All Forum Posts by: Christopher Morin

You haven't said what the ARV is. If you offer 40k on a property, have to do 30k in repairs, then you're in for 70k. Does the ROI work at 70k renting 1300? And can the seller give you this property for 40k with clean title?

If you want to do something creative, you need more info.  What is their mortgage payoff?  Whats the P/I payment?

Is the "loan" to the family member a recorded lien on the property (ie: is it your problem or is it their problem?

Whats the amount of the restoration lien?

You could take it Sub2 the existing loan + liens, and you'd be in it for your rehab cost (30k) making the previous mortgage P/I from the seller's loan against your 1300 rent. Problem is you sunk 30k cash into this thing, own much more than it's worth, and therefore have no exit strategy. Maybe try to negotiate w/ the restoration company.

Except the Realtor won't understand a Sub2. They will probably tell the seller its illegal or a huge risk (despite being explicitly prohibited from giving legal advice), and won't let you present the deal yourself, and will be dogde-y as you ask the necessary questions above.

I would just submit your max offer contingent on the seller delivering clean and marketable title and move on to the next one.

Legal action, maybe.  Swift and deliberate action, definitely.  What precedent will you set in your own life and business by allowing $5,000 in unfinished work to just disappear?  I would apply a firm escalation of pressure.  

Line up your paperwork and communication logs. Separate emotion, and be a fact based professional representing your business' interests. Make sure you're talking to a decision maker, not the front office secretary.  Be concise and factual; they won't take you seriously if you start with "he-said she-said".  Explain to them what you're asking for, and in as few words as possible, how they can remedy the situation.  Consider the details and facts from their perspective, and make sure they understand. 

After you talk to them, immediately send them via certified mail a letter of demand, just like you would if you paid a deadbeat contractor too early and he walked out.  

Have an attorney call next, he can be more concise in their breach.  Then you can file suit against them. If nothing else, these escalation actions will force them to look at the facts of the case to determine their culpability from a legal perspective, and let them figure out if its worth it to defend in court.

You can drop the suit if they call your bluff and you don't think its worth it.

I'm not a lawyer.  I'm sure there are specifics to your deal that I'm missing.  Good luck, let us know how it goes.

Yes. A HUD-1 or settlement statement is not required to transfer title on a property, it only helps you have a nice printout of who pays for what. The only thing you need to transfer ownership is a deed.

@Daniel O. thanks, great considerations if this happens.  I already know $10 is off, it just gives me a baseline to deviate from.

@Zach Quick very true.  I'm more trying to validate the model rather than this specific deal.  An offer on a property based on speculative numbers site-unseen and from a distance, and refined during due diligence.  This one just happens to have a lot of what-ifs to consider.

Every one of my tenants and SF buyers transfer me money via ACH.  Did you end up with a lot of fees?  How long after the transfer was it "revoked"?  Seems pretty secure to me unless a tenant decides he doesn't want to pay his rent this month, which only saves his a few days.  A check could bounce in the same way. 

Sometimes people look at their their weekly or bi-weekly paychecks, and decide that they don't want to hold money for 13 days, and would rather spend it now and be a few days late on the rent.  

They may be having legitimate financial trouble.  While you may receive this month's rent, what about the rent due on 1 March?  It might be time to have a legitimate discussion with them on their options if they can no longer afford your home.  

I would show kindness and allow the late payment, if they are willing to exchange open dialogue on their situation.  If they are un-able to catch up, you'd rather them see you as an understanding person.  If they can't pay, you want then to move peacefully, rather than choose to strategically default on the rent in their attempt to get financially soluble.

One time I was contacted by a guy who inherited his father's fortune of 2 million in Niger but the country impounded the money and demanded an inheritance tax.  He only needed 1,000 USD to release the money, and he was going to give me half if I could help him.  I was an idiot and accidentally deleted the email.  Biggest mistake of my life.

Hi all.

I'm not in the United States currently, which makes this tricky, but I have a stellar team that I trust. My agent sent me a 10-plex that's in rough shape. The listing has a GOI showing 59k, and NOI of 42k, listed for 525k. I redid the numbers on my best estimates and came up with a GOI of 29k. I then put it against an 8% cap. I factored in $10/sqft rehab as a baseline and came up with 70k. So I submitted 2 offers the day she showed me the listing.

310k conventional purchase.  

370k Owner finance or contract for deed w/ 5% down.

The listing agent is slow, but communicated that this property needs a ton of help.  The owner didn't realize what he was taking on, and there are 2 vacant units in the 10 plex that need full rehab from water leaks.  Additionally, there is a un-usable duplex on the parcel I just found out about, apparently water damage from the parking lot next door has made it un-inhabitable.  This kind of turmoil smells like opportunity.

I figure once (if) its under contract I'll do inspections and due dilligence toadjust all my figures.  If my contractor comes up with a higher than 70k rehab estimate, I'll negotiate my offer by this amount.  If rents are not as advertised or expenses are higher than expected, I'll negotiate my offer accordingly.  I will pay my buyer's agent to act as a property manager during the, and I have an awesome property manager to assist filling the vacant units.

I will have never seen this property.  What can go wrong?  I'm being serious, help me prevent disaster, I'm eager for your feedback.

@William F. Sales are probably the single most important skill you can improve to improve your business.  The ability to show a customer, employee, boss, or investor why your product or solution meets their needs is everything.  

Investing in formal sales training will provide you with skills you will always be able to use.  Negotiation, basic communication, understanding buyer personality types, building rapport, overcoming objections, closing techniques, and follow-up marketing are all monumentally important.  

Learn the formal sales process.  Seek out sales masters and follow Grant Cardone, Brian Tracy, and more.  Invest in education and books that are sales based.  Overload on youtube on all aspects of sales.  There are mountains of free info out there.  Dive in negotiations and positional bargaining, cognitive biases, understanding your negotiation partner, their interests, and both of your 'BATNA's.  Learn how to speak in a way that is understood by the customer.  Then know that all of it relies on your hard work to implement, you should know all of your scripts and responses because you've rehearsed them endlessly.

Thank you @Christopher Phillips. Let me clarify, these are leads from my direct mail campaigns, not MLS leads. The agents are acting as my acquisitions agents, and will be answering the phones from motivated sellers instead of me. Any money the agents are paid will come out of my net.

A % based buyer's commission does not incentivize my acquisitions agents to get a property at the lowest possible price.  I am looking for an alternate method that perhaps others have used.