All Forum Posts by: Joel Owens

As stated court costs can get very expensive.It's better to mediate out of court in many cases.

The question is do you think going to court after expenses you will be off better than settling out of court??

A friend of mine invented Goof-Off cleaner.They went through a divorce about 15 years ago.

The soon to be ex-wife said the company was worth ex and of course he said the companies valuation was worth way less.

The parties couldn't agree so went to court and after a long battle finally settled.

Every buyer investor will look at this differently.If you advertise a 10 CAP rate you will at least get their attention to investigate further.

It sounds like with the properties they own them free and clear to do owner finance.

Sellers try to do owner finance and stick it to the buyer on loan terms and price.Buyers are looking for owner finance and reasonable terms.

It sounds like by them evicting tenants and rehabbing and renting over a years time that they are overly invested emotionally in these properties.

Usually on inherited properties they want to sell as fast as possible.It sounds like they want top dollar and yet want someone else to take over the headache.

Also you stated repairs repairs and rehab.
How long have the properties been stable at the quoted occupancy rates??

What type of rehab was done?? Was it cheap or good quality??

Are the properties real close together or way spread out??

What kind of cap rates are properties selling for in your area??

Sounds like a minimal deal to me.Instead of one property you are having to look at 4 with different capital expenditures and rent levels.

10 or 20% down with owner finance might be appealing with a great cap rate.

The seller will need to look at money down versus what it would cost to foreclose and any personal guarantees offered before owner financing. In some states foreclosing can get very drawn out and expensive.

Personally in this down market I would much rather have the 250k to 300k and move it into a much larger value add property such as an 80 to 150 unit building or larger.

Dion the appraisal records doesn't mean anything in my area.

In my area of Georgia from the time a property forecloses and takes back the bank is given a foreclosure deed but it will take 2 to 3 months to be updated in the tax records.

So every record will show the previous owner but they don't own the property nay longer.In my state even if the property is vacant if 500 or more of property appears to be in the property you MUST go through eviction proceedings.

Sometimes people being foreclosed on store their things there even if they have moved rather than paying a storage place.Then if the bank does a trashout the former tenants sue stating that the bank threw out a 5,000 dresser that was really a 100 dresser.

So from the time the bank forecloses ti sometimes takes 3 months before a vacant property is listed REO even if the bank owns it.

You would have more luck targeting absentee owners who have owned their properties for a long time and want to get rid of a headache.They will usually sell at a great price.

Jason in my experience most of the time the first is larger than the second.

Most of the second in my neck of the woods were done with these 80/20 loans so no mortgage insurance would be paid out.

Even though the same company originated the 1st and 2nd loan both loans were sold off to different parties.

So if you have for instance a house that was bought on an 80/20 loan program it might look like this.

Paid for house year 2005 200k 80% 160k and 20% 40k.

Fast forward to 2010. Property is worth 125k.

1st lender is owed 175k with late fees and penalties. Second is not going to foreclose and spend 175k to obtain a property worth 125k.

They would be losing 50k plus their original 40k and other costs. So the second is now worthless.

With a short sale the second can agree to release the lien interest for say 5k or so and reserve the right to go after the remaining balance.

The second could also approach the first to buy their note for 45 cents on the dollar which would be in the 70's.Then the second could foreclose and recover most of the balance selling REO.

Most likely the first will just foreclose and wipe everything out. The second doesn't go away they just sell to asset collection company for so many cents on the dollar and write off the rest with taxes.

So the reason what they will do varies so much is some states have very long redemption periods and very long judicial foreclosure processes.

Here in Georgia investors love our state.We have a power of sale clause in almost all the deeds where you give a 4 week legal notice in the local paper and then foreclose at the courthouse steps the first Tuesday of every month.

After the sale at the courthouse steps there is no redemption in my state.

All you have to do at that point is evict the holdover tenants.

Many sellers incorrectly believe the loan balances go away once foreclosed on or sold as a short sale.This is not true and everything must be negotiated in writing so that later the sellers cannot be pursued for a deficiency and then wage garnishment or a bank levy.

Dion are you trying to wholesale because you have no money starting out??

If that's the case why not go work for a big investor company and get paid to learn the ropes?? Buildup cash and start doing your own deals.

Re-inventing the wheel will take you much longer to get going.Having someone to show you what is working and is not and preventing you from making the same mistakes is priceless.

Yes winterizing you are wasting your time.On the REO's I list if the property is priced right I don't need a middleman wholesaler trying to put under contract cheap and collect a fee.

The right price will bring me plenty of direct cash buyers that can close fast.Asset managers sometimes have over 100 files to deal with and don't have time for investors with no money to try exotic ways to make money.

Sometimes those deals work but many times they do not and the asset managers plays the percentages.

Now if you have cash to purchase sometimes you will catch the bank on the right day when all the planets line up and they will take a low offer and dump it which will make it easier to wholesale.

Forget all these people who say things are easy and try to sell you something.Nothing is easy and takes smart work and time management.The question at the end of the day is do you enjoy doing it??

These seconds are always looking for the inexperienced to bail them out of a bad situation.

All I can tell you is I have been to the cash foreclosure courthouse auctions in my state and watched many times.

About 90 plus percent of the time the first is foreclosing and the mortgage value of the first with attorney fees,penalties,interest etc. is way more than the property is worth.

Even if the first mortgage and bid price is at market value there is no money in the deal for the investor buying with cash.So most of the time the bank is the winning bidder and gets their insurance payoff on the loan and proceeds to sell REO(bank owned). Other times the foreclosure proceeding is pulled because the owners filed BK at the last second to stop the sale.

Of the ones who do win a property with equity they still have to get rid of the holdover tenants.

If there is equity in the property usually the cash buyer would go knock on the door of the owners and offer to give them a cash offer to sell before the sale.This way they have less competition at the court house steps.

Each state is different with foreclosure laws.In my state of Georgia we have no post right of redemption only pre-rights of redemption and eviction is fairly quick.

I wouldn't mess with buying a second.

If you set your contracts right you shouldn't lose 1k on an escrow you don't close one but that is another topic.

If people want to throw money at systems great.

I don't want people using my money interest free.I am glad it works for you.

All the best.

Most I have seen use a fee agreement with the NCND on the commercial side.

The fee agreement has a disclaimer that they are not a securities dealer,financial planner,mortgage broker,etc.

It simply states they are a business consultant and xx number of points will be paid from the closing to be put onto the loan.

Basically a fee for bringing two parties together on the commercial side to do a transaction.

This can be for energy,gold mine and other deals as well.

The key is full disclosure.

Residential is highly regulated unlike commercial.On the commercial side everyone is trying to slam in deals before the government wants to "regulate something" and stick it's nose where it doesn't belong.

On the residential side you have the Georgia Residential Mortgage Lending Act which ALSO states you are NOT allowed to counsel people with loan modifications etc. unless you are licensed.

So as said the feds have rules and the states have rules and you have to make sure both are covered.

Everyone ETHICS has nothing to do with license laws!!

I have to keep posting so people will understand.The state real estate commissions care about their license laws and if fraud is being committed etc.

Ethics is a subjective subject that some people feel is important and others don't.

If a broker/agent is a REALTOR belonging to the National Association of Realtors then they subscribe to the code of ethics.

Not all licensees are REALTORS. I am not one because there is no value in paying all of their fees each year.Doesn't mean I don't have Ethics.In fact there are many REALTORS who do not have ethics so a title doesn't mean squat.

Agency laws vary by state.In my state of Georgia I can check a box that I represent the seller and that the buyer is not represented as a CUSTOMER.I still get both sides of the commission and perform ministerial acts for the buyer (filling in the contract) but do not represent them as a client.

As far as commission MONEY talks.Some brokers/agents will scream ethics and I submit all offers etc.

Some do but over 90% of agents fail in the first year of entering the business. Almost all are trying to get REO listings as that is what is selling in most markets not regular resales which are expiring or withdrawn.

Until you close you don't get paid a commission so taking overpriced junk that won't sell is a waste of time.So you will find many new agents getting REO's as the government pushes small business and diversification to minorities etc.

The asset companies want to look good with the government and in compliance.

So if I am a new agent struggling to survive and I have a 100k REO most likely the commission total is 5%.The reo broker gets 2 to 2.5.The buyers broker co-op is at 2.5 to 3.0.

That new agents is likely on a 60/40 split with their broker.

So 90k offers at 2% is 1,800 commission and then agents gets 60% after cut with their broker 1,080.Actually it's way less than this when you count in other fees too long to mention here.

OR

A buyer where you get 5% of 90k = 4,500
60% of 4,500 = 2,700 to the new agent!!

Makes as huge difference. Now experienced brokers and agents in the game know that you only double end in reality a small percentage of their listings.A struggling new agent with just a few REO's doesn't know this so they will push to try an double end that one sale.

I just deal in the REAL WORLD where deals happen and not in fairy land where things are supposed a certain way and ETHICS stands above all.

It would be nice but is not practical.

Bottom line is they know it will take 1,000 later rather than sooner for many to close their first deal if at all.

So they have that 1,000 to leverage to their advantage while HOLDING it for you.

Commercial lenders do this as well and if you pay attention to the LOI's they say nothing about who will get the interest on a deposit for a deal while it is held in escrow.

Say a commercial lender asks for a 100,000 deposit and then 60 days later says SORRY the deal can't happen.If they get 6% a month they just banked 12,000 off of your 100,000 deposit.

I never said this guys system did or did not work.Haven't tried it. I am sure there is a small percentage of people who it has worked for.

I stand by my post.You sure seem defensive over a company you no longer use and you are not connected to.

I run across nice companies that will take your money and return it later all the time.They are very pleasant because you are giving them money even if to hold.