All Forum Posts by: Bob Floss II

It sounds like he doesn't want to be hands on with the investment, so he should think about being a hard money lender.  He can loan money out to rehabbers and collect interest and watch his money grow. 

However, you also stated he wants passive income to retire.  The other option to purchase value-add income property.  He could buy an two-flat or apartment building, depending upon your area, that needs a gut rehab.  He can buy it cheap, fix it up and get it rented, and then refi to pull his money out.  He can then turn around and do the next property and keep stacking them up and accumulating rental income.  

There are lenders that work specifically with rehabbers.  They will finance up to 80% purchase price and all of the rehab budget.  I've done some closings with FundThatFlip and they can probably work with you.

I've been on both sides of this issue.  They were likely aware of the lien, but did not anticipate how large the late fees or legal fees had accrued.  This can happen with unpaid real estate taxes or mortgages left in default.  The seller can end up with tens of thousands of dollars quickly accruing that they did not anticipate.  

Perhaps have your agent ask how much the seller would need to bring to closing.  As far as asking for damages, you would need to review your contract and any attorney modification letters.  Sometimes damages are limited to the earnest money on deposit.  If not, you can seek damages, but if they are losing money on the property..... the seller has to actually have money for you to collect on your judgment.  The courts also shy away from awarding specific performance in the instance of real estate disputes.  

Property fully rehabbed in 2011.  Updated Kitchen with Black Appliances, Cherry Cabinets & Granite Counter tops. Private master suite on 2nd Floor. Gorgeous Flooring, Eat-in Kitchen, Formal Dining Room plus Semi-Finished Basement & Great Yard for the kids!

Subsidized rent guaranteed every month.  Property is currently occupied, please do not disturb tenant.  

Great investment for a new investor to get your feet wet.  

@Patrick Senas I'll send you an email with some properties my clients are looking to sell.  If they don't interest you, we can work to find something that fits your criteria.

The contract to purchase the property should have included language dealing with the survey.  Typically, it requires the seller to produce it so you can avoid these problems.  If we are buying from a bank or auction, I advise my client to purchase a survey when buying the property, again so we can be aware of these issues.  

@Nicole Heasley Beitenman Honestly, it's very hard to turn a profit on your first flip, I usually tell my clients to expect to break even your first time out.  The smallest details can really add up and result in losing money.  Try to learn what aspects of the flip got away from your projections.  Typically its one of two areas.  Many first time flippers look at the potential profits of the flip without accurately reflecting the amount of closings costs when they sell.  Almost all first time flippers are overwhelmed by the little costs that add up in finishing a project and getting it to completion.  

When doing the numbers on your next project, adjust your spreadsheet to learn from your mistakes and you'll be fine.  Honestly, I've seen clients lose 10 times that much on a bad flip.  Consider yourself fortunate that you only lost that much on your first time, dust yourself off, learn from your mistake (and fix your mistake!!), and get back out there.

@Tammy Tivis One of the hard parts about real estate is working with parties without an understanding of everyone's experience level and knowledge base.  We just did a deal with a fairly experienced broker that we have done several deals with in the past.  We had problems with other real estate deals and we needed to switch the 1031 account purchasing the building the morning of the closing and swap out earnest money.  I received an onslaught of text messages calling me and my client 'amateur hour' and refusing to help.  We ended up getting it done and switching the purchasing 1031, but during the closing the same agent admitted he didn't understand how a 1031 works.  

The point is, some agents expect everything to be very vanilla and every buyer puts down 20% and puts up 10% or more earnest money and uses conventional financing.  Don't let them bother you, they have a very narrow vision in real estate.  If you are closing deals and everyone is getting paid, it shouldn't matter how you are getting the deal done.  

@Kate Weinberg Based on your goal ROI for your investment, you'd need to something more aggressive. You would need to do a larger project like a value add MF property. We've done some deals where the passive investor takes a minority stake in a new LLC with the hands on investor taking majority. You would put up the down payment and the majority holder would obtain financing for the purchase and rehab. After the building is stabilized with raised rents, you can get more conventional financing and get the building cash flowing with the return you need.

I would be cautious of anyone that can promise $10K a month return on any other type of purchase.  The only thing that comes to mind is acting as the private lender for a fix and flip, charging interest plus points, and getting a portion of profits on the back end.  

@Nikki Kofkin No problem! I'm just up the road if you need any more help.