All Forum Posts by: Brandon Diaz

ARV=$160,000

Contract Price= $49,000

Repairs= $20,000-$25,000 repairs 

Problem: 

Owners deceased with NO WILL

Behind Taxes= $10,000 (Tax Sale June 1st 2017) 

Owes= $24,000 (Charged Off but are accepting payments to principle)

Story:

Parents passed away and the two heirs (I will refer to them as brothers) and are not getting a long. I got a contract with one son (Sam) that said he had went through the probate process and was able to sell the property. Next day, I find out this guy (Sam) was trying to sell the property without his brother (Frank) being able to profit or knowledge of the sale and Sam had not gone through any probate process... Figures.

The other brother (Frank) doesnt even care about the property, doesnt want any money, and WANTS to lose the house to the tax sale (Again, coming up June 1st 2017) to screw his brother out of this deal. He is serious.

The other son (Sam) wants at least a little money before losing any chances all together and his price is a smoking deal. The other brother (Frank) WILL NOT sign anything to give his brother a chance. That brother does not even care at all.

What I am doing now?:

We are in the process now of doing our best to mend this relationship between the two brothers, so that they both will sign some documents and walk to closing. We have ran several options with Sam (the one I am dealing with).

(I am not sure how that will go... we will see).

I have to come up with Plan B, Plan C, Plan D, etc. If the brothers cannot get along and wont shake hands:

I am going to the courthouse tomorrow to record my contract on the deed (I believe I have a claim on this property... Up for debate, but not something I am willing to chance.)

I have instructed my title company to also do a title search to find out if there are any liens against the property. Since the loan was charged off, my next goal is to find out about this charged off loan and see if there is still a right to foreclose or not? (Any insight?) 

If the bank DOES still have the right to foreclose:

I would offer to buy the note at a discount and foreclose giving me clear title at that point. (Never done this before) Where can I read exactly how do to this? I dont know what documents I would ask for or how they even will respond to me asking for this. Remember, the borrowers have deceased and the tax sale is coming up so discounting the note before that day I think would actually happen, and I can get a better deal here. Even if I buy it at the current loan amount, I would just pay the taxes up myself, foreclose, and have a clean title. 

If the bank DOES NOT still have the right to foreclose:

I would figure out some kind of owner financing offer with the seller knowing that I would not be able to get clear title and just start renting it out for cash flow. I have looked at adverse possession laws in the state of Tennessee to pay the taxes and later just suit to quit the title to convey clear title. Looks like adverse possession is 20 years in Tennessee!!!!! (GEEZZZ). If I did that, I would have to pay up the taxes, rehab the property (rental would rehab for like $15K), and set up what the brother wants to be paid in payments. The house would rent out for $1,200-$1,300/month. So, I would set it up so that I could get a free and clear property in like 2-3 years, knowing that I have a clouded title for 20 years! (Yucky!)

(I am open to anything better here)

The tax sale: 

This property is in a hot market and properties are selling in a day. I cannot redeem rights (owners are deceased). I am afraid to get outbid at the tax sale, so I am trying to handle this before that date. The owners are dead so I cannot do anything (I believe) other than pay the taxes current and work with the heirs. 

(Unless I can find a better way)

Any seasoned advice would be great and thank you for your time

IT IS A GREAT idea and very happy for your friend. Sounds like a great guy. 

It solves a lot of issues cheaply. Veterans Homeless need 1 bedroom homes. BADLY. I could talk about this subject all day. A lot of my friends I deployed to Iraq went homeless for long periods of time. I want to fix this issue using shipping containers. 

In this article it says that the total cost is at $70,000. I think you can get away with it cheaper than that. More like the 25k-30k range (Thats actually expensive where I am from for a 1 bedroom btw). You dont need drywall and wood frame and all that. Trending currently anyway is industrial, interior metal conduit, open pex pipping. You can cut any window sizes you want to fit. It can look good and be built economically. 

I loved your friends ideas on his website. Simple and easy. It is exactly what I had in mind.

The shipping container is the most energy efficient idea out there. There is nothing that rots. Your roof is metal. Your walls are metal. Your floors are metal. Its the most maintenance free idea ever. 

If I had a group of people that were also very passionate about doing something like this I would be really down to talk about this subject further and explore. 

Thank you for sharing. I really think we all should be talking about this more.

@Dennis Domingos to live in or rental property? I got several in Chattanooga

Man I swear it feels like yesterday I was in the same shoes. Let me say, you will find direction. It will take time, but your question is clear enough that.. we all feel you. This is a journey and you are at the beginning of that journey. Keep going!

Here is my answer... Deals are people. You need to talk to people about houses. A wholesaler is creating opportunity for other investors or homeowners (cash buyer type) to get a deal. That means somewhere you are bringing an actual deal. 

One of the best ways to create those opportunities is to spend money in finding deals through marketing and advertising. This generates leads. That means opportunities for you to go chat with a person about a situation (any situation) about their house and see how that deal can be created. Start cheap advertising and start small but be consistent and leads will come through. (I got a lead today off of just going to a Facebook yard sale group and posting a "we buy houses" meme on the group and got a phone call)

True deals will be obvious because of their situation, and theat will force you to learn how to help that person- thus you start gaining experience. That experience over time allows you to be a master of your craft. Wholesaling is a skill and it's hustle work (grow your hustle muscle). Eventually, it becomes you.

As far as marketing:

You can target market (contacting directly to preforeclosures, code violations, vacant lists) BUT you are confused on direction on who to target market. So, I would recommend learning different types of "gorilla marketing" techniques that are on BiggerPockets already. Basically general marketing for all situations to call you. 

Let the deal tell you how to help them out. Experience will tell you how to start target marketing to the different groups you just mentioned above. You will help one person out and than (*idea pops in head) I could target to everyone that is in this same situation.

I hope this helps

I know what you mean brother. In some locations they have the ability to pull those demographics like age, equity percentage, etc. If i were to guess, the info on quadruplexes in your area are recorded differently than other areas, so it populates a zero. My area has its own little issues as well. 

Recommendation either go with multiple bedroom size to equal out what a quadruplexes would be. See if that works. Play with sqft sizes as well. Or certain locations that you know that those are all quadruplexes. Just keep thinking outside the box and seeing what can be done. 

If that doesnt work, you may have to find another approach all together. 

Hope this helps

The answer is... yes you can. But since it's your dad, why dont you just J/V (joint venture) on the deal. You basically be a mini partner on that one deal and you can split profits however you guys negotiate. That way you arnt on the line for a monthly payment each month. Unless you can make the monthly payment comfortably. I dont know how much you could get in rent but you would need to at least consider the property taxes for the year and the insurance as well and what exactly your roll would be and your dads role would be. 

You can do a land contract but it seems like there is motivation and your new and maybe need to arrange something a little simpler. 

Hope this helps

My goal is to kick something up for all of us to learn something interesting. Lets explore what you know about court cases that you found to be interesting or learned, and summarizes the case to put all of us ahead of the game- collectively. 

Here is one: 

Case: Lucy v. Zehmer

Supreme Court of Virgina

https://en.wikipedia.org/wiki/Lucy_v._Zehmer

Summary: 

Guy writes on the back of a store receipt paper that they would sell their 400+ acre land for $50,000 and signed- later in court claiming it was a joke. The courts said that was a legal contract and forced the sale of the property.

Why is this important? 

Our purchase and sales agreements are stronger than we understand- even the simple one page documents with no earnest money. We all know about "buyers remorse" but a lot of also know that there is "sellers remorse" as well. 

Scenario: The sellers are backing out of the deal, but you have considerable amount of time, sometimes money, and investment emotion in a deal and all of a sudden... seller changes their mind? A judge would say different based on this case. Even if it was a joke, no earnest money, and only having 19 words written on it.

When to use?

Send this case to the seller so they can read the case for themselves to understand in the event that they are refusing to close. This could help them understand the situation a little better and bring your seller to closing. 

I am not an attorney and I am not writing this to give any legal advice and should be looked at as entertainment purposes. ALWAYS SEEK AN ATTORNEY FOR ANY LEGAL ADVICE. 

Think of any contract as an agreement (In this case, a Master Lease Option Agreement) that ultimately has to face a judge for a decision in the event of a dispute. Regardless of whatever is signed, on whatever paper, that contract could still be violated by parties involved. The real answer always comes from a judge in the event that there is a dispute. 

The cool thing about any contract is you can choose your level of comfort and protection. 

If you know your laws behind the provisions of your contract than essentially you are saying "I know how to face a judge with this document and know that I would win". Understanding different cases would help with the confidence and understanding. Also, it helps you feel comfortable with your document the more you understand about our system. 

The only challenge you face with using your own contract is that the opposing attorney have many tactics to try and win a case. One way, is they will say that your contract is not a valid contract. They can find "one" thing wrong in the provision and try and say that the entire document is "voided" due to that one provision (Basically, saying that both parties mutually were making mistakes in this contract thus the entire contract is no good). To stop that...you put provisions that claim that if one provision is null/void than the rest of the provisions are in good standing. This means understanding federal laws, state laws, your contracts, your court system, and your ability to back up your claim come in to play. 

Another, tactic an attorney will use is that you are not competent in creating and using your own contracts. 

You can find many cases that people use their own contracts.

I would bring up the case: Lucy v. Zehmer 

Which forced the sale of a persons land; because, they as a joke wrote on a NAPKIN and it said they would sell their 400+ acre DESIRABLE farm land for $50,000... and the courts said "that was a legal binding contract" and forced the sale because it was written, agreed upon, and signed.

Some might not be comfortable doing that, so they make sure that the document basically has "attorney approved" which an attorney would actually place their name on the contract at the bottom in fine print. Other attorneys read that and supposedly that would stop them from trying to fight that. 

I did a Master Lease Option deal on 14 single family homes and a triplex apartment with one seller (I was 9 months into my real estate investing and man was I a newbie and had no clue what I was doing) and I hired an attorney write up the document. 

The attorney claimed they could help me out, but after starting the process the attorney calls in another attorney to help out without permission- the attorney claimed he had to and they both punched the time clock on me. That Master Lease Option costed me $3,500 and it was fancy, nice, and looked different, and made me feel like I had the Cadillac of contracts. Reality, it was confusing, to much unneeded verbiage, and expensive. I learned a lot about contracts after that.

No matter what contract you use. You have to face a judge if something were to happen. All your doing is getting something in writing that could #1 deter someone from trying anything sneaky #2 contracts remind each party what was agreed upon. Our minds tend to forget things, contracts are great reminders. #3 Contracts are great instructions. So coming up with as many thinkable scenarios like death, fire, insurance, taxes, etc. etc. can instruct what would happen next. Admittedly, Attorneys do a better job of thinking of everything that could go wrong, and that is probably because they see a lot of cases. And #4 would be to help a judge make a decision based upon what was agreed upon in the event of a dispute.  Which is really the last thing you want, but that is why you have a contract.

There isnt a "this is how you should do it". You are just going to have to go and make the best decision as a leader to your business. 

I know this is long but I hope this helps

Hey @Paul Kennedy I edited my post and reposted after doing some research and added some more content to follow, but thank you for saying it was brilliant idea. *breathes on knuckles and scrubs shoulder. :)

Dang! What a situation!

First, see if the daughter has power of attorney after death. She might, but it has to specifically say it. If it does, go to closing. If she doesn't than you'll need to go a different route.

Next, Grab your purchase and sales agreement and go to the courthouse. If it is notarized, than you recording the contract will be super easy. Tell them you want to take this document and record it on the deed of 123 main st.

I would guess that you did not do that (because who notarizes a purchase and sales?). You might be able to still record that document without having it notarized but recording purchase and sales agreements have been a hassle in a lot of areas and in this situation you cannot afford a mistake. So, we are not going to test it out. Here is what you will do....

You need a unilateral agreement (Affidavit of interest) and go and get that notarized. Take that document and your purchase and sales agreement and go to the court house- with the unilateral agreement on top of the P&S on the bottome and go record it on the deed. Hand it to the person as is.

You are basically placing your interest on the property and the son will not be able to sell the property with a clean title because you have placed a claim on the title. Make them take you to court and make your claim with a judge. I would absolutely tell the son that you are doing this by the way and that this decision is going to cost him money with an attorney, and that his future buyer is going to back out once they see the claim, no bank will loan on this property because there isnt a clear title. This could all be avoided if the stepson follows the agreement that was PROMISED during that person life.

I understand that this is a sensitive situation, but you are losing money, time and a property in this same unfortunate situation. You were doing that person at the time a favor, and the stepson is making this a headache- you are not. You are following a promise.

A judge is the only person that can clean this up. Let the stepson spend the money and effort to make that happen. Just wait for the day you get the notice and have all your documents organized and ready for that day and be excited when they do.

Going to attorney is costly. Doing nothing is costly. Doing it this way is the cheapest, safest, and the only real answer is going to come from the stepson doing the right thing or a judge forcing the stepson to doing the right thing.

The contract might be voided after death, but I would let a judge make that decision.I actually DO NOT think the contract is voided after death. 

I really don't know what anyone else would say, but its unique situation and that is absolutely what i would do here and that is what you asked.

I hope it helps

I did some research and each state is different. Contracts follow the land and NOT all contracts are voided upon death. 

Here is an attorney that wrote up a question an answer for Florida.

http://aboutfloridalaw.com/2016/05/17/what-happens...

I know you are in Georgia and I read another article of someone in Georgia that said basically the same thing. I did not share that link because they were some Joe but they said the same thing that this article basically did. I agree with them though and this one makes more legal sense so I shared this one.