All Forum Posts by: Brian Wall

Ron, here is another idea. Something I have been trying to do out here in California. But housing prices tend to be too high.

A good potential tenant, is a Sober Living House. I would be willing to bet there are a few in your area and you may not even know it. Just google "Sober Living House North Carolina". I did and found several websites that have sober living houses in North Carolina listed.

Basically, these are places that rent out by half room (2 people per room), as an interim housing for people just getting out of rehab, before they go out on there own. Out here is CA, everyone I talked to said there is always a waiting list. Not sure how much is paid in NC, but in CA, you can get up to $1000 a month, per person. The average rule of thumb here is say you can get $1500 per room. So, for a 4 bd house here is CA, a sober living house owner, can get $6000 a month. There is a lot that goes into running a house, so it is still work.

I am not suggesting you start one, but you should find someone that runs a house already, and most likely they would like to open another one. If he was making $6000 per month, he could afford $3k for rent. Now you have a long term steady client.

I would suggest renting on a triple net basis, where he covers insurance, taxes, maintenance, etc. That is all tax deductible for him, most likely he has a non-profit organization all setup already.

More than likely, the new tenant will want upgrades, etc. So, you can do that for him as well, and he pays for it.

Well, that is my idea ...... Let me know if it works out.

Brian

in addition to what everyone else is saying regarding tax liens, judgement liens, etc. There is one more reason.

A HML told me that since he is now licensed as a lenderd there are certain things he has to do to stay in compliance. One of those things is to have the applicant fill out a standard loan app, and the other is to obtain a credit report.

Brian

My experience was similar to Jerry R.

I purchased one property, and the process was cumbersome. They seem to have a series of different "transaction coordinators" which each fulfill a different step of the escrow process. You would think an all cash purchase would not be that complicated, but they made it difficult. Many of the TCs seem to be offshore, which can be a good thing, but the problem is they have to coordinate with a local escrow and title company. It did not seem like they were communicating.

We got a pretty decent deal, not a home run, but it was okay. It took several months to get our bid accepted. I am guessing that a few people put in bids, but then got frustrated with the process, and saw that it was not worth it, so they cancelled.

I would purchase something again through them, if it was a good deal. I know now what to expect, and can anticipate some of the issues.

Brian

We just got a short sale approval in a few weeks. Here are the details:
The current ARV is about $350k, it needs about 30k of work to make it "nice".

A few months ago, when it was first listed, at $320k, I made an offer at about $285k, and it was rejected right away, they had "several" offers at asking.

Well, 3 months and 3 buyers later, the agent calls me back, (I knew her from other deals), and said they are a week away from auction and 3 buyers had fallen out, and they are now ready for a cash offer. All 3 buyers had gotten approvals from the bank, at $300k or slightly over, but none of them performed.

I offered $260k, and within 2 weeks the offer was accepted.

The home inspection is Monday, and most likely there will be some issues, and I am going to ask for another $10k off the price.

Brian

Thanks Josh, although there was not a direct connect to BP, however I can say that I have learned a great deal, and have made some great connections that have not only educated me, but encouraged me, all attributed to BP.

That is why I want to put this kind of info back out there. To show people that this is real!

Keep up the good work!!

PS - As I write this reply, I just received the first offer submitted on this property. It is not quite at asking but it is close!

Brian

Hey BP Nation!

It has been too long since I posted about one of my deals, but I just finished rehabbing the property (it is listed for sale now) and it was NOT an REO and NOT a short sale. I found by direct marketing!

So, here we go:
In July I sent out 1500 yellow postcards. I sent them to Non Owner Occupied properties with 50% or less LTV, 3 bedroom, SFRs. I got the mailing list from my title company, at no charge, and it cost me $600 for postage and processing via Click2Mail.com. The postcards basically said I want to make an all cash offer on your home, with no RE Agent commissions (although I am an agent).

I received 12 phone calls, and 2 of those were serious motivated sellers, the other were just curious. One of those was a guy who's mother had just passed away about a month earlier. He mostly lived in Utah, but was staying out here while his mother was ill. She knew she was passing so she deeded the house over to him before she passed, he was only child, and his father was not in the picture.

He said he wanted to move (he wanted the cash) by the end of August, I told him that would be no problem. I asked him how much he wanted to sell for. He acknowledged that the house needed to be upgraded (it had all original kitchen, bath & windows from the 50's), so he was looking for $215k to $230k. I knew, before I met with him, that the ARV for this property was easily $300k, maybe $310k, and I knew the rehab would be $25k, assuming no major system problems (plumbing or electrical). We had just rehabbed a very similar house, almost exactly same layout, for $25k.

I responded to him that I thought $200k was a fair price, explaining that if he sold with a real estate agent, he would net less than $200k. He accepted the $200k price.

Great, now I got a deal, but I don't have the cash. So, I scrambled a bit, and eventually found (with about 1 week to spare) an investor that had done one or two deals with someone else, so he was familiar with the flip process, but hesitant to go on his own. After some back and forth discussion, we agreed that he would put up the cash to purchase the house, and I would put up the rehab money and we would split profits 50/50 (after I get listing commission, of course). Before we closed, I had my contractor go through the house and he was concerned that the windows we were going to replace were going to cost a little more than expected, so I went back to the owner, and he agreed to credit back $5k. So, net purchase price was $195k.

We closed escrow on the purchase on 9/1 and now, the property is listed, (on 11/11/11 how lucky is that!). The rehab should have finished a few weeks back, but I had some financial issues so we did not get the kitchen and carpet installed until just last week.

The rehab cost about $27k, so pretty close to budget.

We are expecting this property to sell quick. It is well priced, and the nicest house on the market in the area.

I took a before video, and an after video. here you go.

Before: http://www.youtube.com/watch?v=duoMd-FtgnU

After: http://www.youtube.com/watch?v=DTUuWi9dG5M

I welcome any feedback, good or bad! In case you are wondering, yes, I did ask the owner about owner financing, he was not opposed to the idea, but he did need the cash, as he was buying a property in Utah, and needed the cash to buy that property.

Aaron, I have not used them before, but there is a national lender that specializes in doing loans to SDIRAs.

Just google "IRA Lending" and they should come up.

Like Jon said, you will probably have to put 35% down. They also will look at the income/rent coming in and will want the income to cover the PITI + 20%, typically.

It can be a great way to leverage your SDIRA. Something else you may want to consider is partnering with another SDIRA or even another party, does not have to be an SDIRA. The only key factor on partnering is that for all expenses (and income) it has to be proportionately allocated. If you personally put in half, and your SDIRA puts in half, and you have a $1000 maintenance bill, you personally have to pay $500 and your SDIRA has to put in $500.

I would make sure you consult with your SDIRA Custodian, they can make sure you keep things straight, taxwise.

Brian

Hey Chuck,
I have had good success using click2mail.com, they have a direct relationship with the postal service. I send out a simple "I want to make a cash offer on your house" postcard.

You can design the postcard right online, then upload your mailing list. They automatically validate your mailing to ensure you have accurate addresses.

I have used them several times in past few months. To give you an idea of price, I sent out about 1600 postcards, just the basic one sided, on yellow cardstock, with first class postage, and it cost me about $600, including postage.

I have not been able to find a better deal.

Brian

Hey Mark,
Here are my 2 cents...

You have done a great job in determining why the family is motivated. They want to sell the place, but the end result is so that they can pay for the 24 hour care.

I would figure out how to sell the property without taking title, so that the title can change hands from the family directly to the end buyer, that way you do not have to "prove" anything.

There are a couple ways to do this (I am sure other BP members can chime in with other ways), but here is how I would do it.

You get an option on the condo in the next 90 days. Find out how much the family needs for the next 90 days, and give them that amount as an option fee. You could get them the entire $70k, but then I would extend the option expiration out at least 1 or 2 years. That amount would apply towards the purchase price, when you exercise your option.

With that option, be sure to ask for the right to show the property, and do what you need to do to sell.

You can then do whatever you would normally do to sell the property.

You list for sale at say $110k, then when you sell, the end buyer is paying $110k, just like any "regular" transaction, and 70k, goes to the family (less the option fee you already paid) and the rest goes to you, as the option holder.

Doing the option correctly, means that you would need to record an memorandum of option with the county recorder, to demonstrate that you have equity in the property.

This is a win win, the family gets the money they need ASAP, and you have the opportunity to sell and maximize your return on investment, while never "owning" to the property.

Like JD Rockefeller said: "Own Nothing, Control Everything!"

Let us know how it goes.

Good Luck,
Brian

I am running into the same issue now.

I just got an addendum that said "buyer agrees not to sell 10912 zzzzz street within 90 days of from the data escrow closes."

My question is what is the definition of sell.

I know for the FHA 90-day flip rule, I could not accept an offer for 90 days.

But, here, I am interepreting "sell" as the date when I transfer the property to the new buyer. If that is the case, I am okay with that, it will take 30 days or so to rehab, then market, and open escrow, so waiting until that 91st day to record is okay with me.

I am afraid to ask for a clarification at risk of getting the answer I don't want to hear.

Maybe I will check with my title company.

Brian