All Forum Posts by: Account Closed

I do a similar setup. In my case however, one of us puts up the capital and the other finds the property and resells to a tenant buyer. We really don't do any rehabbing anymore. We let the tenant buyer do the rehab. Generally we get $25k down from a tenant buyer and split that 50/50. Since we take over the properties using Subject To and Wraps, there is also monthly cash flow of roughly $500 which we split 50/50 upon selling on Lease/Option to tenant buyers. We provide the tenant buyers with owner financing so they don't have to worry about bank financing. When the tenant buyer exercises the Option to buy a few years later, generally that has bought down our underlying financing and we split those profits 50/50 as well. Whichever of us provides the management side of the transaction has 51% ownership so decisions can be made. Everything is done inside an LLC. Very profitable for all involved. It's just another way to have partners and keep everyone happy.

 I did short sale negotiations and foreclosure bailout for years and it my considered opinion that banks are irrational. ;-)

One I remember was a drug house. I made an offer with all of the photos, comps and documentation for a cash purchase at the then current value. They said no. Fair enough. It was about 80% of the amount owed. The missing windows and walls and graffiti throughout must have been mistaken for artistic enhancements of the property since there wasn't any other way to justify a higher number. We went back and forth for a year. It stayed in foreclosure that entire time never going to sale. I went through four different negotiators at the bank over the year because the negotiators kept getting "reassigned" and simply disappeared into the great behemoth called "the bank". After about a year, low and behold, they accepted the same offer I started with. They never took it to foreclosure, which they had the right to do, they were not getting paid, they were paying the property taxes and insurance and they had a liability on the books. I made a ton of money doing those but you have to be in for the "long play". There is no real rhyme or reason as to which will be accepted. 

(Having been a lender, I know that the bank's decisions are made on things like VA, FHA or conventional, if it was a purchase loan or a refi, homestead, quotas for the negotiators, pressure from the FED, incentives for the negotiators, loan modifications, bankruptcies, lawsuits, robo-signing, MERS, bank's availability of funds, vacant management positions and on and on. But, all of that is "unknowable" regarding a particular property and makes a particular property anybody's guess as to how it will turn out.)

 A short sale has to be approved by the lender. If the offer has been submitted it can take 6 months for the lender to decide. If the market is going up the lender may adjust the numbers up. If the market is going down the lender will speed up the process to mitigate loss (sometimes). Submitting an offer on a property that already has a short sale offer to the lender will drive the price up. It may even make the lender think there is demand for the property and they might reject all short sale offers. It's a bank. They are irrational. You never know.

 Use cash to bring the loan current and out of foreclosure, give the seller some moving money and take over the loan using Subject To. Fix up the house, refinance or sell or rent out or do what I do and sell to a Tenant Buyer and get a big down payment and let them do the rehab. Lots of ways to take this one.

I agree, In my case I won't offer if I see there is a serious foundation problem, under or near high tension power lines, too near a cliff, flooded, burned, drug house, war zone, more than 3,000 sq ft, under 1,000 sq ft, clouded title. I've done all of those in the past, but learned that it isn't worth my *particular* time (some people have more time on their hands ;-) I can usually get everything I need to know by Google Maps and a quick drive by.

 I never have a contingency when buying a rehab. The whole point is to rehab. There are probably others like me who are going to gut the property. Sometimes simply changing the floor plan makes the house worth plenty more and since that means rewiring and re-plumbing anyway, it's all built into the offer. That doesn't mean you shouldn't have contingencies, it just explains why some of us don't.

 Not likely. Either sell the property and move on or get a new loan to buy out the other partner.

Yep. In fact, if you sell it to an FHA buyer, they will probably require proof. Just call the county and they will tell you if it was permitted or grandfathered. Some counties on that on-line.

 I had a property next to a stream and the walls did that when it would rain hard. We dug a trench next to the foundation, put sheet metal along the wall (but I suppose you could use thick plastic sheets), and laid river rock and gravel in the trench and filled er' back up. Then we used a concrete patch from Home Depot on the basement concrete wall. That fixed the problem. It also helps to make sure the lawn has a bit of a grade away from the foundation. I don't know if that will solve your particular problem, but the guys at ACE, Home Depot and Lowes are pretty good about local conditions and solutions.

 I invest in Austin (From Killeen to S.A.) and I would say you have to decide if you want fast cash, cash flow or flips because each market offers different opportunities and challenges. Finding a multi in Austin will cost you and may not provide decent cash flow. What do you have in mind for an investment style?