All Forum Posts by: Arron Paulino

Hi @Arron Paulino, I am working with a client now looking at the Contra Costa County (Pinole, San Pablo, Brentwood) and happy to share with you some insights in DM. As far as capital, most investment loans would require you to do 20-25% on a SFH. On a 600k property, you are looking at 125-150k plus closing cost.

For Livermore, the activity is slower compared to the general Bay Area so you would need to be more cautious on picking the right property to flip, and the margin has to be large enough for it to make sense. Hope this helps.

Good to hear from you! I think working on getting liquid capital for these projects is step one for me.

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San Francisco, California

I wanted to learn more about real estate investing in the Bay Area, specifically in the East Bay. I hear there is a potential market in the Pinole area for buy and hold long-term and even Livermore area for flipping. Does anyone have any experience with these locations? What starting capital would suffice? Thanks in advance!

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San Francisco, California

Quote from @Mike Dymski:

Quote from @Arron Paulino:

Quote from @Tony Savage:

Hey Arron,

What zip code are your rentals in?

38127

The median household income for 38127 is $35k, which is near the bottom of the US. Neither remote or 3rd party management will work...it will take local, hands on, full time management. Whoever sold you this property and the management company are not looking out for your interests.

Definitely a learning experience and trying to move on.

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Quote from @Henry Lazerow:

Don't invest in low class areas and you won't have to deal with that kind of stuff.

Lesson learned and looking to move forward.

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Quote from @Tony Savage:

Arron, did you go out to Memphis before you bought your properties? Did you work with an agent that new the market?

I went out to Memphis in late July to set up a network of agents and contractors. I got a chance to drive a few of the neighborhoods to figure out where we want to buy. We're flipping these properties to investors and or first time homeowners.

Tony,

I haven't been there personally but have just been investing from out of state. I was able to build a small team, but have struggled to see profitable gain in my situation.

Cool to hear you actually went over and introduced yourself to boots on the ground in that market. Definitely want to learn more about your experience.

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Quote from @Tony Savage:

I have a flip in Chattanooga that we just put on the market. Once it sells, my partners and I are going to buy a flip in Memphis.

I see you're from South San Francisco, I'm from San Francisco!

I am interested in hearing more about you do, especially seeing we are both in the TN market and from the bay area!

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Quote from @Tony Savage:

Hey Arron,

What zip code are your rentals in?

38127

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Quote from @Jonathan Bock:

Quote from @Arron Paulino:

Quote from @Jonathan Bock:

@Arron Paulino

Responding to this and your other posts, has any actual real live investor from Memphis offered you cash? Not - Sub2, owner financing, wholesale, contingent offers, but hard verifiable cash.

Someone who knows and works the area regularly?

If you need an exit for a reset this may be an option you want to investigate further.

I actually got an option from a buyer to buy all of my remaining properties in cash. It is a little lower than I expected but I will be able to sell these off, however, it may be at a loss and is less than what I had mortgaged on these houses so I would probably need to come up with cash at closing, which is not ideal. They also gave me a subject to option for all of them, where they take over the existing mortgages and provide cash upfront. Thoughts?

Tough pill to swallow, I like cash and certainty over sub2 all day but that's my preference.

Definitely am choosing cash offers over subject to due to the paperwork and liquidity of things. I may just have to take my medicine and learn from the experience.

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Quote from @Tom Gimer:

Quote from @Arron Paulino:

Quote from @Tom Gimer:

Quote from @Arron Paulino:

Quote from @Joe S.:

I'm not here to promote or denounce Sub2. I will say this, there are a number of investors if you want to call them that that have VA's that are making multiple offers for them. Now you said they wanna buy it in a trust account.

Here’s my rant.. talking big words is quite stupid for them to do. It’s juvenile behavior. The confused mind says no so by them using difficult to understand terminology….They’re confusing people.

What would that mean to buy it in a trust account?

I agree. I'm more of a straight to the point investor and just want to know what the endgame is in the deal so I have more clarity. It's not really a benefit to be confusing.

What they want to do is have the property transferred into a trust (days, hours, minutes) prior to settlement. The declaration identifies the would-be buyer as trustee; and the current owner as the beneficiary of the trust. At settlement what is sold is the beneficial interest in the trust rather than the property itself.

On paper the lender just sees a common estate planning tactic rather than a sale of the property. But what is being proposed is nothing more than an effort to avoid implication of the due on sale clause. This may actually be the best method to prevent the sale from being discovered, but of course there are other potential pitfalls.

Under federal law a transfer to a trust where the grantor retains the beneficial interest WOULD be exempt from the DOS... but notice how in the context outlined above the exemption would disappear.

So would I still technically own the properties after closing? I just want to be sure I know what I am getting myself into. To make things easier, I am really just prioritizing cash offers so the process is more seamless.

No. The property would be transferred to a trust and at settlement you would be selling your interest in that trust.

As a seller I would be considering offers other than subto, for sure.

Thanks for the clarification. I think I'll just sell to cash buyers to keep it simple.

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Quote from @Jay Hinrichs:

Quote from @Rick Albert:

So I don't really have experience in this but I recently got an offer on one of my listings with a subject to and spoke with my broker who was in the mortgage space for about 30 years.

You are correct, if the lender finds out, they will call the loan. My broker also received a few subject to offers and when looked them up in public records on other properties he say Notice of Defaults. Basically the concern is they tie up the property, collect enough rents to make a little bit, and then just default. I'm saying that's what's happening and I'm sure there are some legit ones out there.

The offer I got I called the number and it wouldn't go to anyone. It screamed sketchy. To be honest as a broker I'm not sure we can really suggest accepting these types of offers given the high risk potential. It would need to be a savvy Seller to agree to this.

you would be nuts to advise your clients to do a sub too.. WRAP with a AITD that can work but a straight sub to no way.. CA has the AITD and its a robust debt instrument that is designed for these transactions.

This is what I figured. I'll just stick with what I know and that is cash offers or loans as these are clearer to understand for me.

1 Vote

All Forum Posts by: Arron Paulino

Arron Paulino has started 51 posts and replied 212 times.

Post: Real Estate Investing in the Bay Area (East Bay)

Post: Real Estate Investing in the Bay Area (East Bay)

Post: Squatters and Thiefs Keep It Up

Post: Squatters and Thiefs Keep It Up

Post: Squatters and Thiefs Keep It Up

Post: Squatters and Thiefs Keep It Up

Post: Squatters and Thiefs Keep It Up

Post: How do Subject To Offers work for the seller? Won't the loan be called due?

Post: How do Subject To Offers work for the seller? Won't the loan be called due?

Post: How do Subject To Offers work for the seller? Won't the loan be called due?