All Forum Posts by: Joel Owens

If the seller rejects the winning bid or counters and you won't accept you will get your deposit back.

The reason for non-refundable is so if you back out once being the winner and approved by the seller they want to make it painful for you. It also weeds out people doing hair brained schemes.

If that is the buyers only 2k or they have little reserves they will make sure all their ducks are in a row before bidding.

Williams is on of the auction houses but there are about 5 to 6 big ones such as them.The bidding takes place in a huge meeting area,at the subject property,or online only or both on location and online.

My experience is the prices get bid way up over a good deal to a bad deal.If the deals were that great they wouldn't need to mail me out glossy expensive magazines because the prices would sell the properties.

Many time as an REO listing broker a listing might get pulled and put up for auction as the asset manager is praying some idiot will overpay and be the winning bidder.

Once that doesn't happen they assign back to the listing broker and do a price reduction.

Some properties sell auctions but not the hype Williams and other claim.

Auctions many times are a waste.The awesome deals are when you have little competition and can whittle down the price.

I think the biggest point missed here is the CONDITION of properties for sale.

Many investors are looking for just carpet and paint and a few outdated fixtures.Guess what so are home buyers and they will OUTBID you everyday of the week.

If you are a rehabber your goal is to resale a property or hold long term for rent depending on your local market or the market you choose to invest in.

So to make the numbers work you have to buy really low.For a home buyer if they get 10k to 15k equity after new paint and carpet they are happy so they will bid close to asking price or over if the listing price is low for the market.

In the property you posted on that is definitely going to be a cash buyer.Make your offer and see if they come down.

If you are making a low offer just submit a one page letter of intent until you get your price and then go full contract with all the amendments etc.

Saves a lot of time and money on paper.

Yes start off small and build that is the key.

Are you buying for cash flow or appreciation??

I noticed you are in California.Many investors are not purchasing there that live there.They are looking at Florida,Georgia,etc. where you can buy multiple properties cheap that cash flow well.

California tends to be more of a speculative market where the markets can swing wildly and many take a gamble on appreciation.

You just need to define what you want your plan to be.

About what range do you have to put down??

You make 90k a piece or together??

FIRST STEP is to correct any mistakes with your current finances.

Order your 3 credit reports.What is on there that is negative??

Are your credit card balances high and your interest rate high??

What about car payment?? Are you driving a mack daddy vehicle with an huge car payment and insurance requirements??

Your mindset has to get out of spending mode and into investing mode.Sell your newer car and buy an older one for cash.

Live below your means and save so you can amass properties and THEN live the good life for an extended period of time.

Call the credit card payments and get the interest rates reduced.You can't get a YES unless you ask.

Call your mortgage company.Some have what is called a short sale refinance where you can get a new loan at the reduced value.If you can't do that go for a loan mod or temporary reduction to boost income and decrease expenses.

Your property tax bill if it is high contest it to go lowered.Cable,clothing allowance,cell phone,eating out nothing is off limits.

If you do this you will start turning the tide.The question is HOW BAD do you eventually want to be able to quit your 9 to 5??

Start working on these items first to increase cash flow and start decreasing bad debt.

Mehran,

You don't need to re-invent the wheel.What exactly are you trying to do??

Are you someone with actual cash or have some down for a loan or a late night infomercial type that has no money and is trying to be a middleman and collect a fee?

Not being snippy just seeing what you are trying to accomplish.

Realty Trac and all those sites are outdated junk.They sell subscription after usually 30 free days for highly outdated data.

With pre-foreclosures you have to remember not everyone wants to sell and also might file Bankruptcy or do a workout with the bank.

On REO's depending on your state foreclosure laws a bank may be in the process of foreclosing but because of redemption rights,legal proceedings,or title issues they have to delay listing the property for sale.

Very rarely will a bank not list a property with a broker especially on the residential side.An asset manager for a bank handling hundreds of files doesn't want to talk to you,won't talk to you,and waste time teaching a rookie with questions.

I am just giving it to you straight.If you want to be successful you have to know how the system works.

The MLS is the place to get the most up to date data period.As soon as I get a listing assignment from the bank the listing agreement has within 24hrs you have to put it in the MLS and send in proof to the AM.

Many times we don't even get the AM's e-mail.It's uploading contract on a portal and by phone.If they don't know what file you are connected to or who you are they will just delete.This is why many never answer the phone and screen their calls.Then they call back the important ones.

Some listing reo brokers will have buyers list they notify of an upcoming listing hitting the market.Sometimes if you offer and the price is good enough the AM will accept and close out the file.

Other times the AM will want the property exposed to the market for 7 to 10 days to see what kinds of offers the property attracts.

Now that is usually how national banks operate.Sometimes local and regional banks you can buy direct before they list with someone.

Also the rules are different if you buy in bulk or buy the note at a discount from a bank.

It really depends on what you are doing in how to proceed.

Some never get going and have "paralysis by analysis".

The goal is nothing will ever be perfect you just have to get started and constantly revise along the way.

So many people look for a reason to not do something that they never get going with anything.

Fear of failure,fear of success,fear of making a mistake,having doubts are all mental roadblocks.

I ran 14 miles the other day without stopping.I am 25 pounds overweight but still had an 8 minute plus average.

People always tell me they can never do that and can't believe I can.The point is they never know because they never TRY and find out.

Some is physical but most road blocks are mental and people give up with their mind way before their body does.

Most are looking for that silver bullet (the next greatest toll that will make you rich beyond your wildest imagination! )

Consistency and small steps will get you to your goals but it is not as sexy and glittery as the magic pill many want to swallow.

Smart work,determination,consistency is the key.

Charles I definitely agree and I am not even close to being a tax person.

When I do commercial short sales the sellers ask about the 1099 phantom gain and how that will be huge to deal with.I tell them if they can to try and do a loan mod or interest rate reduction first.

Some bought at the height of the market and are pouring money into an over leveraged property. In these cases they don't want to keep pouring money into a property or do a workout on something where even when the market recovers it will be worth less than their mortgage balance.

In other words there is no reason for them to go down with a sinking ship.

In these cases I tell them to consult their tax accountant for legal advice and that I am not a tax person.

I do tell them if they do nothing and it forecloses the 1099 will likely be higher than in the short sale.The reason is markets continue to decline in value and unemployment is still high. Usually once the tenants get wind of a foreclosure the occupancy drops as tenants jump ship to another landlord close by.

So usually by the time the bank forecloses and takes over the complex the value has eroded even further.

I am not a tax expert but it would seem easier to mitigate a small 1099 versus a large one.

Also if it forecloses depending on what type of loan it is they won't be able to get financing for xx numbers of years moving forward.

So as you say many things to consider.

Sellers are always looking for a totally clean break from a bad situation and it doesn't exist.I tell them you have options and have to try to make the least painful and most in your favor as you can.

The bank is trying to get what they want and the seller is trying to get what they want and both have to give to get somewhere.

With taxes some are very risk adverse,some test the waters a little,and others swim with the sharks and hope not to get eaten.

At the end of the day it's a personal choice for everyone how they conduct business and live with the choices they make.

Charles do you have a blog on taxes and planning on BP that you do??

Yes sorry Charles I just quoted the wrong form.

There are so many! :)

If part of the forgiven debt doesn't qualify for exclusion from income under this provision, is it possible that it may qualify for exclusion under a different provision?
Yes. The forgiven debt may qualify under the insolvency exclusion. Normally, you are not required to include forgiven debts in income to the extent that you are insolvent. You are insolvent when your total liabilities exceed your total assets. The forgiven debt may also qualify for exclusion if the debt was discharged in a Title 11 bankruptcy proceeding or if the debt is qualified farm indebtedness or qualified real property business indebtedness. If you believe you qualify for any of these exceptions, see the instructions for Form 982. Publication 4681 discusses each of these exceptions and includes examples.

Man this is a HOT topic ! LOL

I will throw my hat in the ring.

I talk to generally about 50 investors a month to sometimes 75.Most are calling off my apartment listings I am marketing for my sellers.

I will tell you for an initial calculation many use the 50%. Now some smart ones will look at properties that are overpriced which aren't ones I take.

You can do due diligence and find hidden profit centers and ways to fix problems to increase value that the current seller didn't think of or doesn't have the current capital to do.

Generally the smaller investors keep very poor records and we have to go by the schedule E's. If as a seller you want to drive top market price than you have to have all your books perfect.

Anything questions you can't concretely explain away and show numbers will reduce your sales price to adjust for the buyer on the unknown risk. "They will not just trust YOU"

Usually with smaller properties books are poor and questions are many with the minority keeping perfect records. On the flip side larger units of properties generally have professional managers in place with excellent books and then occasionally you will have a few sellers that self-manage and keep poor books or a bad PM company.

I have seen tally's of 25% to 60% in ranges on the 50% average used.

I tell sellers when I list there property that they need to think about the buyer.Even though you manage the property and save 10% on property management doesn't mean the buyers will not use one.

Example: Property at 100,000 NOI is 1,000,000 at a 10 CAP but put in management instead of self managing to reduce by 10k in costs now the property to achieve the same 10 cap is at 900k sales price.

I find this happens often in the 10 unit to 30 unit apartment complex range where a seller can manage themselves.Anything above that in unit size usually a PM company is in place.

So I tell sellers we have to price according to what the costs will be to the majority of buyers looking to purchase your property.

As other investors have told me.Corporations say the seller does a great job with costs but our managing structure is different so we can't offer that price.

Others say they can't manage the property as well as the seller can so have to offer based on more conservative numbers to give themselves a buffer.

So as others I use the 50% equation as a quick reference and nothing more.When I get into cost analysis I ask myself if the seller has been cutting out trash pick ups,termite maintenance plans,and defering maintenance and improvements to boost cash flow on paper.

Direct mail works !

In fact many people today don't have a pot to p%ss in so they do social networking all day because they just have TIME in it.

Now if you are going to mail TARGETED mailing always out pulls blanket mailing.

My father who has been passed away for some time was a supervisor at the main mail center in Atlanta,Ga and was over thousands of mail employees at the distribution hub.

I personally do not like postcards.The reason is many postal letter carriers are lazy and get paid by the route so they want to finish as fast as possible.

Many put postcards even if paid for with standard licked stamps put inside the junk circulars.Many people throw in the trash without ever seeing your piece.

Also different days of the week have different mailing volumes.You want to be on a lower volume day so your piece gets more exposure.

I like handwriting the outside of an envelope so it looks like it's from a friend. The whole goal is to keep the letter short and sweet.You just want to peak their interest and get them to call you,text you,call an 800 number where you get there number to follow up,go to your website and fill out a form etc.

With less mail volume I am finding out better returns with direct mail.

The message of your piece and how it is laid out will drive response as well.This is where you test and track all of your marketing material.

Not everyone will respond immediately.Sending out letters has a building effect. Some will respond now and others in a few months.Being consistent is the key to success.

It is much better to send 100 letters once a month for a year then to send 1,200 letters all at once and run out of money.

If you send the wrong message to 1,200 people even if they are targeted you will get low to zero response.If you start small and experiment you will find the sweet spot that generates the best result over time.

The goal is to constantly tweak your control to improve response.First start out with a small mailer such as 50 or 100 and then start tracking.After you have the increased response to a fantastic level then you go bigger and scale it up.

Usually 1 to 2% is average,5% is really good,10% and you are hitting a grand slam.

This process I am mentioning has been tested thousands of times to be most effective in successful mailings.