All Forum Posts by: James Harkness

A lot of your questions don't have an exact answer, as there is not "usual" scenario. Every investor has their own exit strategy. That may be buy and hold, it may be fix and flip.

As far as bird dogging vs. wholesaling goes, as a wholesaler, you get the property under contract and you assign the contract to a buyer for the price of your purchase price plus your fee for assignment. A bird dog simply provides leads to investors. They do not typically get a home under contract. They may see a for sale by owner sign and refer it to an investor that they work with. If the investor closes on that property, the bird dog gets 500 bucks or some pre-determined amount for the referral.

all lien holder's receive notice when the foreclosure process begins. it usually comes via certified mail.

If they are lending on the ARV, you will get 65% of 400k, which is 260k. So in your scenario, you would be out of pocket 40k, not 87.5k. If you find a good enough deal, you should be able to purchase for 70% less the cost of your repairs. That is a typical rule of thumb many investors use. I believe that there are hard money guys who will do 70%.

I think that if you find a good deal, the ARV would end up such that the hard money will cover your purchase price plus repairs.

I would be skeptical... if it is positive cash flow with perfect tenants, why a short sale?

Danielle,

First, I think it is important to point out that I only work on commercial properties, not residential, so maybe the rules are a little different. We do not use a specific ratio. But we do frown when we see a 600 dollar per month car payment that is on time and the mortgage payment hasn't been paid. We also frown when we see that they pay a 1000 dollar credit card before they pay their mortgage. It is not right for someone to have an 80k car and not be able to afford their mortgage payment.

Basically, we look at monthly cashflow. If they are making a ton of money every month and everyone and their grandmother is getting paid before us, then yes, we are going to go after deficiency because mortgages are collateralized debt, where as credit cards are unsecured. I think it is right that we feel that we should be paid first.

Nick,

We do this all the time as well. It has always been a requirement for each one of our short sale deals. We use it to determine if we should be going after the seller for a deficiency judgement or like the article mentions, a cash contribution or promisory note.

If a borrower has the means to repay their obligation but simply chooses not to, then they should not be allowed to be released from their obligation in a short sale, IMO.

MikeOH,

I know you are stuck in your mindset that all tenants are irresponsible. I don't even know why I am trying to say otherwise to you because I am sure you will enlighten me to the many reasons why I, as a tenant am irresponsible. For me, it was a decision to live at home with my parents in a small town where there are no opportunities for work nearby, or to move away from rural Connecticut and become a tenant in an area that will allow me to pursue a career and save for a down payment on a home.

I could have been irresponsible and bought a home that I could barely afford, but it makes more sense for me to be financially stable before I make such a large investment. I know many people that are in the same boat as me. Most people graduate college with a large amount of debt. It was a choice of mine to pay that debt off as fast as I could before I buy a house.

Does that make me irresponsible?

Thats right, Bill. Another good book that looks at psychology and can really be applied to any aspect of life is "The Secret". I read it and was skeptical. The theory goes that everything in the universe has a frequency. Even our thoughts, which have a mass (proven by physics) give off a frequency. As the book describes it, like frequencies attract. Your thoughts attract to you the things that you think about and believe most.

As I said, I was very skeptical of this at first, but after several months of trying to apply this very principle, I am seeing that it is indeed true. One line that sticks with me from the book is something along the lines of: If you focus on getting out of debt, you will continually find more debt, because the focus of your thoughts is debt. If you focus on abundance, your debt will disappear quickly.

I think I mentioned that a focus of mine in the goals for 2010 was to get out of debt. Once I read the book, I changed my mindset to think about abundance. I can tell you for certain that everything has changed. Next week, when I receive my next paycheck, I will be 100% debt free. I have been trying to pay off this debt for almost 3 years now without making any headway.

They will not get a 1099 for the deficiency.