All Forum Posts by: Buddy LaRue

Jordan,

Everything should boil down to the numbers, and let the numbers make the decision for you.

Hard Money Loans or private money loans are good, but in my eyes they work best if you're getting a knock out deal on the house with plenty of capital gain to be had after repairing the property. I've sold a number of properties using HMLs and after refinancing (after repairs) many of the investors I worked with had ZERO out of pocket into the deal...but only because of the amount of capital gain they could get out of the deal (these were all in the Houston, TX market area). In SoFla, these are extremely hard to find.

A conventional loan is fine if you have the money to put down....keep saving if you want to go that route.

As for FHA loans, you have a low down payment and do have to pay PMI, but you'll get into a property. With FHA, you can purchase up to a quad and still get the FHA financing. This may be the route to want to take due to the low down payment, other units in the same building that pay your mortgage and PMI, and maybe still cash flow (always check your numbers). Even if you only break even on the numbers, you won't be paying someone else's mortgage, and hopefully you can/will take the money you've been paying in rent, saving it, and buy more cash flowing properties. Sounds like a win-win to me.

As for Homepath properties. Be careful with these. Yes, you can often get into a property with a low down payment (supposedly 5-10% down, though to get that is a major pain in the A**, and the investors that I know of who have tried that route ended up having to put closer to 15% down), but what I've been finding in SoFla is that most of the Homepath properties are overpriced, so to get a decent deal you have to find a property that's been on the market a few months, with the price being dropped a few times before it is low enough to even be reasonable for the condition; and that condition is most likely not going to be move-in ready...thus the Homepath Renovation financing.

PM me if you would like to discuss further.

Try asking for a list of properties with code liens against them. You'll probably find more motivated sellers there.

@Raymond B.

Thank you. This will definitely be helpful.

@Jay Kiehn

PM me, I have a private money lender down here that works with a lot of investors.

Jon,

You can use the standard forms from a real estate agent in Florida, even for a wholesale deal. Just be certain to do the following:

1. Buyer's name should be listed as your name (or name of your company) with the words "and/or assigns" after it.

2. On page 2, paragraph 7 of the "AS-IS" Residential Contract for Sale and Purchase, make sure that the box is checked for "may assign and thereby be released from any further liability under this contract.

Even if you try to wholesale a deal you find through the MLS and have to submit the offer through another agent, my bet is that many agents will skip right over paragraph 7, but the "and/or assigns" verbage in the buyer's name will be the give away that you may wholesale the deal. (BTW, this information was given to me by my attorney. There, you just got some free advise, albeit not directly from the attorney).

Have a great one!

There are still some occasional deals in the MLS, one just has to consistently dig for them (I'm in West Palm Beach and we share the same MLS with Fort Lauderdale and Miami). I can honestly say that they are tough to find, but they are out there. Move QUICKLY when you find one, and don't rule out the MLS completely. The more irons in the fire, the better. Direct mail campaigns will probably garner you more properties, but it will be more costly. Postage adds up!

As for investing in condos, I'm not a fan. First of all the HOA fees eat up a lot of the cash flow, oftentimes down to a non-acceptable cash-on-cash return, making finding condos that do cash flow appropriately more difficult to find...and that's until the HOA doesn't up the fees.

Second of all, so many of the condo associations here have "no renting the first year" or "no renting for the first two years" as restrictions that are not always disclosed in the MLS. If you find a deal that looks like it will cash flow appropriately, make sure you read the rules & regs of the HOA, the bylaws, and take a close look at the budget as well. Upcoming special assessments for a roof that needs to be replaced or other capital improvement can kill your deal and once you're in, you're stuck with the bill if you don't negotiate the seller to pay it.

And last but not least, if the building/association drops to less than 70% owner occupied units, forget about getting a loan in the development until the percentage goes back over 70%, which can kill your exit strategy.

I don't mean to rain on anyone's parade, just be careful out there!

@Jay Kiehn PM me, I have a private money lender down here that works with a lot of investors.

Hey Blake,

PM me. I'd love to meet with you.

I've been working on starting a BP Networking Group, though the thread on the subject has just mysteriously disappeared. I was hoping to have that this month, but with some personal issues (family member with a brain hemorrhage) I've run a bit behind. Things are getting better now and I have the time to met when you do.

Hi Bill,

I'm licensed in Texas, California and Florida and was working the Texas market until my move to Florida in late 2012, and was working with Lifestyles Unlimited Real Estate Investors Group in Houston.

First of all, never completely write off any source of potential properties. You may not find deals everywhere in the MLS, but they are there. You just have to dig for them; or better yet, have someone else dig for them for you.

Here's some information that may help you if you plan on looking at REOs (foreclosed properties).

First of all, I have never seen, in any of the states I am licensed to work in, any REOs where the bank gave anyone a disclosure of any sort beyond the federally required Lead Based Paint Disclosure for properties built prior to 1978. The banks obtained the property through foreclosure and therefor are exempt from this disclosure (HUD homes will give you some information, but it's not a full disclosure of condition). HOWEVER, most foreclosed properties give you a 7 to 10 day "inspection period". This should not be confused with Texas's "option period" for which a buyer typically pays a small amount (usually around $100) for the property to be taken off the market and the buyer can back out for any reason during the option period. During the inspection period you need to quickly do most of your due diligence, including the property inspection. Should you need to back out of the contract for any reason, you simply need to find an item on the inspection report that would NOT be readily apparent to the average buyer going through the home and looking at the property prior to making the offer. That's the clincher...make sure you choose an item that would not be readily apparent. This gives you your "out" and you can get your earnest money deposit back so long as you terminate the contract within the inspection period. (PM me if I need to clarify that more for you). Beyond that, your outs are: title issues that the seller is not willing to clear to give you "clear and marketable title", or because your lender will not lend on the property.

Should you back out of a contract for "no good reason" after the inspection period ends, your earnest money deposit would be forfeited to the seller. I've been licensed for over 15 years now and have yet to see a bank sue for specific performance, though it can happen. Protect yourself and use your inspection periods wisely. Do as much due diligence (including general inspection, search for open permits, search for code violations and code liens), and gather repair estimates on the property as early as possible in the inspection period, then use the "not readily apparent" items as your way out of a contract if the deal turns out to be no good.

Here's the news story. Unfortunately, scams seem to run rampant in Florida.

http://www.wptv.com/dpp/news/region_martin_county/robert-allen-tribble-jr-mary-revoller-chavez-arrested-fdle-accuses-pair-of-rental-fraud-scheme

The answer to your question lies within the listing agreement she would have signed when she gave the agent the listing.

Listing agreements vary from state to state. In the three states I'm licensed in, all three have "Exclusive right to sell" listing agreements in which case if the seller finds their own buyer, they still owe the agent the commission and there's "Exclusive agency" listings where the seller can avoid the commission if he/she finds their own buyer.

Your seller will need to read the listing agreement and perhaps have an attorney read it as well to see if she can get out of the agreement without paying a commission.