All Forum Posts by: Account Closed

With no Bio, no comments and very few posts "it ain't gonna be easy" to get the attention of anyone who knows what they are doing. 

Put a little something in your Bio that explains what you've done, what you're looking for and what you want to accomplish.

People here aren't impressed until you've shown what you can do. They are over 2,000,000 people who signed up before you did. What sets you apart?

Buying pre-foreclosures is my specialty (when they are available. :-)

If you are doing this with a partner you do the following:

1. You create individual LLCs, one for you and one for your partner. Have an actual real estate attorney create them, not online. (Don't do a partnership, too much liability in a partnership.) Your two LLCs form a Joint Venture in writing. Your attorney writes up the JV Agreement one time and you use a copy for each new property. You have to decide percentages. I don't recommend 50/50 ownership. It's a deadlock if you disagree on something and everything bogs down. You can do a new Joint Venture for each new property but do 51/49 ownership perhaps on an alternating basis. Or if you do 50/50 have a means of a tie breaker (draw straws, flip of the coin). Your LLCs have to be run according to your operating agreements.

 2. Identify the state(s) you want to buy pre-foreclosures in. Please don't say Washington State, Oregon or California. It is highly regulated and against the law in Washington State and is a felony. Didn't know that huh? Yeah, it's that serious. Have a 1 hour conversation with an a real estate or foreclosure attorney in the state(s) you want to participate in and ask what can and can't be done. Take really good notes and follow the advice you've paid for. Ask about redemption periods and the S.A.F.E Act and Dodd-Frank and any local laws regarding foreclosures, reinstatements, evictions, Allowing the seller to  remain in the property (Not recommended, but some investors want to do that.) Personally, slamming a hammer into my big toe is more satisfying and less pain than keeping a tenant who was an owner. They forget they lost the house and resent you. Make a clean break.

3. Decide if you are keeping the property long term (cash flow, appreciation, great tax write-offs) or flipping and selling (capital gains) or selling and holding a note (how you structure the deal here is important). I use lease options and get 10% down. So, on a $200,000 house I get $20k Option fee non taxable cash, up front. Since a Lease Option isn't a sale there is no capital gains tax until the Optionee exercises the Option and finances out of it. Have the attorney set up both your Lease agreement and Option agreement in compliance with the Dodd-Frank Act.

Go for it tiger, that should get you started.

I've been doing creative financing for over 25 years and I can't sort this one out. A lot of it doesn't make any sense as you've written it out. You may misunderstand how the transaction is designed. I never sign unless I know how everything works and I agree to the terms. 

He appears to be putting $120k into the deal and taking serious risk to sell to you for $125k. Nobody who understands real estate will do that unless it is for their parents.

But, let's assume he actually means to do the following:

He will buy the house and rehab it, you will buy the house from him using a loan. He will get the difference between your loan amount and what you "buy" the house for. So, the numbers go like this:

He buys the property for $100k and puts $20k into rehab. He then sells to you for $160K and you get a loan for $1650. After the dust settle you "gift" him $35k. That's the $35 difference between your loan amount and what he has into the property.  So, at closing he gets his $120k back that he used to buy and rehab the house plus after that you "gift" him $35k for his troubles. You have a house and a mortgage for $160k, he has made $35k. It's "as though" you bought it for $125K.

Several questions:

1. How does he know the home will take only $20k to renovate? Who covers the holding and closing costs?

2. How does he know you will qualify for the new loan?

3. If it is an FHA or VA loan it may not work unless done properly and legally. For FHA they will require you to put 3.5% down of the sale price. So on $160k it's about $5,600 that needs to be in your account for about 60 days prior to closing. You can receive the $5,600 as a gift from a family member but it has to be a gift not a loan.

4. How does he know the appraiser will appraise it for $160k? What happens if the appraisal comes in lower or higher?

5. Be very careful on the loan application, if done improperly it could be construed as loan fraud and wire fraud and tax fraud. Very serious issues. Never lie on the application. If it can't be done legally and ethically then it isn't worth doing.

6. It isn't at all clear why he would prefer this approach. The only thing I can see is an attempt to avoid capital gains on the $35k (by gifting instead of as profit) which is roughly about $4k tax depending on his tax bracket. But he may be over looking that and not know. There may be something else that he wants to accomplish that is perfectly legit, I just don't know. 

7. Sometimes banks require "seasoning" of 6 months or longer before they will do a loan on a cash purchase. Check with your lender.

 Just a few thoughts.

 If you stole his tools you are responsible to replace them. Obviously you didn't steal his tools, so the point is he is "blame shifting". He is trying to make you responsible for something he did. It's very common in today's society to blame others for something they had nothing to do with, so you have to watch out for it and Not assume the responsibility.

 If "policies, taxes and crime are are issues", those rarely "turn around". It is what it is. 

If you are happy with the returns you can get there, just realize you are "buying a job" instead of "investing". There will be ongoing drama, phone calls and decisions, but, to each his own. 

My properties require little to no interaction from me and I get great appreciation (in a very different market than Danville). Early on I learned the drama in places like you describe do not fit my criteria.

Are you positive prices will always go up? How long will it take for the other house to be completed and hit the market? If it is 8 months that means it will be about Feb 2022. What other houses will be competition in Feb 2022 ?

What about the time value of money? Can you invest that money to make more than you'd have by waiting?

Timing the market is a very tough thing to do.

Sell when it makes sense. 

Yes, simply put the "1 measly foot" on your side of the property and she will be satisfied.

Depends. What number of units are you interested in? 

1 - 4 ?

5- 60 ?

61 - 100 ?

101 - 200 ?

You need to join a REIA and talk to the guys doing what you want to do in the states you want to invest in. The list looks like you're in 1st year med and trying to decide between obstetrics, pulmonary and kinesiology or maybe doing all three simultaneously. They are very all different and require someone with experience (not an attorney or an accountant) so that first you can select a direction.
  

The Part of Philly I visited is where the Cheese Steaks Sandwhiches are ( S 9th street?) and it was a little intimidating. Then I saw this video 

https: //www.youtube.com/watch?v=o1wBG1...