All Forum Posts by: Joe Smith

1. No, not as an investor if set up properly through a broker, but if you are in the business you may need a license. Check you state laws as well.
2. Yes, Yes get a servicer who has a license
3. Yes, I have done hundreds of modifications to bring them into performing status and then refinance them later on for the discount.
4. Absolutely, but the paper business is not buying the property. If you go to foreclosure you can be outbid (not in this case as it is underwater). All you are entitled to is the money to payoff the liens and any overage can be due the borrower, if any.

You can certainly approach the borrower and use the note as leverage to buy the property or as Jon suggested obtaining a deed-in-lieu, but be carefull of other liens doing that.

How difficult is it to do a lien search?

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OK, this idea intrigues me. I was browsing FCI Exchange today.

Questions:

1. If I want to buy notes, do I have to be licensed as a lender or servicer per the SAFE Act??

2. Would I have to service the loans? Or is there a third party that can do this for me?

3. Is there opportunity in modifying non-performing loans (presuming the number work?)

4. This is the BIG question...if I am truly interested in the property moreso than the note, I assume I can't buy a note with the INTENT to foreclose, as that would be more predatory than you could imagine, however, what about a situation where I buy a non-performing note at, say 40 cents on the dollar, modify their balance to a lower figure, then, myself offer to the owner to BUY the property off of them, which would be a voluntary transaction on their part? Is that legal to do? Something like:

Loan balance $392,000
Property Value $300,000
Purchase note for $198,000

Offer to buy property off of owner for $230,000, write down payoff to $198,000, then seller gets to walk away with cash and I get a property at a 25% discount.

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Originally posted by JJ Cole:

I typically buy houses worth 110-140K for 65-80K (cash) and then spend 8-15K on rehab before renting the out for 1150-1250/month. When I cash out refi. I end up have to pay $4k in closing costs on a 80-90K loan. Is this a reasonable closing cost? I think it is too much, it significantly reduces my cash on cash return, sometime by 50%. What do y'all pay in closing costs on a NOO cash out refi?

That's about right.

Fact is, the lender/bank doesn't get all that, a big chunk is title, etc.

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Thanks!!! Will check out all the options.

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Hear me out...I've thought of doing one, but then when I research it, I only have 180 days to find a replacement property. With the way I buy property, there's no guarantee I'll find something acceptable in that timeframe.

Has anyone else run into that with a 1031? Have you felt "pressured" to buy a less-than-ideal property just to make it happen?

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Originally posted by Bryan Hancock:

How so?

If you buy-and-hold forever you have to make estimates for extremely distant cash flows and what the key variables will be. If your exit isn't until your death or until your basis steps up when you will the property to our heirs that analysis is much more complicated than a short time horizon.

That's why my focus is on properties that cashflow now, and make sure that I maintain enough equity (by buying right) that, if say 10 years from now, selling *should* be an option if I choose to do so if the benefit of keeping for cashflow is no longer there.

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Originally posted by Mitch Kronowit:

Originally posted by Joe O:

Exactly. Doubling every 20 years is a 3.53% annual appreciation level - about the same as long term inflation.

Ahhh, but you're forgetting the beauty of leverage. Sure, if you pay all cash for a house and it only doubles in value after 2 decades, big deal. But what if you only put 20% down (or LESS)? What's your return then???

If you're at break-even, or positive cash flow, you essentially don't pay anything for the interest while you're paying down the home...so you're getting a much larger return on investment.

Even with a slight loss this is true in many cases.

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Originally posted by Joe Wilson:

Wow, son. Don't just use 20%. You can do it a couple of ways.

Find out what the comps are for raw land by acre in the area are and multiply it by the amount of acreage that came with the property. Take that figure out of the purchase price for depreciation.

Another way is to look on the real estate assessment for the property to figure out what the land portion is on the property tax and then take that amount out.

Looking at the property tax assessment may yield a lower amount to pull out of the depreciable figure and that is to your benefit.

Joe

In my county, the assessment value of land is FAR greater than what the per acre cost has been in that same area lately.

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Dion, do you know anything about this company?

www.commercialbanc.com

Looks like they're owned by Global Capital.

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I always thought people just did it because they were pissed.

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All Forum Posts by: Joe Smith

Joe Smith has started 19 posts and replied 73 times.

Post: questions about buying notes/paper

Post: questions about buying notes/paper

Post: Closing costs mess up Cash return.

Post: is a 1031 not worth the hassle?

Post: is a 1031 not worth the hassle?

Post: Who does not use the 50% rule?

Post: Who does not use the 50% rule?

Post: calculating land value for depreciation

Post: cash out restrictions on refinance

Post: Why do people steal toilets out of foreclosures before they move out?