All Forum Posts by: Ken M.

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?

Personally, I'd add

1. SubTo investing.

2. Short sales

3. Foreclosure bailouts

4. Doorstep Auctions

5 Votes

Quote from @C.S. Bryson:

Seller Financing Offer

Purchase Terms

1. Purchase Price: $215,000

2. Down Payment: 20% of the purchase price, equal to $43,000

3. Financed Loan Amount: $172,000

4. Interest Rate: 6.5% per annum (fixed)

5. Initial Amortization Schedule: 12 years (144 months)

6. Balloon Payment:

• At the end of 24 months, the buyer will make a balloon payment for 50% of the remaining balance of the loan.

• This balloon payment will be paid through a cash-out refinance of an investment property valued at $198,000.

7. Remaining Balance: After the balloon payment, the remaining loan balance will be re-amortized over 5 years (60 months) at the same 6.5% interest rate.

Payment Terms

Initial Loan Terms (First 24 Months):

The monthly payment for the first 24 months is based on a 12-year amortization schedule:

Monthly Payment for First 24 Months: $1,573.39

Remaining Balance at Month 24 (Prior to Balloon Payment):

The balance after 24 months can be calculated using the amortization formula:

Remaining Balance at Month 24: $157,113.92

Balloon Payment:

The balloon payment will be 50% of the remaining balance at Month 24:

Balloon Payment Due at Month 24: $78,556.96

Re-Amortization of Remaining Balance (After Balloon Payment):

The remaining balance after the balloon payment will be:

This amount will be re-amortized over 5 years (60 months) at the same 6.5% interest rate.

Monthly Payment for Final 60 Months: $1,541.18

Summary of Key Terms:

• Purchase Price: $215,000

• Down Payment: $43,000

• Loan Amount: $172,000

• Interest Rate: 6.5% (fixed)

Initial Terms (First 24 Months):

• Monthly Payment: $1,573.39

• Balloon Payment Due at Month 24: $78,556.96

Re-Amortized Terms (Final 60 Months):

• Remaining Balance: $78,556.96

• Monthly Payment: $1,541.18

Additional Conditions:

1. Prepayment Penalty: None. The buyer may pay off the remaining balance at any time without penalty.

2. Late Payment Penalty: A late payment fee of 5% of the overdue amount will apply if payments are more than 10 days late.

3. Loan Security: The property will serve as collateral for the seller-financed loan.

A 24 month balloon payment is a deal killer.
Put your numbers in front of a mortgage broker and see if they will even do the deal. It depends on what the property appraises for in 24 months, if you will be able to get home owner's insurance, if lenders are lending and so on. Anything less that 5 years is very risky unless you have cash available to buy the property on a moment's notice.

0 Votes

Sacramento, California

Quote from @Adam M.:

I’m currently renovating a rental property and exploring ways to manage costs without compromising on quality. I recently watched a video where Troy Kearns mentioned he could source a high-quality quartz slab for $100 from China, which got me thinking about exploring similar options.

Has anyone here ever imported materials like hardwood floors, countertops, or tiles from China for a project? If so, I’d love to hear about your experience!

Specifically:

How did you find a reliable supplier?
What was the quality like compared to local options?
Were there any challenges with shipping, customs, or delivery?
Any tips or advice for getting started?

Thanks in advance for sharing your insights!

Can you imagine how hard returning the wrong delivery would be? My wife ordered a kid size pool table from China for our STR and they sent ear muffs. That's what you face. Forget about getting your money back.

1 Vote

Quote from @Jesus Nieto:

My son is working on his first SubTo real estate deal in Crawfordville, Florida, and I'm hoping to find someone in this community who can offer him some guidance and support.

He's eager to learn and navigate this process successfully, but could really benefit from the expertise of someone with experience in SubTo transactions. Any advice or assistance with Subto would be greatly appreciated.

If you're willing to share your knowledge or connect with my son to offer some mentorship, please reply to this.

SubTo is a more advanced technique. Does he understand, Deeds, Due On Sale, Insurance, tax implications, servicing, contracts and so on? There are those who say they will mentor for free and "free" doesn't get you what you are looking for.

Does your son have the capacity to pay off the loan entirely with 30 days notice?
I don't mean to be a "stick in the mud", but successful SubTo is treated very differently than a bank loan investment property.

I've done Subject To for a very long time, been sued over some pretty ridiculous accusations and have had to sue to clear up title. Spend your time and money learning how to avoid that kind of situation rather than learning from on the job training. You'll sleep better.

Now, I didn't say don't do SubTo, what I clearly said was learn the ropes before committing to a property. Group training sessions do not deal with specifics that lead to lawsuits. This is not a team sport. It's one on one.

1 Vote

Tallahassee, Florida

Quote from @Kris Kempe:

Hey BP fam,

Have a single family home I got under contract and planned on wholesaling. Nice property in Texas and the entry is 12k. The only issue is the interest rate is 7.125%. I’ve tried posting it in communities, reaching out to buyers agents, and dispo specialists. Are there any strategies to sell subject to,s to end buyers? or get this sold or is the interest rate too hard to get past?

When we present a Subto for investors to buy, it has to have enough meat on the bone, all said and done, that the investor will still have equity and the property will cash flow.

For instance, I have one I'm working right now, that has a high entry, because the seller wants some cash out to himself, but even with that, the buyer will wind up with $50,000 in equity. The interest rate is 7%, so we suggest this property is for someone who wants to get into Lease Options and meets the other requirements such as adequate reserves and credit.

That means, they buy the property, they wind up with $50,000 in equity and they do a Lease Option to a buyer who doesn't currently own a house, but wants to. The new buyer puts down 10% as the option fee, ($50,000 fee to our buyer) in this case, and we make the rate 10% to the new buyer for the monthly payment.

You'd be surprised to learn that someone living in a rental or apartment, that has a family and is a successful small businessman, has the money and is willing to take that deal. It becomes their home and they can paint the walls any color they want.

So, sometimes, it isn't just about the interest rate.

0 Votes

Quote from @Natalie Gelbke-Mattis:

Looking for feedback on an approach to help grow my hospitality portfolio. Instead of discussing the possibility of owner finance with sellers - what if I offered the opportunity to JV where they are the equity partner? In the assets I am considering - the seller is typically selling because they no longer have the time or energy. I have the credit, experience and the knowledge on how to underwrite the deal to show their ROI in this arrangement vs a traditional sale. The seller will always retain the equity and would receive annual distributions - and could structure the agreement with an exit strategy that makes them comfortable. I recently analyzed an asset of vacation cabins - where the seller would earn 23% ROI over a 5 year term. Is my out of box thinking not make sense and be a waste of everyone's time?

Hmmm, teaming up with someone you don't know. Might work. Might be a lawsuit waiting to happen. Vet them carefully. Use an attorney.

0 Votes

Quote from @Richy Johnson:

Hello I Need free download or examples of creative terms deal structure examples/underwriting displaying all the terms of the deal that were successful and accepted by the vendor using seller finance or accepting a creative deal any examples would be much appreciated what methods you use. im trying to underwrite an offer to buy multi units with creative finance and terms any help would be appreciated

similar to the picture that has been successful keen to work with some people in finding my next apartment purchases

if you could send to that'll be much easier and we can talk and go through the terms and s&p from there.

Thanks alot

for buying apartment 10 - 100 +

doors structure & S&P

.
Why does it need to be "Free" download?

0 Votes

Chandler, Arizona

Quote from @Don Konipol:

Quote from @Quinn Olivarez:

If I were the original seller, I would tell the bank I sold the house so that I could get the ball rolling on getting it out of this sub to agreement that is probably not enforceable in most jurisdictions. I have had previous requests for help with this situation, and that's the advice I consistently offer. It is fairly easy to prove that the sleazy and less experienced sub to people had ill intent, they keep a fairly detailed record of their doings in a Facebook group and are easy to find elsewhere. Posting this here in hopes that other sub to 'sellers' see this and take action against these predators.

”getting it out of this sub to agreement that is probably not enforceable in most jurisdictions”

“It is fairly easy to prove that the sleazy and less experienced sub to people had ill intent”

Can you sight specific legal cases that back up the above assertions? Or is this just what your fantasy?

.
@Quinn Olivarez: "”getting it out of this sub to agreement that is probably not enforceable in most jurisdictions”

(Spoken nicely) I hope I misunderstand your meaning. And since this is a written medium, I can't see your expressions.

@Don Konipol: Asks a very good and subtle question, "Can you sight specific legal cases that back up the above assertions?"

I'd love to see your answer. Case law supports him.

I don't even know where to begin with a comment like that, other than I suggest you start building a legal defense fund, to deal with that mistaken approach to contracts.

It isn't so much that you are totally wrong (again said nicely) , but let's start with the real issue. If a warranty deed has been filed or even a memorandum of sale or a lis pendens, it makes getting clear title virtually impossible without the co-operation of the one who filed or having assistance from an attorney and maybe a long, costly, lawsuit.

It's a very big deal.

0 Votes

Houston, Texas

Quote from @Chris Magistrado:

I have an international friend that flips in the Netherlands and Spain. She wants to learn if it's possible to flip in the United States, remotely, and what that would look like. My guess is that it could be structed as one person handles everything locally 'boots-on-the-ground', and the other acts as the investor.

Has anyone see or done deals like these? Do they work, not work? What's something to look out for?

It's not something I would do. Too many complications. And when things go wrong, they go terribly wrong. Now, if she had someone she implicitly trusts to manage it, as though she were present, that might work, but the added costs would probably make the endeavor non- profitable.

4 Votes

Quote from @Jay Hinrichs:

Quote from @John Clark:

Quote from @James Hamling:

@Jay Hinrichs I'd love to think this is government working FOR the people, protecting there ability to process. My gut say's it's other motives.

The timing of people most apt to say "F-it, I'm done with this stuff, I'm gonna take the $ and run" is in that 90 day period.

Because that is when the impacts are most felt of everything one has to do with the now pile of ashes. 90 days to do nothing forces people to engage with staying.

I have a feeling this is designed to maximize retention of now dislocated persons.

Why do I say that? Because I don't see any exceptions in it for those people who want to get out, who want to just sell and run. If it were really for the motive of protecting the people, the people would still have there option and freedom to initiate the action themselves.

I like the notion of protecting peoples privacy to process. What I don't like is seeing the removal of peoples options and freedoms to self select and engage in what they want to do.

"If it were really for the motive of protecting the people, the people would still have there option and freedom to initiate the action themselves."
--------------------------------------
I don't think it prevents you as an owner from initiating the action.

Personally, I wouldn't have any moratoriums on private transactions.

U can initiate a sale as the owner this is just a moratorium from investors or others wanting to swoop in and take advantage of folks at least that's what the state is doing or thinking this moratorium is going to do

Would someone suing the city or fighting an insurance company attempt to sell their property? Any property that has a claim will be tough to get through escrow.

0 Votes

All Forum Posts by: Ken M.

Ken M. has started 58 posts and replied 758 times.

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

Post: Is this a good deal?? New to investing and seller finance and looking for advice :)

Post: Has Anyone Imported Materials from China for a Rental Property Renovation?

Post: Need help with SubTo Deal

Post: Subject to exit strategy PLS HELP

Post: Asking Seller to JV

Post: Need free download of creative terms for buying aparment 10 - 100 doors structure&S&P

Post: Subto FHA problem

Post: Remote Flipping, is it possible?

Post: LA fires Wholesalers Beware