones, but I had never checked her social security number. By the way, is there a way of checking a social security number without pulling a full credit report ?

Once I have made sure that the social I have is the correct one, I want to report the payments as delinquent to all 3 credit bureaus. What's the cheapest way of doing that ?

Thanks,

Abdenour

Another way of putting it is, I am trying to find a way to outsource entrepreneurship. A few years ago, Ron Starr (a veteran Real Estate investor and educator) replied to somebody in a real estate forum and told him "You cannot outsource entrepreneurship". But then, in a different thread, he said that he learned in his science classes that you should never say that something cannot be done.

I wouldn't outsource entrepreneurship here in the US. Two twin brothers already tried that when they asked Mark Zuckerberg to develop a social network platform for them. Zuckerberg developed it alright .... and then kept it for himself.

I am trying to think of a way to outsource a big chunk of a business, that cannot be done abroad alone, to somebody in a third world country, in a way that I will only do the part that requires a presence in the US.

Neither run as a business nor save a few bucks.

Let's say I expanded the effort to find a very bright person in a 3rd world country, and gave him the following instructions:

---------------------------- Begin Instructions ----------------------------------

We are starting a new pre settlement funding business. Use Google to learn what such a business is (I pay you while you learn), create a web site to market the business (copy similar web sites without violating copyright law, then customize it as you wish), do online and off line marketing campaigns (here is a credit card with a $1,000 credit limit - you figure out how to market - I pay you while you learn), and make my phone ring with good quality prospects. Pay: base of $2/hour (not a real pay - just a non refundable advance on the bonus to be earned in the future) + bonus based on a formula that gives you X bonus points for each closed deal (X = % of the deal), Y points for the profit on each deal (Y = % of the profit), and -1 point for each time waster that calls my number (mostly a pay for results scheme).

-------------------------- End of Instructions --------------------------------------

As you can see, those instructions are quiet different from what many VAs get (such as, run one of each of the 10 ads I am giving you on Craiglist everyday).

VA may not be the right term for such work. "Virtual Vice President of Marketing" may be more appropriate.

I would have to pay the VA for a year or so before closing the first deal, and he would have a lot of control over my business. If he is not ethical, after he figures out how to do the business on my dime, he can take the business (including the contents of the web site, lists of lawyers who've expressed interest, etc.) with him and sell it to a new would be competitor (it's as simple as making the would be competitor's phone ring). It would be much easier for him to do that if he belongs to a network such as oDesk, eLance, etc.

The other concern is, as I have stated earlier, taking on other projects and not focusing on mine, and/or higher base pay projects.

One more thing: I would rather not use Paypal.