All Forum Posts by: Jonathan McGee

@Jay Hinrichs Deed in lieu of foreclosure would require the lender to have an NMLS number if I'm not mistaken. His question was geared towards private lending such as family or friends whom I would assume are not licensed lenders. 

@Robert Trevino This is a method used for non-traditional lenders, like family members or friends who are not licensed with an NMLS as a mortgage company. There are additional steps required to place a “first mortgage” on a deed and have the right to foreclose it. 

@Robert Trevino A Quit Claim deed is a deed of transfer that does not have a warranty, like a warranty deed, but it is a valid transfer of ownership. Basically, the private lender would fund the purchase price plus the rehab funds into escrow at closing. The warranty deed will go in your name, but in the closing docs, there will be a Quit Claim deed signed between the lender and yourself with additional documents stating that the Quit Claim will only be filed in the event of failure to perform or non-payment. The lender can request the attorney to file the Quit Claim based on non-performance and essentially by filing the Quit Claim, all your rights and interest are transferred to the lender. Once you have refinanced or paid off the lender, there will be additional document stating the Quit Claim is now null and void. 

@Nathan Gruetzmacher I can understand that! Having the cash but not the deal can leave you itching haha! I would definitely use this opportunity to get hands on with direct marketing as that is where 90% of the deals are found. You can easily take $500, pull a few different lists and send out some mailers. You'd be surprised how fast you get a few calls. I'm sure there has to be a few reputable wholesalers in that area, it doesn't look far from San Antonio. You've actually got me interested in this little pocket!

Fill out a Quit Claim form with them, both parties sign and notarize. If things go south, they can file the Quit Claim and take over all your rights and interest in the property.

Sounds like a win win to me! I would be all over that, assuming you are closing on it first before the owner starts funding for repairs. I would suggest getting a 3rd party professional inspection to be safe. I always suggest that to my BRRRR guys investing in Memphis because eventually the bank is going to send their inspector and you want to make sure you've checked everything off the list.

Best of luck!

@Nathan Gruetzmacher By the way, after a quick search, I found 810 Gardenia Ln which is FSBO at $135k and has been available for 50 days. At a quick glance, I'm seeing an estimated $150k ARV. I'd shoot them a $110k cash offer and see what happens?

From my experience in working with out of state investors using the BRRRR method in Memphis, you would have to get this property at about $80k to make sense with a small budget of $15k to remodel. If you're estimating a $133k appraisal, then at 70% you would only get about $90k back.

My question is with your calculations and what you're willing to spend ($115k) you would be leaving about $28k in it after the refinance. Why not just buy a rent ready property for $135k with 20% down which is about the same cash you'd be leaving in your BRRRR?

BRRRR is a great strategy, but from my perspective, the whole point of it is to walk away from the refinance with most of the cash you invested so you can repeat.

Not trying to discourage you, but I would be patient for that deal that has you all in at no more than 80% of the appraised value.

Best of luck!

I’m not an out of state investor myself, but I am a native of Memphis so I’m part of the “team on the ground” so to speak for a few investors abroad. 

I have to second the notion that it is well worth flying into your targeted market to get a good feel for the area as well as shake hands with your prospective “team”.

While selecting markets, most of the top Midwest cities have been mentioned here so from there it is a matter of looking into job growth, development, vacancy rates and weather patterns. Oddly enough, cities with high crime rates tend to be at the top of the list for best cash flow markets like St. Louis and Memphis. You can’t expect much appreciation in these areas, though. 

Once you’ve selected a market, next up is selecting a property. If you don’t feel comfortable forming your own team (someone to finds deals, PM, contractor, inspector, lender), then you may want to consider going the turnkey route for your first few ventures. You can do most of your due diligence from afar looking at Trulia’s crime map, compare asking rent rates on Zillow nearby (and how long they’ve been listed) and looking at the street view to make the block. 

Best of luck on your ventures!

Hey @Jeff Jones just sent you a PM! I’d be more than happy to help.