All Forum Posts by: Shane Wilson

I'm in Georgia. Just from personal experience, I know some investors who have went to magistrate court with contract for deeds and got possession back. If that does not work then most likely you will need an attorney to file for a judicial foreclosure to retake possession unless you had a waiver of borrower rights signed when you did the contract allowing for a non-judical foreclosure. 

In our leases, we have an early termination clause that states the tenant has to pay 60 days of rent plus an early termination fee. This gives tenants a clear path to follow when they want to leave early. And on the lease-up fee, every company is different but we would replace the tenant and not charge the owner if it happened that quickly. 

A lot depends on your unit count. Just from my experience, I would aim for automation over outsourcing. The property management software programs out there are very good at automating and making your life easier with most of those items. Maintenance outsourcing, I did that around 10 years ago and it worked out fairly well. I had a general contractor with his own business handle the phone calls for the maintenance side of our business and callouts. I've also tried a call center about around 10 years ago with mixed results to take incoming calls. I wouldn't do it again. I would never outsource applications. We review those in house. 

Why does it have to be one or the other? If your open to opportunities they will appear. One of the biggest Ah Ha's I learned in this is industry is diversify your income streams.  

Property Management  - Reoccurring income - Less upside but dependable income typically. Works well in a down economy. Takes time to build. 

(Also note a job is reoccurring income as well - steady and reliable but less upside)

Wholesaling / RE Commissions - Small Capital Income - More variable income bigger checks then property management but more swings month to month. 

Flips - Large Capital Income - Much bigger checks, capital intensive, bigger risk longer time frame fewer checks but big checks when you get them.

Notes / Rentals - Passive Income - We all know what this is.

Focus on what income stream is generated by an activity not so much what that activity is then figure out how to combine them to most efficiently reach your goals while providing a safety net if things turn south. If you mix your knowledge, expertise, and add more tools to your tool kit then longer term you are in a much stronger position for the ups and downs. 

Also, a note on the agent end. The best agent isn't the one who knows every house, street, etc, 

The best agent is the best marketer. The top 20% of agents who actually make money know how to market and generate leads, prospects, and turn them into listings or committed buyers. Time is best spent on those areas to be successful as an agent. By default if you do that and you generate business you are going to gain the market knowledge from experience of doing.

Go to the foreclosure auctions and see who actually bids. Strike up a conversation with them. Have an real estate agent buddy print out the cash deals for the past year in the price range and property type you are working and then research the deed records to who bought them. REIA's are good just sort out the pretenders from the real players.

I have no idea about your market. These numbers are for mine.

If it has a permanent foundation where it qualifies for FHA financing yes its a deal depending on condition. It would go 55K-65K here. Being rural with land is a plus typically but again is market related.

No foundation is cash only and maxes out 35K or less typically 25K in value.

So the foundation is the important question.

FYI they also make great rentals. They cashflow almost the same as a house at a much lower acquisition cost.

Thats my 2 cents. Your market and mileage may vary.

-Shane

As long as your upfront with people then no its not an issue. Tell them your an agent and tell them they are selling below market value and have them sign off that they understand both.

Its a confessional moment for me here. I rejected this rule and thought it was extreme when I first started in 06-09. I believe I evened argued this rule somewhere on the forum way back then. I was at approximately 70%. 

Does anyone with a pulse in 07-10 remember you couldn't sell a house to recoup any of your losses from rentals? Oops didn't plan for that one.

So when I became cash flow dependent on my rentals reality hit quick and hard. It took me losing 27 houses in the downturn and reviewing my cash flows from that time frame to realize that if I had been at 50% for the aggregate of my properties I would have been able to make it. 

Call me a believer now. You can hide your losses with flips again now but if you hit rock bottom and have nothing but cash flow to depend on its a dangerous game if your ignoring the 50% rule.

Your mileage may vary depending on your risk tolerance and general market conditions but I'd rather not waste time building a real estate foundation on a house of cards. I'm conservative and picky now with the deals I do. Quality over quantity.

You can either learn from those with experience here or learn from your own experience. 

Whats the foreclosure process in your state? 

If its a quick and painless process I would do a loan wrap with a high enough down payment if they insist the deed has to be in their name. But it better be a good down payment.

Otherwise I would only do a lease option with the option decreasing over specific intervals as on time payments are made or a contract for deed where the deed transfer upon final payment of the contract. There's no banking issues with these 2 items and you retain much more control.

Do not let the Buyer make payments. Take them yourself. Not because of the bank but to make sure it gets paid.

What does the Seller need? Do they need cash now? Cash later? A monthly cashflow? Figuring out what they want goes a long way toward what you will offer. The other question is what 's your exit strategy? Are you keeping as a long term rental or a flip?