All Forum Posts by: Ken M.

I am considering buying, renovating, renting, and refinancing (BRRR) a property in the Albuquerque area and have found a single-family home that appears to be condemned. My real estate agent sent me a report that shows it is valued at $ 324,000, but the mortgage loan balance is $415,000.

I am not aware of the issues with the property, but I plan to investigate them soon. What do you think? Should I run like hell, or is there an opportunity here? The home is located in a much sought-after, popular neighborhood in ABQ.

Thanks!

@Eric Miller, first off if you are asking this question you NEED a real estate agent. There are likely many more things an agent can help you with many of which you would not even think to ask.

A few things about your question:

1. Just because a seller (in this case a bank) does not wish to warranty the title doesn't mean the title is not "clear".

2. In most states the sales contracts used by realtors will by default make the contract contingent upon the seller providing "clear and marketable" title. This generally means that you can get title insurance on it yourself when you purchase it.

3. In many places (including my state PA), the sales contract used by realtors will specify the type of deed/title warranty the seller will provide. The typical default is a "special warranty deed" meaning they are only guaranteeing the title for issues that came into existence during their ownership.

Since the bank likely owned the property for only a VERY short period of time, that kind of warranty would not provide you with much protection at all anyways.

A "general warranty" deed would guarantee the title against any issues that came to exist at any time but those are not often used.

It sounds like you will receive a "quit claim" deed or similar where they simply transfer whatever interest in the property they have with no guarantees.

4. You asked what can cause a property like this to have a title issue. The foreclosure process can be messy and complicated. So, errors can occur. The type of error may depend on the state and the mechanism the use for foreclosures. In the east, lien theory states we use a judicial foreclosure and in most western states they use a title theory non-judicial foreclosure process.

In my state (PA) which is a lien theory state perhaps an interested party to the foreclosure is not served property with the notice about the foreclosure. Maybe its an estate and they don't notify the heir(s), administrator, or executor at the correct address. Errors in the process as small as that create a "cloud" aka uncertainty on the title because one of those parties could show up later on and contest the foreclosure as improper because of their lack of property notification. 

That is just an example of the kind of issue that may exist. MANY MANY other types of issues might exist having nothing to do with the foreclosure process.

5. Generally speaking, it would not be uncommon for a lender to sell a property without warrantying the title and that you as the buyer would buy your own title insurance as part of the closing and that the insurability of the title would be a contingency in the sales contract. 

 I'm not really sure why the conversation went so sideways but there are certain subjects that trigger very strong opinions. Generally, I think people are just trying to be helpful. I'm glad I could be anyway. 

In the last two months I’ve bought 3 Subject Tos for less than 85% of ARV each.

*******

I found this 4 bedroom 3 bath property built in 2001 in Phoenix AZ through our normal marketing.

Then the key was to find the owner and ask the right questions.

I always introduce myself and mention why I’m calling. I say something to the effect of “Are you or anyone you know planning on selling a house in the near future and would you like an offer?”

Do I get screamed at and get hung up on? Yes, a lot. Do I hear some pretty interesting responses, some dirty, bad, nasty words? Yes. But, Do I care? Not really.

*******
When I finally found someone who was interested, I tried to come to a reasonable offer.

To figure out how much I would offer, I took the Zillow, Redfin and Realtor estimates of $401,000, $412,439, and $402,889 respectively – added them together and divided by 3 which gave me an average of $405,422. But, I never pay ARV or MLS, so I multiply by 85% and offered $344,608. It was accepted.

Zillow $401,000

Redfin $412,439

Realtor $402,889

Average $405,422

Average times 85% = Offer

$405,422 * 85% = $344,626

As I explained to the seller, there are no realtor fees of 6%, so that saves the seller $24,000. The sale is certain, it is now, and they have no repairs to make and no inspections to pass.

I showed my seller how I arrived at my offer and why. No serious repairs are needed on the house. It’s in a reasonable nice neighborhood.

Since it is a “Subject To”, I take over the 2.75% loan payment of $1,306 instead of having to pay for a new loan at 6.88% or $1,653 monthly for a difference of $347 a month. That saves me about $116,000 over the life of the loan. And I save about $6,000 in new loan origination fees. I have no real estate agent fees.

No loans, no new lenders, no 1031, no MLS sale,

*******

So, how did I handle the equity the seller had? He took $60,000 on a carry back (2nd) at zero percent interest (o% interest) for monthly payments of $177 for the remaining length of the term.

In this case, one of my students, who actually prefers to have me find the properties for him, bought this one from me. His cost was $369,626 “all in” on paper, (he didn’t actually need that much money or credit as you shall see) on a value of $405,422 for a savings of $35,796. It helps to know the right people. ;-)

Rents in the neighborhood are $2,300 a month for a cash flow of $2,300 minus $1,306 PI and $112 tax and $91 insurance, so he clears about $ 791 a month.

*******

How much cash did he need out of pocket to pull this off? (I don’t allow borrowed money.)

1st & 2nd month’s lender payment, $2,612, carry back payment to seller for two months $354, change door locks, $200, closing costs $3,500 (title, escrow, recording) house cleaning $500, yard care $500, my fee $25,000, pizza for a work crew for a day $100. Those are my requirements to allow him to buy the property.

It takes money to do “No Money Down Deals”. Don’t let the “gurus” fool you.

Borrowing that money is a recipe for disaster. Anyone who buys from me has to be able to prove ability to service the loan.

*******

So, This is how I locate properties for investors who are tired of faking it.

Places like AZ, ID, TX, GA, MidWest, Deep South are great markets for these, but Sorry, in CA, NY, Il, NJ, or other crazy states, the numbers just don’t work because of taxes and regulations.

So, realistically he needed about $32,766, Using a bank he would have needed 20% down or $80,000. Now, if he had done it himself, could he have saved some money? Sure, because he never would have done the deal. He’s just like you. Wishful thinking doesn’t buy you properties at great deals. 

Could he have negotiated such a sweet deal. Lol

Of course not. But, If you like sweet deals . . . 

Hi there, love the questions!

I’m with 8020CRM, and yes - we built the platform specifically for real estate investors. It's built on Salesforce, which means you're getting enterprise-grade reliability, customization, and scalability - but fully tailored for real estate investing. From lead intake to dispositions and rehab calculations, it's designed for how acquisition and transaction teams actually work, with built-in automation, smart reporting, and REI-specific workflows.

We know we're not the lowest-cost option, but many of our clients see a strong ROI through better organization, faster execution, and improved conversion rates. If you'd like, we're happy to connect you with current users for direct feedback and references.

As for the name - it’s inspired by the Pareto Principle: helping you focus on the 20% of activities that drive 80% of your results. And just to be clear - we don’t chase your properties or keep 80% of anything you make. Our only goal is to help your team win, grow, and scale with the right tools.

Happy to answer any other questions or schedule a walkthrough!

@Ken M.. If I recall, Philly chargers over 3% plus 1% to the commonwealth.  Very steep.

@Sylvia Castellanos. Just an FYI on Pennsylvania transfers. Pennsylvania imposes a tax on real estate transfers into living trusts unless the trust includes specific language outlining the permissible beneficiaries. To qualify for an exemption, the trust must strictly define who the beneficiaries are and ensure they align with the state's requirements. Without the required language, the transfer may be subject to real estate transfer tax. For more information, refer to 61 Pa 91.101, which provides detailed guidance on this matter. I raise this issue because depending on who drafted your living trust or how it reads you may create a taxable event upon transfer.  Best to have your trust reviewed by an attorney in Pennsylvania.

Ok to keep it short i have 4 HELOCS on 4 different properties fully paid off and was thinking about getting another HELOC But it just Occurred to me can my Lender ask for the FULL amount whenever they please before the 30 year contract i have with them? As in the company is going out of business or the company is doing poorly can they demand full payment?? if so i really dont like this idea and may not barrow again as i will loose everything because i would not have the FULL amount to pay off 4 Properties