All Forum Posts by: Jamie Hogan

Thanks everyone.

I contacted the bank for him and was able to negotiate an agreement with them. I'm hesitating to post the details here until the deal is totally wrapped up and I have all of the paperwork in hand.

Thank you for all of your quick replies. It really helped in the negotiations.

One of the things I’m worried about is paying off the wrong company to pay off the debt and this man losing his money. He’s very elderly and trusted the wrong person. He’s on social security and a pension which I believe can’t be garnished. So, I was hoping that would give him some leverage. He’s in Texas. Is there some piece of paper that I ask for from the new debt owner that proves they own the debt and can discharge it? What happens if I send them a check and they don’t own the debt? How do I know that I’m dealing with the right person and the debt will be discharged and the lien released once the debt is paid?

When I talked to the bank, they said he could continue to make payments. I’m not sure if they were just trying to offset some of their losses and if whatever he pays will actually continue to pay down his loan. If he does, will the bank keep the note and not sell it?

I have a friend that had someone else managing their money. Several mortgage payments were missed. I guess the bank had someone drive by the house and saw that it’s in terrible shape. They determined that it would cost more than the house was worth to foreclose and charged off the balance of the loan. The lien will remain on the house. The implication I have is that if this friend doesn’t make any payments, the balance owed will not increase because the interest has stopped and the bank will wait to collect on the lien when the house is sold sometime in the future. I have several questions. Any insight?

Will the bank sell the note to someone that buys bad debt? If so, can this company charge interest from the time they buy the note or before?

Since the lien is still in place, I would think that this is not a taxable event to this man. Is this correct?

I’m concerned that he’ll find himself trying to quickly refinance this house at some point in the future when he’s not prepared because the house is being foreclosed on. Some other friends and I are trying to help him make repairs and help him get back on track financially. I was thinking of approaching the bank and attempt to buy the note at a discount. Any advice about approaching the bank?

Thank you, Shawn! Great tips.

Now, I have to find another title company that will do this transaction. The one I've been using told me this morning that they don't do sub2's or wraps anymore. So, I'm calling around. No luck so far.

I'm looking at a condo in a couple of days. The owner is willing to do a sub2 for only the outstanding amount. I can't rent it. I have an end buyer in mind and plan to wrap the note. I've never bought a condo before. Any advice or gotcha's I should watch for? I've never wrapped anything either and will have a learning curve there too. Any advice is appreciated. My title company created the note, etc. when I bought a property with owner financing before, but that one was free and clear. I had planned to contact the title company tomorrow to see if they can create the paperwork for this too. And, I'll be calling the condo office to ask for a copy of the complex rules and restrictions. Any other advice?

I second the idea about getting rid of the carpet. After hearing several landlords rave about Allure vinyl flooring, I’ve installed that in two rentals. (Not the tongue-and-groove style) It hasn’t been down long. So I can’t say how long it will hold up, but it looks like it should hold up well. The tenants have loved it and I noticed that the furnace filter (in one unit where it replaced carpet) when replaced after 2 months was a lot less dirty once I went with the vinyl flooring over carpet. I don’t want tile in my units because I don’t think the tenants will take care of it. I don’t want to deal with broken tiles and stained grout. If you have hardwood floors, provide the tenants with instructions how to take care of it and what products can be used on it. The floors in one of my units had to be screened and another poly coat applied because the tenant used the wrong product when cleaning it and ruined the finish. I’m also moving to semi-glass white for all ceilings, walls, and trim. All of my tenants have been hard on the flat paint I was using and I’ve never been able to just touch up after any of them have moved out anyway. This makes getting the unit ready easier and faster. I also include only a stove and refrigerator in mine. Dishwashers and microwaves just add one more thing to break.

Steve,

Thanks for asking a question I struggle with too. I see bad times coming – the same things you do. As this thread shows, it’s hard to know for certain how to protect your financial life since there are so many different opinions. Until the future arrives, we’ll never know who’s right here. Although I worked hard over the last several years to try to understand the right way to invest my money to build a (hopefully early) retirement fund, I’m not an economist or a millionaire. With that in mind, here are my thoughts. It’s long, but I would love to hear your comments and ideas.

I started investing diligently with IRA's/401k's with the plan that they would be about $3M at retirement so that I could pull out 3% a year as a salary. This was the first exposure I had to the stock market. As I've watched the balances seesaw, I've learned that these accounts aren't a sure path to financial freedom. Good to help diversify and forced savings, but I don't have a lot of control over the outcome. Fund managers more in the know than I am and emotional trading by amateur investors like me determine my stocks' value. My focus going forward is to hire a financial advisor a wealthy acquaintance uses to help me invest these funds in something that will hopefully protect the initial investment as well as provide a steady return. I think I'll look to invest in stocks related to healthcare, basic food, and elderly housing – funds instead of individual stocks. The accounts will never be at the $3M mark and I see now that they will be too volatile to count on a consistent income anyway. But when I can take the money out without penalty, they can give me either seed money or backup funds for a business that can produce more cash flow.

I’m now focusing on finding different classes of assets that are more within my control that will produce monthly income in excess of what I need. When the real estate market took a nose dive years ago, I bought several rental properties and financed them through a local bank. I plan to buy several more while the prices are still depressed. Cash flow is king, but it’s not the only thing I’m looking for. While I’m not counting on appreciation, I’m also looking for marketability with these newer ones - good 3 bedrooms in a blue collar, good school district area. I hope to have most paid off by the tenants within ten years. I can then use the equity as collateral for other businesses, sell them to conventional buyers, or sell them on land contracts or wraps.

Although I know I'm better off than some, like you, I don't feel totally secure. Even with a good real estate portfolio, I know there are downsides. People can double up or stay with relatives if times turn really bad driving vacancies up and rents down. Higher unemployment can bring more evictions, lost rent, and turnover costs. Then comes the EPA's lead laws, the SAFE Act, the ever present lawsuit threat, and rising interest rates which all affect the real estate I'm investing in now. I don't think there's a perfect investment that is totally safe from all the ways the government can muck it up. And, I'm angry with the politicians that seem to thrive on dissension and don't seem to have the ability or will to deal with the problems our economy is facing. I plan to just try to not put my eggs all in one basket any more. Use Weiss ratings to check out the banks and insurance companies I use to hopefully avoid companies that are possibly heading towards trouble. Keep enough emergency cash instead of relying on HELOC's which can disappear overnight. And, reduce the amount I need each month by downsizing my home when I can, reduce my debt, and avoid costly indulgences like brand new cars. But even though I think we're heading for some tough times, I know that I can't stop investing. There's still great rental housing to buy. I'm also working on positioning myself to take advantage of some even better deals that I think will be here in a year or two. Good luck and I'd like to hear more of your ideas.

Hi, everyone.
I've been lurking for a while and decided to put my first post out here. Yesterday, I saw a video about a book titled Aftershock. It's some economists' predictions on what we can expect to happen over the next several years. I have some rentals that cash flow nicely. They're financed on ARM's that will reset in 3 years. (I didn't find any fixed mortgages at the time.) I plan on reading the book and I'm curious if anyone has read it and has an opinion. Although the authors seem to recommend buying gold, I think my best bet would be to accelerate the pay down on my mortgages instead. Over time (and especially if inflation hits as they predict), I think I would get a better "return" on my money by saving what the interest would have cost compared to the few thousand I MIGHT make IF gold goes up another few hundred dollars an ounce. I'm not an expert on markets, trends, etc. and my investments are pretty basic (rentals, ira's at Vanguard). I'm worried about making a misstep. Any advice?