All Forum Posts by: Dennis Maynard

The general contractor should provide this work agreement.

@Aaron Hunt. It's actually coverage for the owner.  As you read your purchase and sale agreement and joint escrow instructions, you will note that the owner has to provide clear title or you can back out of the agreement.  Sometimes the buyer will upgrade the title policy to be include an ALTA Survey or ALTA Policy.  Typically each party has a share of the title policy, it's just called an owners policy.  

@Aaron Hunt Title companies are insurance for what is known as clean title.  This means that upon your purchasing the property, they guarantee that there are no encumbrances on the property, aka liens, tax liens, outstanding debts, or if you get an ALTA, encroachments on the property.  CA works on a 3 party system instead of a two party system, meaning, a trustor, a trustee, and a beneficiary instead of mortgagor and a mortgagee.  All trust deeds are held by a title company until debt is paid off.  The deed goes to the owner after debt is paid off.  The beneficiary holds all rights in the property for use subject to the deed of trust.  This actually aids in preventing fraud vs the mortgage system.  At any time there is a "cloud" on title, this means there is something preventing the title company from delivering clear title.  Depending on what it is, it could be converted into an Exemption on the Title Policy.  Now that you have had a crash course in Title companies, I feel like I should make a TNT video out of this.  LOL.  Hope that helps.

@Aaron Hunt. If the property is listed by an agent, they will usually have an escrow and title company selected that they used before.  You can try to negotiate, but my suggestion is that when it comes to an escrow company, agents usually select them based on service and experience.  Title company escrows are typically the cheapest option, but they also have the least service.  That said, title companies and title fees are all pretty close to each other.  It's not too out of line, and the companies have been bought and sold so many times they all seem like the same company.  As for suggestions on title companies, Stewart Title and First American Title are companies I've used in the past.

@Aaron Hunt. According to RESPA laws, the escrow company should provide you with a statement of all fees and closing costs.  You can ask for a draft of this statement anytime.  It will be issued to you at close.  If that is a title fee, then it is reasonable.  

@Tara Faulks Let us know if you have further questions.  Happy to help.

Glad you guys brought my name into the conversation...

@Tara Faulks First, I would add that using a Cap Rate as a Cash on Cash is incorrect.  Two different equations.  Be careful there.  8% Cash on Cash in California is super tough.  @Enrique Huerta is correct that getting outside of the city is paramount to finding Cash Flow Deals, but the concepts and guidelines they teach here are really meant for middle America where you can pick up a house for $150k and then rent it out for $1000 / mo. I think it's best before going market hunting to establish your goals, your investment, and criteria for investing. Then back into your locations based on those stated goals. Food for thought. BTW. CoC is NOI / Initial Investment. Cap Rate is NOI / Purchase Price (or Sale Price). Brandon is referring to CoC not Cap Rate if my memory serves correct.