All Forum Posts by: Allen B.

It depends on which mortgage product you use, but there are some banks that you can re-finance the property within 1 day of buying the property.

A lot of our investors would pay cash and then take out a 70% home equity loan instead of a LOC. You can also get a 80% mortgage but you should leave a lot of equity in the property in case you need to sell in a hurry.

Bank of America just changed their seasoning requirements, so we are now working with some different banks which have a variable seasoning requirement depending on your underwriting package.

Again the key is buying the property at the right price. Most investors that I see get in trouble overpay for the properties and then have a 100% mortgage that just doesn't allow them to deal with any adversity.

In the past I have bought hundreds of properties for under $100.00 on tax deeds.

However in the past few years it has been hyped so much that junk properties are selling for more than retail. Currently it is easier to buy properties from individuals cheaper than the tax sales.

The information from the course can all be found online.

In general HUD and REO properties can not be assigned.

There are 2 ways around the situation.

1. Double Closing

2. Submit the offer from a LLC or corporation that you created just for this purpose. Then sell the LLC interest or corporation stock to the new owner. I did not suggest a land trust for this as the HUD contract requires a tax id number.

In my opinion the practice of advising people to transfer properties via Quit Claim Deed to an LLC is just wrong.

It is not sexy, but the majority of asset protection issues are taken care of by having appropriate liability insurance and hiring a property manager.

Here are my reasons for not moving to an LLC

1. Your tax bill will go up. In my home state of TN the LLC has to pay a $300 a year bill to the Secretary of State plus a income tax that a privately owned LLC doesn't. (Now if the LLC is owned by family and is only used for passive income like real estate you can file and exception to the income tax, but not the $300 a year bill). Also if you don't live in TN , then you have to pay a registered agent around $100.00 You are now going to have to keep separate books and tax returns for the LLC.

2. Using a Quit Claim Deed kills your title insurance policy and opens y

ou to previous title flaws unless you do it properly through a closing agent and get new title policy for your LLC. (This is a complex scenario, but trust me it does kill it unless you use a warranty deed, but using a warranty deed means you have to pay transfer tax)

3. Insurance policies for an LLC are more expensive for many companies.

4. You can't get a loan on a property owned by an LLC unless it is non-conforming and personally guaranteed.

5. If you manage it yourself then they may sue you and the LLC. If you are negligent in your management of the property, then the lawyers may sue you anyway. To avoid this then use a management company.

Now if you own the properties free and clear or are paying cash then by all means put them in a LLC, but this is a rare exception.

I have sold properties to investors from over 20 different countries.

So I can't speak to you on the buying side, but I can speak from the Property Manager, Real Estate Agent side.

The first thing you are going to have to look at is the logistics and tax issues of your investment.

Once you have worked through those issues, then it is time to pick a market and property manager to work with. One of the most important market criteria is going to be based on your goal. Do you want appreciation or cash-flow, or a mixture of both?

The market we work in Memphis is mostly a cash flow market, but there are some areas of Northwest Mississippi that are appreciating.

Next you have to identify the properties and work with a property manager.

We work with a lot of out of town investors and I have seen them get taken advantage of by buying based on "the numbers". The problem is they bought from a listing agent marketing the property and not a buyer's agent who has to manage the property after it is sold.

When we sell a property, we make sure it is one that we are comfortable with and one that will make the investor money as we are going to be stuck trying to manage the property.

I would highly advise that you visit the market and meet with the people you are going to work with before buying properties. it just seems to work so much better that way.

What I would advise you to do is focus on finding the very best possible deal in your market and buy it for cash, then get it rehabbed and then rented. Once it is rented, then you can re-finance it and repeat.

The key is to find good deals.

Now what is the definition of a good deal. It is a working class rental that is at least 3 bedrooms. Most usually it is either a REO or HUD foreclosure that needs less than 10K in non-structural repairs. (re-painting, new HVAC, New roof).

Now the most important thing that I would advise is to take it slow. Do one house where you spend 40-50k of your money and then go through all the steps. Many new investors have 300k and go buy 10 houses all at once and get overwhelmed and loose everything.

Ebay, ********** and others will let you auction the land online. You can also put the land in a hotel ballroom auction with other parcels, but this method is best when you have very little in the property.

You may want to look into advertising the property to the US Senior market at sites like escapeartist as they have real estate classifieds.

I can't post the full links to these sites as I am under 10 posts but google them. They are definitely not my sites and I get no benefit from them.

I have bought and sold land in Rio Del Oro. I made money on my investments, but that was because I bought from a motivated seller and flipped it quickly.

Having said that I would advise against buying an already subdivided vacant lot as a long term investment. In general the land has to be fed through high Association fees and taxes. Also I think the price may be too high as right now a 1/4 acre lot in Rio Del Oro is for sell on Ebay for $995.

I would recommend putting the same 40,000 into a rental house that rents for $600 a month in a decent area. In ten years you would from cashflow alone have more than 100,000 from value plus income.

Anyway I bought my lots for less than $200 there a few years ago and that lot on Ebay is not mine.

I am a new member of this forum, although I have been in real estate for a few years.

I got started buying tax deeds from the state of Arkansas 7 years ago and since have bought and sold over 3000 properties.

Along the way I have picked up real estate, auctioneer and insurance licenses. We started a niche investment real estate brokerage in Memphis and since have merged it into a ReMax franchise. We are Gold Sponsors of the Memphis Investors Group.

Our specialty is acquiring, rehabbing and managing properties for investors in the Memphis area. (TN and MS) Most of our clients are from out of the area.

I also do a weekly real estate investment show each Sunday morning on KWAM-990 in Memphis.

I look forward to participating in this board and helping other investors.

Allen Bailey