All Forum Posts by: Tom Goans

Please Seek Legal and Professional Advice

Seeking legal advice from an attorney in the area where the property is located can be a wise and very economical decision considering the alternative. An attorney will assure you are abiding by the federal and state laws. It is not wise to consider any legal advice from someone who is not a licensed attorney where the property is located. Otherwise, the advice may be incorrect and cause you harm.

• Every state has unique laws.
• Every state has unique legally acceptable legal forms with legally acceptable legal language for that state.

The attorney will review your specific situation and then provide the best advice and options for your specific needs. The results will be legally drawn up agreements for your use.

Please do not rely on legal advice from anyone other than a lawyer you hire. Protect yourself, your investment/money, your family, and your future.

Just they way you communicate with a borrower is regulated. Your attorney will help you with this process.

@Justin Hennig,

I am older and understand the younger generation is hooked on automation and technology, thus avoiding work - yes I said it.

• However, more of your time may improve your success.

For your consideration. I have many years of collecting money ... since the 1960s. I have always found people prefer to pay people with whom they have a personal and emotional connection. I maintain a monthly email connection with all of my payers that goes beyond the collection of money. For example, a few days ago it snowed in Colorado. This bit of information was sent to my payers.

Sometimes I bring up the subject of barbequing - a favorite subject of mine.

Another way to look at automation vs. a personal connection is to consider your own feelings. How enthusiastic are you to send money to pay a credit card? You are nothing but another number to them. Now, how would you feel sending a payment to the landlord that comes by every now and then just to say HI and ask how the kids are doing - no inspection, just a friendly visit?

I would bet the landlord is paid more timely and eagerly in my example. I also would bet the property receives better care.

Another consideration, I am well known by just about every person who works at the bank where I do business. Bank employees look forward to me coming in and shooting the breeze. This little bit of my time (politician call this working the crowd) can increase my profitability in many, many ways.

Just another way to look at the real estate business. Too often, some forget this is primarily a people business. Without the people, you have no buyers or tenants and nothing to do. Moreover, if the tenant feels like they are paying a cold person, the property will suffer and so will your profitability.

This is a detail that was not important to me or the purpose of the meeting. The greater picture was my concern.

By the way, I did suggest to the seller that the possible best way to solve this major quagmire was to buy out the hard-money lender or to attempt to assume the loan. The borrower is currently experiencing major financial problems after closing the business they owned and are now completely broke. If the original seller takes over the hard-money loan or pays it off, then once again the seller is in a good position to move forward.

My major concern was the fact that the hard-money lender - in first position - will be very eager to foreclose to gain ownership of the property. Remember, they are in at a 4/1 ratio.

Cut your losses, take control of the situation, solve the problem, and move on.

@Steven Bays,

The property inspection is far down my list of things to do when considering an investment property. My first priority is the learn about the neighborhood and then the target market. If either is unsuitable, nothing else matters.

This research is conducted prior to any communication with the seller. Thus, I am not another nuisance to the seller. My first meeting with the seller will be from an informed advantage. It will then be up to the seller to sell me on why I should buy.

Moreover, without the research, how do I know what questions to ask the seller. I certainly do not want to continually contact the seller with questions from newly discovered research. Then I do look like an amateur.

If I appear to be an amateur to the seller, the terms of the loan may negatively change. Who could blame the seller for assuming an amateur is a higher risk.

Thank you Bill for the very kind words. This is a business with unlimited potential for those who do what others are unwilling to do. Associate with the soaring eagles of the industry and you should do very well.

May your future be full of great success.

@Michael Hable,

The real question to your question is what do you prefer and what are your personal goals?

Are you doing this to make money today only?

Or, is your goal long-term with the establishment of a cash flow and the building of an estate?

@Bill Gulley,

I came across an interesting situation the other day that may be amusing to you and informative to the members of this blog.

The holder of a seller-financed note discovered numerous mistakes were made asked for my opinion.

1. Whomever drew up the legal documents omitted a Deed of Trust. Thus, none was recorded.
2. The note holder has lost the originally signed Promissory Note.
3. The borrower has since borrowed money from a hard-money lender. This lender recorded a Deed of Trust and now is in First Position by Colorado law. The balloon date is in 2014. The lender has a 25 percent LTV ratio.
4. The borrower has been in default on the original seller-financed loan for about 6 months. The seller hired an attorney who discovered they did not have a Deed of Trust, much less a recorded one. So, the attorney drew one up - without the original executed Promissory Note - and recorded the Deed of Trust.
5. Now, the attorney for the seller is trying to convenience the seller to pay the attorney more money to file foreclosure proceedings. The attorney also told the seller they must put up a bond to proceed with the court litigation.

A great lesson in how not hiring an attorney in the first place can turn into a financial disaster. Ignorance is expensive.

• "Investors", please learn from this lesson.

EVICTION

The very first thing the judge will want to see is a WRITTEN lease agreement. Otherwise, it is a he said she said argument in front of a judge who will put a higher requirement upon the landlord because it is the responsibility of the landlord to be informed and documented. Courts generally side with tenants unless there is written proof of violations.

However, should you be in violation of any tenant rights, it can cost you a lot of money.

Second, you must follow the laws of the state with regards to tenants rights. This includes the way you communicate with tenants, including default notices.

You are in luck. The Young Lawyers Association (I believe this is the name) publishes and provides as a free service a terrific landlord/tenant handbook. A must have for every landlord in Texas.

This handbook can also serve as your checklist for the rental process.

• It is highly recommended you hire and seek the advice of a lawyer where the property is located.

The attorney will review your specific situation and then provide the best advice and options for your specific needs with a consideration for your future. The results will be legally drawn up agreements for your use.

• Every state has unique laws.
• Every state has unique legally acceptable legal forms with legally acceptable legal language for that state.
• Just they way you communicate with a tenant is regulated. Your attorney will help you with this process.

You have put yourself and family in a precarious situation. Be very careful doing anything before hiring and seeking the advice from your lawyer. To repeat myself, violate any tenant rights can be very costly and damaging.

@Matthew Paul,

Farming requires a lot of knowledge, hard work, very long hours, courage, and a lot of luck. It may be wiser to consider leasing the property to a farmer.

The one major drawback I see is how tiny the property is. Another thought is forget the farming option, just keep the weeds plowed under. If possible, plant a good cover crop (grass). If there is bird huntin' potential, you can lease the property to hunters.

Still, the property is tiny. Research what the area needs to see if the land can fulfill a need.

There is not enough information to provide a valuable opinion on the house. Just remember time is money and putting money in a house may not be returned.

As a longtime developer, your development plan is never a guarantee for many, many reasons. If nothing else, the money factor. How deep are your pockets?

@Nate Crump,

It is my opinion that is based upon what I have experienced and learned, that many minds and people control the economy, including interest rates. This applies to the world economy all the way down to your local government.

It is not just a few in government that control or manipulate the economy and flow of money. Wall Street continually plays a major roll as well as do investors from around the world. Even Warren Buffett has influence.

While some circles like to point fingers to just a few people, like they did in the last "recession", there are many controlling factors and people involved ... in my opinion.

I believe and agree with Wall Street investors and the U.S. federal government that if they were not manipulating the U.S. economy right now, interest rates would be much higher. I also agree that once they pull back from manipulating the U.S. money and economy, the result will be inflation, higher interest rates, and fewer U.S. lenders. The latter can have a huge influence.

I am of the opinion that Europe has been taking its medicine the past few years by making efforts to reduce government debt and the burden on society. The U.S. has been doing the opposite to please voters. The European economy may not be robust right now, but will become better and more attractive to investors (lenders) than the U.S. in the near future. Thus, less money interested in buying U.S debt. This can result in greater inflation and even higher interest rates to attract investors.

This all comes into play with the future of the real estate business. If my analysis is partially correct, once again there will be a reduction in real estate property values, interest rates will rise above 10 percent, buying power will continue to reduce, properties will be difficult to sell and rent, investment cash flow will be reduced, and so on. Reflect upon the period between 2007-2010.

This is just the opinion of this old investor. I am never 100 percent correct. But, what if? This is a very complex subject that is ever changing.