All Forum Posts by: Christian Carson

It's these kinds of threads that reassure me that I'm not on the wrong track with my assessment of the market. Just wait until these yield chasers realize that they have bad management six months too late when their income statements are dripping red.

>It was to my understanding that if you have a purchase agreement with the seller, that gives you "equity interest" in the property which shields you from being charged for practicing without a license because it would be no different than if the owner decided to sell the home themselves.

A plain reading of Ohio law exempts only transactions involving "real estate owned" by the actor. Since this activity is common in Ohio, I expect that our state will be setting the trend for other states to start aggressively pursuing wholesalers. 

As I've said in other threads, if it quacks like a duck, it's probably a duck. The Ohio real estate commission is probably not going to care about the technicalities of the deal (contract assignment, double close without funds, etc.) If you're acting like a real estate agent, expect the hammer to come down. That's especially true if you're telling the seller that you are "marketing the property for them." I see this clause in so many contracts. I don't think you can spell it out any more clear what you're really doing without actually using a real estate agency agreement.

Using your own network to find eager workers is, in my experience, more effective than bare recommendations. If you know and like one guy in the business, ask him for recommendations for others that he regularly works with. That way, the first guy becomes an advocate for your jobs, and he'll know that the other guy is not blowing smoke when he says he can handle the job or get it done on time.

@Jared Lichtin: Things are great, so far. Real estate closings, LLC formation and estate planning is keeping me busy and keeps the capital flowing to asset building. Keep on investing!

Tom,

It's a little unclear as to exactly what you're trying to achieve here. If your sole desire is to loan money to an LLC, then the provisions contained in the LLC operating agreement are not relevant to the deal. It is if you become a member and take an equity interest.

There is a way to skip trial and shortcut your way directly to a judgment after nonpayment -- it's called a cognovit note. Essentially, the debtor gives you the right to appear on their behalf in court and obtain a judgment without a trial, in case of nonpayment. This is not a do-it-yourself project, as your state may levy some very serious penalties if what you're doing falls into the purview of consumer lending laws. Most states also require strict compliance with the procedures of the cognovit statute.

Jared, 

I worked in oil & gas title as my first job for a few years. I had a great team, so it was really enjoyable and flexible enough to get me started on rehabs. We might have worked the same counties, who knows :)

Depending on your state, you might be able to use an irrevocable trust to protect your assets in divorce. You would need your spouse to deed the property into the trust.

 You're right, there is an ambiguity. In traditional legalese, "executed" meant a contract where all obligations have been fulfilled, and an "executory" contract was one where parties still had to perform.

In modern terms, "executed" often refers to the parties signing the contract (or otherwise agreeing to it).

I have bought a few properties from Fannie Mae, whose deed contains a 90-day restriction. I reviewed the documentation and addenda that Fannie Mae made me sign, but there was no mention of any kind of promise not to contract to sell the property before 90 days. The only mention of the period came in the form of an agreement that a deed restriction would be placed in the deed.

@Account Closed: "The material question here is whether there is a severe public harm that results from this?"

I disagree. As investors, we're not arbiters of public policy and we don't get to decide whether the "spirit" of the rule was broken or not. We're pretty much at the absolute mercy of the federal government, and if a kangaroo court wants to find against us despite the best of arguments, it's going to happen, and no cute or clever structure is going to save you. That's why I ask why people constantly want to play with fire when it's obvious that the rules are arbitrary and the judges have no qualms about destroying a speculator.

Ugh. I wish the moderators started to crack down on discussions about scamming government rules. An outright ban on topics using the word "circumvent" should suffice.

Why can't people just play by the rules? I would doubt that the 90-day restriction is really injuring any investors. Buy them to rent. If you need to sell before 90 days, go find another property and don't go through the hassle of setting up a scammy structure.

In any case, exchanging an interest in an LLC is a really bad idea for the reasons enumerated above. In addition, if your purchaser for value is a stranger, there's no way he's getting title insurance. You are buying title insurance, aren't you?