All Forum Posts by: Eric NA

[i]Flip this house and we both win... I own the house outright no mortgage, but the house needs work and I don't have the money right now to do it. If you're a handyman and would like to make some money this is the deal for you!!!!! You do the repairs and put the money in for items needed, when complete we sell the house and I take $50,000 and you get the rest. Houses in the area sell around $80,000. Labor is the most expensive part of renovation, so, maybe you're out of work or just need some extra money and are willing to put in some time. Let's strike a deal so we both come out ahead. This could be your chance to see what flipping a house is all about, especially since you're not having to buy it before you can flip it. If you would rather buy it outright that's fine too, I want $50,000. If you just need extra money we can work out a deal!!!! This house has been sitting too long and I'm not getting the money I need to complete the restore. Sure hope there is someone out there that believes in theirself enough to call me and get this show on the road. I'd like to put the flip on a time frame so neither of us are tied up for an extended period of time. I'm putting a picture of the house online so you know it's not a piece of junk house. It really is a saleable home. Brick exterior, slab floors, storm windows all around, 3 bedrooms 1-1/2 baths and 2 car garage, with a nice back yard for children. Backs up to hwy 169 and has the tall cement sound barrier behind it. Real close entry to expressway system. It's in the Union School District which also adds to its value.
This is some of the things it needs in repair. Some of the windows are cracked and need replacement glass($30), interior doors to bedrooms all need to be replaced 3 of them($150). Needs trim on entry door and outside passage garage door, and a new door to the garage into the kitchen($100). Needs painting($100) of course and new carpet(inexpensive carpet would run around $500) in livingroom, hall and bedrooms. Also really would be easier to sell if it had a patio door to replace the sliding glass doors on back(approx$350). Needs new ceiling fans and lights throughout, some of them are still good but a fresh look would be nice($150). An overhead garage door opener would be a nice touch too($150). Previous tenants took it with them when they left. Needs new hinges and pulls on all cabinet doors($50) These(?) are approximate figures if we are careful not to get to carried away. Of course there will be some additional expenses like brushes, nails and etc. Also needs new mailbox($30)

This is what it has. Entryhall tile to start of livingroom, tile in both bathrooms, tile in kitchen and dining room, has a long mirror on wall that makes the livingroom appear much larger than it really is, has a cement back patio, has been wired for security although the security system there has been destroyed. Has washer and dryer hook-ups in garage, central heat and air, gas cookstove, and crosstop refrigerator, dishwasher(appr 3 yrs old). Has an attic fan and storage area above the garage.

I'm willing to help you in any way possible labor wise. I just don't have the cash for labor and materials. [/i]

Above is the ad on craigslist. So I called, and here are the basic details:

-Owner has $0 cash in the bank right now and needs money immediately
-Bought in 1994, paid 46K, 15 year mortgage just ended, so it's paid off
-Wants 50K for the home, won't take a dime less but not worried about getting more
-Used as a rental for all 15 years, currently vacant
-Comps sold within last 3 months put the price per square foot in the area at $58, $72, and $75. ($58 was a larger house than most in the area, this one is smaller at 1,020, square feet)

I called her up and told her I could take care of hiring a crew to get in there and fix it up, provide the cash for getting it ready to go and on the market. She said she's had 15+ calls on it today and it's only been up for 12 hours.

So I have two questions:

1) Can I write a contract that protects me enough for me to invest the cash to fix it up when I don't own the property so that when it's sold I can get my profit? What if she decides not to sell? Can I write it up so that I can take the rental income from it?

2) She said she was intersted in what I had to offer, but why would she bother? She said she doesn't care how it gets done she just wants the 50K as soon as possible. The other callers were more like potential buyers who would fix it up themselves and then live in property, so why bother with me? I'm just going to add 30 days to the process (at least) and her profit will be the same.

Thoughts? Any way to make this deal work?

Jon, thanks for much for your reply. Those are very helpful answers. The only question I have relates to your answer on #4. If I am paying the mortgage company directly, do I notify them that I am taking over the payments or do I simply send in the check each month and not address the issue with them so that they don't invoke the DOS clause? If I own the home, what does power of attorney do for me? Does that simply give me the right to do what I wish with the property legally even though the seller has the mortgage in their name?

Thanks again Jon.

I have a few questions regarding subject to.

1. Once I have the deed, is the interest paid on the loan deductible for my LLC or is it deductible for the individual who still carries the loan in their name?

2. When does the seller get paid? This probably varies, but lets say you take over the payments and then decide to rent the property out. If the owner had some equity in the house and they wanted some cash out of it, it seems like it would be tough to tell them, "you'll get cash eventually, but i'm just going to rent it out right now" Lease option could provide a little up front cash but if they have 50K in equity and they are willing to give up 25K to get out of the situation, they are still going to want 25K. What would you do here?

3. What ACTUALLY happens in the process. I know they give you the deed, but do they literally hand you a piece of paper and sign it and say it's you're and viola it's done, or do you take it to a title company and have them complete the process?

4. Do you pay the mortgage company directly or do you pay the person who is financing the property and then they pay the mortgage company?

5. What if the house needs a little work, paint, yard work, etc and it's going to cost 2K, how would you handle that? do you just eat the money out of pocket and make up for it with positive cash flow, or do you get the owner to split cost with you? I'm sure there's many option here.

6. Does doing a subject 2 basically boil down to A) Finding someone motivated to get out from under their mortagage B) convincing them to trust you enough to give you the deed to their home. C) Getting a good price. Is that basically the jist or do you need another key?

7. Lets say one day the person who takes over the deed can no longer make the payment. Then what happens? I assume the home owner could go into default for not making the payment anymore and could have to file for bankruptecy, but what happens to the person who has the deed?

8. So lets say someone agrees and they are happy to let you take the deed and keep the mortgage in their name. Wouldn't that make it darn near impossible for them to get ANOTHER mortgage if they are moving to another state or buying another home? Especially now they are goign to check and see what you make vs what you are wanting to buy so it seems like them keeping the mortgage in their name makes it impossible to get another mortage.

Thank you for your time in advance.

Just to weigh in on the overheating issue, I just purchased one about a week ago and have been using it constantly. 0 overheating problems. It doesn't even feel as hot as the original iphone 2G and I had that one for almost 2 years.

I wouldn't let the overheating issue factor into your decision.

Alright I think I figured this one out but I need someone to verify. Based on the law, you cannot manage a property without your brokers license, UNLESS you own the property. So lease option wouldn't work. What I need to do is pick up the deed to a property "subject to" the seller keeping existing financing in place.

My main goal here is to find properties that are abandoned and pitch to the homeowner that I can rent out their property and provide them with a monthly income on their property which is currently just sitting there doing nothing for them. I think doing a subjet to, controlling the property and using proceeds from either a lease option contract or rental income to pay myself back for repairs to get the property into shape would work. This would allow me to manage the property, provide the homeowner with some monthly income without doing any work, and eventually provide a payoff for both the homeowner and myself once the property is sold.

Thoughts? Am I way off base here?

From everything I have read, you have to be a "Licensed Real Estate Broker" to manage a property UNLESS you own the property. So then I started thinking about lease option contracts. With lease option (unless I'm missing something) the owner is still holding the mortgage, I am the middle man who sets up the lease option contract and then I'm basically landlording in that sense but I have never seen anything that says you need a license for that.

So my question is, am I just missing something on using lease option to control a property? Whether I'm right or wrong, would there be some way to avoid getting the license yet still manage the property by creating a contract between myself and the individual?

My two goals for 2009 were to purchase an investment property & also purchase an arcade machine to place at a local indoor soccer facility. I am learning as much as I can about REI but I think I am going to have to wait until 2010 becuase I still have a lot to learn about REI and my local market.

That said, I am looking for a loan for 5K to purchase my arcade machine. I have 1K to put towards the purchase. I applied for a personal loan at a bank (unsecured as I rent right now and don't own) and was denied. My expenses each month, including car payment, rent, insurance, food, everything, is around $1,600. My income is double that.

So where should I go to get a loan? I qualified easily for a 20K car loan but for some reason getting a 5K loan seems impossible. The terms I am looking for are 5K, 3 years, 10% (give or take a little). Are my terms unreasonable?

Any help would be appreciated.

I read a book recently (forgot which book) which talked about the idea of not putting a specified length of time, IE renting on a month-to-month basis. The premis was that he would rather have tenants who wanted to be there, and would himself be able to terminate a contract by giving the tenant 30 days notice.

On the negative side, you could potentially lose $ for people who terminate early and have to pay an early temination fee or people may decide to just use your rental house to jump in for a couple months and then quickly move out.

On the positive side, I think people being lazy is on your side on this one. If people aren't concerned with when their lease is coming up, they may not reevaluate living there and just stick around until they actually take to the time to find somewhere else to live. If you need to evict them, you can just give them 30 days notice and find a better tentant rather than have to go through the process of eviction.

So would the no contract idea be a valid one? If not, why not?

I suspect it may be more difficult than giving them 30 days notice before they have to move out.

In reading a book, it indicated that you should target around 5 neighborhoods. This seems like a low number to me, and I intended to target around 10+ neighborhoods, but I want to know what everyone else is doing.

It makes sense to only target areas within your city you can easily get to, or don't mind getting to on a daily basis. So how broad or narrow is your particular focus when looking for properties?

75K is very doable in the area I'm looking at. Thank you very much for the explanation. I know it feels like beating a dead horse on the 50/2 thing. I will play around with the numbers so more now.