All Forum Posts by: Ken M.

I havs some experience over a couple years. I house hacked a property and built a property which I rented out and sold after covid. Now I'm sitting on this cash and trying to figure out a way to catipult my real estate investing career. I have a fairly strong network with realtors, wholesalers, GC, attorneys, and handymen. Any ideas?

With things as unpredictable in Florida right now (insurance, HOAs, market conditions( I'd focus on where things are a bit more stable

0 Votes

Orlando, Florida

Quote from @Ying Tang:

@Ken M.

Hi Ken! I’m a new realtor here in Phoenix, and after closing my second deal, I’ve been having a hard time finding anything that feels like a true opportunity. Meanwhile, you seem to have a real talent for spotting great deals—I’m honestly a bit jealous!

You must have some serious skills (or connections!) because the deals you find are so impressive. I’d love to hear your secret—what’s your approach to finding these gems? If you’re open to sharing, even just a bit of your strategy or story, it would mean a lot. You’re clearly doing something right, and I’d be grateful to learn from someone who’s making it happen so well.

.
HI @Ying Tang:, it's an accumulation of 30 years of experience and hard work. ;-)

I'm not an agent, so I don't have the tools an agent has (access to the MLS) so, that must not be it. I just turned a property down in Stetson Hills in N. Phoenix that was profitable as far as equity goes, but it didn't cash flow. If a property doesn't cash flow a few hundred dollars a month, I pass on it. I have investors that buy from me, but there isn't enough meat on the bone to resell this one either. So, I can't make money on it by renting it out and I can't buy it and resell it for a profit, so what am I to do?

I spend my time looking for the next one, instead of trying to cram a marginal deal into working.

It's important to not believe everything you hear in the agent's office. Don't get discouraged just because people there, tell you how tough things are. Most agents won't pick up the phone when I or anyone else calls. How do they expect to get listings and offers if they won't take phone calls and talk with folks?

Phoenix has a REIA called AZREIA.com which I occasionally go to when I'm in town. It's $20 a month and ideal for a new agent, plenty of events. You should try it.

0 Votes

Quote from @Colleen F.:

@Ken M. You also have to wonder if you are going to see a Canadian sell-off. We have met a few Canadians who were selling and plan to stay in Canada. However I also see homes listing in the suburbs of Phoenix for higher prices. It is a hard market to read.

It's a tough market to guess right now. In the last two months I've bought 3 houses (off market) In Phoenix, each at a discount, about 15% ($60,000) off what they would sell for on the MLS. But a lot of people laugh at my offers too. They say things like, "that's less than what I paid for it in 2022".

Sure, that's because the market in Phoenix has gone down since 2022 which was the height of the market there. ;-)

There is lots of competition, but not so many sales.

0 Votes

Quote from @Chris Seveney:

Quote from @Vlad Ovchynnikov:

Quote from @Chris Seveney:

Quote from @Don Konipol:

Here is my list of the most dangerous real estate related investments for the “non professional” investor lacking direct knowledge and experience in these investments

1. Tax liens

2. Mortgage notes

3. Syndicated real estate offerings

4. Distressed and or vacant Commercial property

5. Triple net lease property at the end of the lease period

what do you think?

1. Gator lending

2. Syndications

3. Tax Liens

4 Notes

5. Land investing

I went with these five as the first one takes very little money to get involved and its basically credit card / pawn shop lending.

Syndications I put second as most people read the cover brochure but never go through the entire document to understand what they are investing in. Meaning yep I know its a 20 unit building but they do not understand the structure of the investment.

I agree on notes and tax liens. Last I through in land investing. Most think oh buying a piece of land easy - but do not realize it may not have utilities, right of way, may be non conforming or swamp land..

Being very very amateur, and not even a RE investor yet... the point on jumping on the first syndication offer and not reading the entire packet is very well taken. Assuming that an amateur investor does the work of reading the fine print, reviews multiple deals as a matter of practice, asks for references, maybe joins a club to review deals together - do syndications remain at the top in terms of the risk? Which other more hands-off types investments are suitable for beginners?

Gator lending to me is just dumb, you are basically a credit card company as you have zero security in the investment.

Tax liens are low risk and low returns - you are going to get slightly above bond rates unless you have a ton of money or experience like @Ned Carey

Notes is what we do, and you really need to know what you are doing

Syndications you really need to vet your sponsor

so each takes on another level of risk but 4/5 are active not passive investing.

There is a character on Youtube promoting "gater lending". It smells like 7 day old sardines and sauerkraut to me, but I'm not a securities attorney, so I asked one, using that "guru's" example:

******************
Question

What is the difference between Crowdfunding and a Syndication?

For the purposes of buying a single family residence ($400,000) as an investment property short term rental, can I crowdfund 10 investors who lend $5,000 each and lend to the project? I'll be the main investor and have 100% ownership. They won't be partners or part owners, just lenders that get 10% on their monthly payments, each.

Does it require SEC compliance? Is it a syndication that requires a PPL?

Their answer

Answer
"This may be a secured transaction requiring SEC compliance if these contributions are loans, making you the bank. If you're borrowing your contribution from a bank, that presents its own obstacles, as you may not qualify for a loan if "crowdfunding" is the source of some of the purchase price. You'll also need to comply with applicable state usury laws, which may or may not exempt this kind of transaction. A deal this size wouldn't be a syndicate. Let's meet, or Consult with a licensed RE/securities law for help."

****************
Please note, this is using his example, not mine. I do not use nor would I consider "gator lending" an honest (or legal) approach to investing.

0 Votes

The robust metro Phoenix housing market is showing some signs of softening.

Apr 29, 2025

It gets slower from here through the heat of the summer.

Real estate experts weigh in on why Phoenix's housing market is experiencing an unexpected slowdown during what's typically a busy season: "Confidence is the oxygen of the housing market and right now, it's in short supply."

0 Votes

Quote from @Rob K.:

Quote from @Dawson Brewer:

Here’s why I’ve started using novations over wholesaling.

1. Sellers Get More Money

With wholesaling, sellers often need to take a low cash offer. With novations, I can offer closer to market value by selling to retail buyers, making it easier to get deals accepted.

2. Bigger Assignment Fees

Instead of selling to investors looking for steep discounts, I market to end buyers willing to pay market price. This means I make more per deal than a typical wholesale assignment.

3. No Double Closings or Hard Money

Since the seller stays on title, I don’t have to use hard money or worry about double closing fees. I just facilitate the sale and collect my fee at closing.

4. More Buyers, Less Competition

Wholesaling relies on a limited pool of cash buyers. Novations open up the MLS and conventional financing, bringing in a larger pool of buyers and reducing competition from other wholesalers.

5. Easier to Scale

With less reliance on deep-discount deals and cash buyers, I can scale novations faster than traditional wholesaling.

Final Thoughts

I’m not saying wholesaling is dead, but novations have helped me close deals I would’ve lost before. Anyone else using novations? What’s been your experience?

I'm not understanding the use of the term Novation as used by the poster and why it is different from just an assignment of an existing contract. In legal terms a Novation is generally a new agreement with different terms or different parties that is a substitute for an earlier agreement that is then extinguished with the consent of all parties.

If someone could explain the structure of a novation as used in the OP's original post, it might make this discussion clearer. FYI, I do not watch you tube videos or guru stuff, so maybe I am missing some context here.

They way they use the term is to have an "investor" provide money to rehab a house which is then put on the market and they split the profits. The title stays in the owners' name, it is not a loan since no loan documents are used and the "investor" is dependent on the homeowner to honor his word.

A one sided memorandum is recorded which clouds title and purportedly gives the "investor" authority to "collect" money, either the amount lent or the amount assumed to be what the profit would be.

It is often used to discourage a homeowner from accepting better, competing offers, from other wholesalers who learn of the deal.

The memorandum is a blunt instrument of extortion and is treated that way by the court. While the memorandum exists, the homeowner can't get title insurance so can't refinance or sell. Most "wholesalers" don't release the memorandum even if they can't find a buyer and simply wait until the seller attempts to sell or refinance. Then they hold the homeowner hostage to be paid a fee, usually in the tens of thousands of dollars. That is now being prosecuted in several states.

0 Votes

Austin, Texas

Quote from @Stephen Morales:

Quote from @Ken M.:

Quote from @Stephen Morales:

Quote from @Ken M.:

Quote from @Stephen Morales:

Quote from @Ken M.:

Quote from @Stephen Morales:

Quote from @Dawson Brewer:

Quote from @Stephen Morales:

We do both net listings (in FL) and novation agreements. They are both very similar but they are not the same.

The true use of a novation agreement is to improve a property for the Seller without taking ownership. A great example of this is when we work with land owners and offer to develop the property further to resell paper lots or sometimes we go vertical with either a new home or a small multifamily building. In the easiest sense of doing a novation, you would just be doing a moderate rehab to get the property to ARV to sell.

We like offering an additional split to the Seller when we get higher returns than expected. Let's say a property is worth $250k and the seller is happy with $150k. It needs $30k in rehab and we pay all closing cost. We end up selling for $260k or $10k more than what we thought the property was worth. Any of those additional funds above our target mark would be split 50/50 with the Seller or sometimes we offer a more favorable share to the Seller to get the deal done.

Let’s say you build a house on a lot. How would you prevent a seller from changing their mind and not going through with the sale?

To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest.

If they still refuse, you sue them for specific performance. You record a lis pendens during the lawsuit. They have a contractual right to go through with the sale if the other party of the contract (being us) has fulfilled their obligations.

Haven't had this be a problem yet though. It's also a good idea to do your homework on who you end up doing novations with as well.

.
Your comment: "To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest."

That could get you into a heck of a lot of legal trouble.

Heck of a lot of legal trouble... or simply unenforceable depending on how the contract is structured.

If drafted correctly, it is my understanding that you're well within your rights to pursue damages for a seller's breach, which may extend beyond just reimbursing direct investment costs. If there is a valid contact executed, title can file a memo on your behalf. A memo has saved several deals for us in the past and damages were paid by the Seller.

As always, agreements should be structured with a qualified real estate attorney familiar with the laws of your operating state and anything I have described is something we do but is not to be taken as legal advice.

Your comment: "If drafted correctly,"

It has little to do with how it's written (okay, it matters a lot to be sure, about who drafts the document) but to me the concern isn't how it is drafted. It's using a memorandum at all.

When you record a memorandum against the title, you are clouding the title. That is a very serious problem if not done by an attorney. Because, there are plenty of situations an attorney would not even consider using that approach but an inexperienced investor might because they don't have a clue what they're doing and they were told "it's the way to do things". Very bad advice.

Appreciate the concern, and you're right, improperly recording a memo without following proper channels can lead to legal issues. But let's not confuse misuse with the tool itself being "very bad advice."

Recording a memorandum based on a valid, fully executed contract is 100% legal in Florida and widely used to protect Buyer's interests. I have been doing this for almost 10 years and I have never once had an issue with title or their RE attorney filing one for me.

Let's be honest here, the idea that inexperienced investors are out there recklessly clouding title on their own without a contract or legal counsel is a stretch. Heck, most don't even know what a memorandum is, let alone how to file one or even find one.

As with anything, this should be done with legal guidance.

Your comment: "Let's be honest here, the idea that inexperienced investors are out there recklessly clouding title on their own without a contract or legal counsel is a stretch."

Please reference Pace Morby and his SubTo Community of 173,000 on Facebook. That is what they teach. Now, it's one thing to say you do or don't do a certain thing, it's quite something else to say it is NOT widely done.

In addition, but not related to Pace Morby and his SubTo Community, I invite you to read the following:

Click To See Complaint

https://www.azag.gov/sites/default/files/2025-03/CV2025-008402%20State%20of%20Arizona%20v.%20Cameron%20Jones%20et%20al%20FILED%20%281%29.pdf

People who play football in traffic should expect to get hit by a car once in a while.

Oh! this was a great read, I remember seeing it earlier this month. In this case, this was essentially organized fraud/crime that was taking place. They were creating fictitious entities and sometimes assigning contracts that didn't exist because they were using forged signatures. The victims were literally being lied to about what they were signing in some cases.

The Arizona case isn't about using memos, it's literally about abusing them through fraud, extortion, forgery and coordinated deception.

Filing a memo with an actual, valid purchase agreement is completely legal and again, commonly done to protect equitable interest. Especially in the case where you have an agreement with the Seller to improve their property and have invested time and capital with the clear intent to complete the sale.

This is a perfect example that legal tools should be used properly, not an argument against the suggestion of using the tool itself.

As for Pace Morby's group, sure he's got reach. And yes, if he's over here teaching people to file their own memos without legal counsel that is VERY BAD advice indeed. Some new investors listening to him might misuse the memo, but that doesn't change the fact that when used correctly, its a legitimate and valuable tool to protect contractual rights.

Anyone getting into this space should seek legal counsel especially when it comes to contracts, agreements and recording of said instruments.

Anyway, it seems like your set on being right and that's fine. Let's just agree to disagree and leave it at that.

I'm not quite sure why you are so sensitive about this issue, my point is that anyone who files memorandums as a means of hopefully keeping someone in a novation, is playing with fire.

Having a novation is nothing like creating a joint venture agreement with legal interest. The courts align with the owner of the property and creating a memorandum to cloud title is foolish. That's all. People should either enter into a bonified agreement or buy the property.

On a related matter, the states are clamping down on wholesaling as well. Several states have new laws affecting wholesaling as of 2025. Old videos on youtube are not reliable information, and probably haven't been for a while.

By the way, I write this for the lurkers (not really for you)

so that innocent people won't be lulled into thinking they can do what is commonly believed to be acceptable, but isn't. If you or anyone else has consulted an attorney and the attorney is filing the memorandum, you are generally okay. But, if you make a copy of a memorandum and sign it, you are playing with fire. The court will ask who wrote and filed the memorandum.

0 Votes

Austin, Texas

Quote from @Ken M.:

Quote from @Stephen Morales:

Quote from @Ken M.:

Quote from @Stephen Morales:

Quote from @Ken M.:

Quote from @Stephen Morales:

Quote from @Dawson Brewer:

Quote from @Stephen Morales:

Let’s say you build a house on a lot. How would you prevent a seller from changing their mind and not going through with the sale?

To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest.

Heck of a lot of legal trouble... or simply unenforceable depending on how the contract is structured.

Click To See Complaint

https://www.azag.gov/sites/default/files/2025-03/CV2025-008402%20State%20of%20Arizona%20v.%20Cameron%20Jones%20et%20al%20FILED%20%281%29.pdf

It's a common misconception that just because you do something and haven't been caught (been sued for it), means it's okay to do.

Not getting caught has nothing to do with whether it is illegal or prudent behavior.

0 Votes

Austin, Texas

Quote from @Stephen Morales:

Quote from @Ken M.:

Quote from @Stephen Morales:

Quote from @Dawson Brewer:

Quote from @Stephen Morales:

Let’s say you build a house on a lot. How would you prevent a seller from changing their mind and not going through with the sale?

To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest.

Heck of a lot of legal trouble... or simply unenforceable depending on how the contract is structured.

0 Votes

Austin, Texas

Quote from @Stephen Morales:

Quote from @Dawson Brewer:

Quote from @Stephen Morales:

Let’s say you build a house on a lot. How would you prevent a seller from changing their mind and not going through with the sale?

To prevent it: record a memo against title and include clear remedies if seller defaults. Such as paying the total amount invested in the property plus interest.

0 Votes

Austin, Texas

All Forum Posts by: Ken M.

Ken M. has started 62 posts and replied 827 times.

Post: I have 450k cash

Post: Phoenix housing market softens as spring selling season fails to ignite

Post: Phoenix housing market softens as spring selling season fails to ignite

Post: The Most DANGEROUS Real Estate Investments for the “Amateur” Investor

Post: Phoenix housing market softens as spring selling season fails to ignite

Post: Why Novation Are Better Than Wholesaling

Post: Why Novation Are Better Than Wholesaling

Post: Why Novation Are Better Than Wholesaling

Post: Why Novation Are Better Than Wholesaling

Post: Why Novation Are Better Than Wholesaling