All Forum Posts by: Frank Straughter

Quote from @Chris Barrett:

You have no security in that type of loan however, if the deal falls through and the loanee loses the EMD you have to go to them to get money from them that they probably don't have.

If you mean security backed by collateral, you are correct. However, some security comes in the form of having joint control of the transaction. As I mentioned above you are JVing on the deal when you bring in the EMD. So if you sense the deal is not going to go through within the diligence period you can cancel the contract. There are several people in the group that have run into that issue but rather than cancel the deal they brought in the buyer and took a bigger cut of the deal in the form of a "Finders Fee".

Correct me if I am wrong, but I believe the points you are trying to make are the following:

Could you lose your EMD money?
Yes

Is the EMD backed by collateral?
No

If you lose your EMD money could you get it back?
Probably not

As you already know, there are no guarantee's with investing which includes lending.

***NOTE*** I am not trying to talk anyone into doing EMD lending. I just saw a questions that looked like it hadn't been answered so I thought I would try and be helpful and answer it. This might sound rude (it isn't meant to be), but it makes no difference to me whether someone decides to do it or not. I just wanted to share my knowledge on the subject and help clear up any confusion.

Quote from @Chris Barrett:

Yes, and if the buyer isn't able to close due to reasons other than allowable in the OTP you will lose your EMD and they'll owe you money that they apparently couldn't pay in the first place...

As the person bringing the EMD you are essentially Joint Venturing on the contract and as such you have the right to cancel the contract just as much as the wholesaler. This is all explained in the training. The information that is put out there is just to get people interested in taking the training. Its not complete and it causes confusion for people trying to figure it out but there are other items involved.

Quote from @Chris Barrett:

This seems to be the opposite of the point of EMD... if the transaction is broken by the buyer, the seller can keep the EMD. 

Not broken, cancelled. Allow me to clarify.......most states (at least the ones I am familiar with) have ways of cancelling the transaction without losing EMD.

1.) Within the inspection or due dilligence period you can cancelled the contract without losing the EMD. The inspection period is also negotiable. For example, some states the standard inspection period is 14 days, but you can request longer or shorter in the offer letter and if the seller agrees and signs, its binding. I have done this my self for a few properties I made offers on earlier this year.

2.) Contract contingency. Another property I was looking at I placed a financing contingency in the contract that allow me to pull out if I could not get financing within a specified time. Which I didn't for this particular property. The sellers were not happy about it, but I got my EMD back because I did not break the contract, I cancelled it per the contract they agreed to.

There are other ways you could also cancel the contract without losing your EMD, but those are two that I have done personally and can speak too.

Quote from @Anthony Stephens:

It sounds interesting but my concern is that this would be an unsecured loan to someone who may not be in a good financial position. I assume that if the wholesale deal falls through the earnest money is lost and the "Gator" lender would have to seek the money from the wholesaler who did not have the funding to begin with.

Am I misunderstanding?

Hi Anthony,

I'm not sure if someone already answer your question, but when you submit the earnest money to the escrow company (you don't give it to the wholesaler or seller directly), you also submit escrow instructions which state how the money is to be distributed.

In those instructions you specify that the EMD is to be returned to you regardless of whether the transaction goes through or is cancelled. FYI...some states require the seller to sign a release saying they agree to give the money back. This is referred to as a "mutual release state". If you are doing business in one of those states you will want to get that signed before submitting the money to the escrow company.

Quote from @Kim Meredith Hampton:

Frank 

Go check out David Birdy with Birdy Properties, they are awesome and have some of the best STR/MT properties in San Antonio

Thank you! I just sent him a message.

I have been having trouble with locating a management company for Mid-Term \ Corporate rentals in the South Texas (San Antonio) area. Any suggestions on how to find them? What search criteria does everyone else use to find them?

Any suggestion or referrals?

Quote from @Conner Olsen:

Quote from @Donald Yang:

Hey guys,

Looking to get into MTRs in my backyard and I was wondering if you guys usually do it yourself or get a property manager. It seems like groups with good corporate contracts that may be able to get better returns and less vacancy would probably offset the property manager costs wouldn't it? 

What are the general costs associated with property managers in this space? Do they do pretty much take care of everything excluding replacing broken big ticket items like furniture? 

Thanks 

I manage my own and manage others in Austin. MTR PM is a new space so you can expect anywhere from 15%-25% for a management fee. In terms of what they cover, it totally depends on the company and their fee structure so no rule of thumb there.

The best returns are in the corporate contracts. One of those contracts should be much higher than what you'd pay for a management fee.

@Conner Olsen Do you know any management companies in the San Antonio area that manages MTR's?

Anyone want to do a Face 2 Face meetup at a coffee shop in New Braunfels, San Marcos or Kyle? Either one on one or a small group (4-5 people). I'm looking to build relationships with other investors, Wholesalers, Agents, Title Companies, Attorneys, etc.

Just let me know.

Quote from @Ken Morton:

Hello.  I am looking to sell my house in Corpus Christi, Texas that I acquired subto.  I am looking to sell it on a wrap to a buyer using owner financing.  Can anyone help or suggest someone?  Email is better for me.  

thank you

ken

Are you saying you need an agent to find a wrap buyer for you or are you saying that you already have a buyer that you are trying to sell to and you just need an agent for the paper work?
If you already have a buyer you might consider using a Transaction Coordinator to help you with the paper work.
If that is the case I might be able to connect you with one. Just let me know!

Hi Philip,

If "Transactional work" means helping to purchase (or sell) another business, than it would be both. Also general legal advice business matters.I already have an LLC for my Real Estate business. I need additional LLC's. Two highly recommend sources (Anderson Advisors and Prime Corporate Services) seem to be overwhelmed at the moment and are not responding to communication attempt in a timely manner (or at all).