All Forum Posts by: Account Closed

I started the same thread last week.
Most will say run. Some will say stay. For the specific condos I looked at, I ran.

http://biggerpockets.com/forums/48/topics/22995-distressed-condos-in-great-neighborhoods

Originally posted by Jordan Sabo:

what im thinking about is a way to collect a mortgage from people who are otherwise not able to get it from the banks, therefore giving you positive cashflow, giving them a house, and giving the bank the money that you owe. to perform seller financing do you always have to own the property free and clear or are there exceptions?

Search/Google "Contract for Deed", "Land Contract"
That sounds like what you're describing. The seller does not have to own the property free and clear, but I believe there is still a risk of the seller's original loan being called due.

I believe Contract for Deed deals were big in the 80s when mortgage interest rates were 16 percent and no one could get loans.

I think these will be big again - same with "subject to". But sub 2 is "taking over your payments"

Contract for Deed sounds more like what you describe. From what I understand if you're the seller, your name stays on the title - not the new buyers - until the buyer pays you in full. Sort of how the bank holds the title for a car, until the buyer pays the car loan off.

I've been researching these myself lately. I still have a lot to learn.

It seems like there is a smaller chance of the seller's original loan being called due on a Contract for Deed deal versus a Subject To deal, since the seller's name stays on the title. But I don't know yet. Perhaps not, as I am guessing the buyer might want to record the Contract for Deed to cloud the title and to have better proof of equitable interest, so it's easier for him or her to refinance down the road and pay off the seller.
I believe Contract for Deeds are usually done with a balloon payment due in x number of years: The seller gets down payment, monthly payments, and the balloon payment (remaining balance) in say 7 years.

That gives the buyer time to wait the credit markets to come back, restore his or her credit, and pay the seller off after doing a refi.

Originally posted by Shari Posey:

If you get to a point where you can quit your job financial, go get your real estate license and join NAR so you can get on the group plan. My husband and I pay about $400 per month but it was automatic to join (no rejection).

Thanks for the great tip, Shari -
I decided to go for the license a couple weeks ago. That reminds me, I need to get back to studying.

I am going to have to agree with Michael on this one.

I view the bailout passing as a little extra padding - a little more time - to prepare for the worst, while continuing to follow the advice of people who have exactly what I want, to hope for the best.

I'd like to think we learn from our past mistakes. But that doesn't seem to be the case, or we wouldn't be having a bailout thread going.

Just this week, through well written articles with good analogies, I am finally starting to get a grasp on how serious it is.

I remember last week having the gun conversation at beach volleyball, and one of them mentioned hearing about military troops being organized for possible deployment in US locations.

That's not laughable, well, maybe a little.

Originally posted by Michael Rossi:

I seriously doubt with every bone in my body we need to be stocking up on guns, ammo, food, safes...etc.

It's almost laughable

I'll bet they thought it was laughable just before every other catastrophe in history. Unfortunately, it is not laughable. We are in a period of great uncertainty and if the economy really does collapse now, all bets are off.

When it becomes apparent that we can't afford to give handouts to all the deadbeats in this country, what do you think will happen? The FED can only print so many dollars before the dollar will collapse. Ever see pictures with a wheelbarrow load of money going to the grocery?

This is certainly not a time to panic. However, it is a time to be prepared! Having some extra food is a great idea. Having some gold is a great idea. Having a gun and some ammo is a great idea. What's that boy scout motto?

Mike

It seems like no matter how great one's credit it. Understanding and executing these types of deals will help a lot for acquiring property over the next few years.

I like to hear thoughts on why someone would want to do a sub 2 instead of a contract for deed. I am new to creative real estate financing (and investing), and have not executed any of these types of deals yet. But a contract for deed seems safer than a sub 2. I know with a contract for deed the buyer doesn't take title from the seller until the property is paid off completely. I don't have a problem with that. Maybe I should?

What are the pros and cons of sub 2s versus contract for deeds ?

Another interesting perception is that apartment rental prices will drop, because soon many more SFH rentals are going to be on the market, for the same rates that apartments are charging now. People would rather live in a single family home if it's the same price as their apt. They will move. This was predicted in California at the Bruce Norris talk I attended.

Originally posted by Shari Posey:

Why would someone not buy if their rent equals their house payment?? Unless credit tightens so much that nobody can get loans I think the market will turn around when we hit the point of PITI equally market rent.

A couple reasons I can think of are

-Can not come up with down payment
-Can not live in same quality neighborhood and house. For example 1500 rent versus 1500 PITI. The 1500 Rental will be a more desirable location. Appreciation was enough incentive to move to an undesirable neighborhood for newer home buyers in California. Those days won't be back for a while.

I am no economist either. I did go see Bruce Norris speak last week and an REI club. His California economic analysis is usually spot on from what I understand, and have experienced. He's a huge draw, and all about the numbers and charts. According to Bruce, this California down cycle will be the worst we've ever experienced, with roughly 10% of our houses vacant over the next couple of years. As far as price drops we're not near finished. But he also said not to 'wait' for the bottom. To start buying now, and to buy like crazy for the next 18 to 26 months.

Thanks for the replies everyone.
Ingrid that makes a lot of sense and sounds like what I thought may happen.

I drove down to check out these condos. They are not worth it. They are low income housing condos. They just happen to be located in a great area. But driving around inside looks like trouble.

I love the rest of that neighborhood, but a single family home, or the other condos, would not makes sense as rentals. Too expensive.

Those are great questions you're asking.
I am trying to determine the worst case scenario if I paid cash at a huge discount: What happens to a large condo complex - and the remaining unforeclosed homeowners - if it can no longer raise enough HOA funds for management, maintenance and repairs...

?

At the risk of sounding redundant and adding no value to the thread, I totally agree with Jon. I feel a bit of resentment for being responsible. Not buying into the bubble, doing a lot of research on the difference between an investor and a speculator, and choosing the be the former, and now some irresponsible people get a bailed out at my expense.

Ah well...These are times when I need to practice being grateful that I am able to pay increased taxes to help those irresponsible people out. I'm going practice being all zen on this one...anything that will help me relax when making embarrassingly low offers on properties.