All Forum Posts by: Jason S.

All short sale investors are so quick to the defense. Remember that I stated you need to disclose fully and it needs to be in your contracts. Apparently it is in yours, that's good. I said "be careful" apparently you are. That's good. Most people are not.

Also note that I said the only reason I stopped with short sale flips is because I could not get title, if someone has title in California but a legit title company licensed in CA let me know.

I hear you. Once again, in a previous post I said that I if I were a bank I would force all parties to certify there were none of those other things going on - I stated in the previous post that it is that simple for the banks to protect themselves.

I understand you point of view. But you do need to understand that an aggressive prosecutor may want to push the limits, test the law, and make a name for him/her self. That's why I said be careful.

It is easy for them to take those that work for you, put words in their mouths at the threat of prosecution, and then they can come after you with witnesses. This is not beyond conceivable. Short sale fraud is a hot political ticket.

It is also easy for the investigators to take you down on a "process conviction". This is where you are totally innocent, but because you may have, even accidentally lied, or misconstrued some fact - you go to jail - ask Scooter Libby how that works.

I simply am telling people to be careful. This is a hot topic and one where you can get into a lot of trouble - quick.

If they indict you, it will be $50,000 minimum to a decent lawyer to get you out of the situation without a trial. And you will not get back your attorney fees.

All I am saying is be careful - you are right - if you are honest and do business 100% straight you will be fine. But I know many short sale investors and they are not nearly that careful.

Be careful. The higher your profile, the more likely you will be / can be targeted.

Remember perception is reality for many.

I do not know your specific market plan. Maybe you are re-habbing then re-selling or something like that.

But a short sale flipper is taking advantage of ineffieiencies in the system in order to profit, oftentimes at the expense of the distressed homeowner, taxpayer, or Bank. And just as the Gov't protects the banks from robbery, they protect them from RE investors (right or wrong that';s the way it is).

So this makes you a target.

They are not bowing at your feet because, at least in CA, for every short sale you buy, there are 10 regular buyers bidding on that same property - just not with cash. The Seller takes your bid over the others because you will make the transaction easier than the other buyers, plus with you the RE agent has to do less work - you see there is a lot of what could be considered "collusion" by an aggressive prosecutor.

This is why it is a problem. This is why SS investors, in my opinion, should keep a very low profile, and at a minimum be fully disclosing everything, even the fact that you plan to re-sell, to the bank. Even if it is in some form that you submit, as long as you let the bank know, it is up to them if they read your paperwork or not.

Be careful out there. Its getting more and more dangerous all of the time.

All of these things can be fraud, they must be handled very precisely. Look at my comment below - the precision with wich this is handled is of paramount importance.

This should be of major concern by SS investors. The government is taking it on themselves to proactively define and prosecute fraud. This is big, very big. If you do not see why, just think about it.

This is big. I hope everyone is disclosing to all homowners and they are signing that they understand you are doing this for a profit and that they understand you intend to re-sell for a profit, no matter how large etc.

Also make certain your profit does not leave them with tax or other deficiency - if your profit is on the back of the homeowner - watch out for the local prosecutor.

With all of that said, I got out of Short Sale flips because I could not get title - is there title for these in CA still?

Not that I would do this but you can sneek into your local Mannheim auction, there's usually people selling passes out front for $5-$20. Then you can pick up papers showing prices for cars that were sold to dealers in the prior week. Then determine if the market is good or not. Remember compare sale values of cars not asking prices - just like in Real Estate.

The other way to do cars is do a cash for your car type campaign - all of this is very difficult for those I know in the business. The only ones I know making money have a lot where they overcharge through aggressive sales and/or make kickbacks (legal) on the financing.

I also know one dealer that is making it buy supply trendy customizations and selling to upper class young people he knows and who grew up in the same area as he did.

There may be a niche in there somewhere but know what you are getting into. I would bet you can make more with a focus on houses - but if you have a specific angle - then maybe you will do well.

I bought a BMW one time with a guy who had his dealer license at the dealer auction (not a regular auction the real Manheim dealer auction) - bought it, brand new, lowest price anyone bought that same car for across entire Manheim network, $7,000 below Wholesale blue book, Yes below Wholesale, I thought it would be a quick flip.

I sold the car for $7,000 below wholesale.

I never touched cars again.

If Lenders, Fannie, Freddie, GSE's, whomever want to put a stop to this they could. Simply have the Realtor, buyers, and all parties sign an affidavit that states there are no other pending transactions on the property and no other higher offers that any party is aware of, that all interested parties have submitted offers etc - or something to that effect - it is late and I am not thinking of exact verbiage.

They should also include in the short sale package, on submission, that the negotiating party agrees to release the owner of the sale contract should a higher or better offer, as deemed so by the lender, be submitted or available.

That would be that. Then if someone signs and does it anyway it is fraud. Most would not sign it, I certainly would not if I had a second transaction planned.

The fact is that I really am not that smart, and if the banks are not requiring this then there must be a reason.

This is the same when we were suggesting to the banks that they have customers initial all parts of their 1003 at doc signing to confirm all provided information was correct - that would have stomped out many liar loans (keeping the half honest people honest) and stopped the loan officers from creative changes.

For some reason, no one ever implements the simplest of safeguards, therefore - are they really that concerned?

Pre-existing, non-conforming would be a permitted condition if allowed.

Though it is likely that should the structure be destroyed they will not allow the new structure to be built with the "pre-existing non-conforming" status.

In this case you would be seeking a land use or planning "waiver" from your local building/land use/planning department. I have seen them grant these also. Though they are more rare than the pre-existing nonconforming exemption.

It all depends on their mood for the day and how well you present your case.

I am checking in again before you change the price.

Is your Realtor an expert in that immediate neighborhood?
Is your Realtor an expert with the target demographic of the buyer?

I have found this is very important and a common mistake investors make. They use those they know and not necessarily the right person for the job.

I see what Jon is saying on comparative props but I too have re-habbed a place and sold it for $200K when everything around it was $150K, as have many others. As he said, it all depends on the condition of the other properties.

The property has not been on the market for too long depending on your local market conditions. In So Cal 30 days is an eternity - How hot is your market?

I have also taken to finding Realtors that are very active not just in the local market but more importantly with the target demographic of the buyer. Make certain you have a match.

Also, what are rents in the area? I know that I once posted the monthly payment on the sign (there are regulations you need to follow to do this)and it was amazing because a it sparked a lot of calls within days as the neighbors that were renting found what they could buy.

Once again it all depends on your market.

One last thing. The exterior does not do the interior justice. The buyer has no idea what a great home it is inside because the exterior is a little rough, at least in comparison to the interior. I am not saying this to be negative because I do not know your market nor do I know the details of your deal. But if there were a way to draw people in with the exterior it would be possibly helpful.

Sometimes, if you do it right, and know the right people, etc, you can get a pre-existing non conforming exemption.

I have obtained this type of waiver in CA. If you were in Riverside, CA I would try it for you - find someone that knows everyone at your building department.

I re-read your initial post and you were looking for our opinions on a generic scenario.

You can conservatively make $60K per year for every $100K you have in cash in today's environment. Yes you can make more, but that is a conservative number for someone that knows what they are doing and is not willing to borrow. Simply fix/flip 2 houses in that price range per year. Once again, yes you can make more, yes you can fix/flip more (4+ per $100K), yes you can leverage that into several deals at a time.... but conservatively 2 is a good number without borrowing.

Some will say that $100K will not get them a deal, OK then adjust the number, but if you live in LA or OC it will get you a deal if you drive a little, in SF the same, you need to drive a little. Other states, I have no idea.

But that is today's market. There may be times when fix/flip is not viable because prices are dropping too fast so you will need to live on savings etc or have a different strategy. But while fix/flipping you should be saving homes that make sense as rentals in order to offset the times you cannot find a deal.

You also need to adapt, I suppose fix/flip is a good strategy in good times also, but for me that is when we build new.

OF course I ran into a guy in the Inland Empire of CA a few weeks ago and he is making money building new right now - so..... but he is probably making 30% or so per deal, given the numbers he spoke to me about.