All Forum Posts by: Paul OConnell

He may be picking up lots he feels that the city or another governmental agency will need to buy for a future project. Say an airport or harbor expansion, freeway expansion, or whatever. Or it could be random landlocks parcels that is only valuable as a part of a bigger piece surrounding it.

Then he thinks he can hold out for top dollar for land he got for nothing and is paying almost $0 in carrying costs for.

Just a random guess.

And Mr. Scott takes us to warp speed!!! (sorry, I am a bit ashamed I wrote that but it is April 1st). The benefit os the mortgage interest deduction is NOT an argument for debt directly, the mortgage interest deduction decreases the effective interest rate of debt, meaning if you are paying 5% and have a 20% interest rate, your cost of the debt is really 4%. Now if you have cash sitting around in a CD and can't find anywhere else to put your cash, then yes, pay off your debt. If there is one more profitable real estate project out there where you can return >4% buy the project.

I wonder how many major real estate companies Mr. Payne thinks carry no debt.

Mortgage rates are based on risk. Better credit score = less risk, higher down payment = less risk, solid employment history = less risk...you get the idea

Edit: Also note, the dollar amount can have an effect on the risk if you get into jumbo loans or loans that are too low to fit into the bank's mortgage pool. Both of these things tend to increase rates without, intuitively at least, increasing risk.

Allen - In my experience, I have not seen commercial real estate properties sold in bulk like you would see a residentital portfolio. That said, I am from the Midwest and worked at two large regional banks. I would imagine there is not enough A. Demand and B. Capital in this region to be able to bundle assets like this.

I'm afraid I can't give you more direction than this but I will ask some old colleagues to see if I can come up with anything.

One thing to note, we are starting to see banks, as they strengthen, be more willing to take things to REO. They fully understand the foreclosure process and feel that they can hold some of their better deals for 18-36 months in the hopes that they can flip them for more money.

Justin - The bank doesnt have to pay to foreclose, or pay someone to manage the asset, and depending on the bank they may have capital requirements which are pushing them to settle on deals sooner rather than later.
From Allen's perspective if he can get in there now, he doesnt have to compete with someone else in an auction setting.

Allen - I wouldnt worry about being intimidated by the banks. They want out of these things as bad as anyone, for the right price. I wouldn't worry about having a canned line. Especially if you have a particular asset you are looking at. If you are looking for a list of assets the banks have, you will have a much harder time with that, unless they have a dedicated website.

As to who the right people to talk to, that is a tough one. Since you are looking to buy the notes, you don't want the REO department. Different banks have very different ways of handling their "Special" or "Distressed" or "Criticized" Assets some banks have new groups set up focused on selling notes, others would do it through the officer managing the individual asset.

My suggestion would be to reach out to the head of commercial real estate lending for the particular region you are looking at, you could also ask for the head of their commercial real estate workout area and then try to work your way down to the officer.

One thing to keep in mind is taht these people are usually way overworked. As I said above, if you are looking for a list, you may have some trouble. If you can find some assets you would like to buy and then figure out who the lender is, your success rate will increase significantly.

By the way, I am a former Commercial Real Estate lender and workout officer who now manages projects as a receiver or as a manager for REO properties.

Sorry, Justin you are right about the paper trail part.

Broker's license requirements differ by state and the license can only be used in a particular state. They also usually require a few years of experience working as a salesperson for a broker. In Michigan, there are workarounds to that, like having an MBA or working in a related field for a number of years.

Because the buyer, who is upset because you just made $20k on his deal, told them you were involved. There would be a paper trail on your exclusive rights contract.

And "finding deals for another person" is pretty much the definition of brokering.

Your name is the first step in your marketing plan. You aren't overthinking it.

But like Rob said, once you do a deal with someone, they will forget about your name and remember the experience.

I would stick with something simple, and easy to spell, because at some point in the future you will have renters.

What about using your last name? Watkins Strategy Group? Watkins Real Estate Solutions? Then maybe Watkins Homes once you start to buy and hold.

If they did back to back closings, as opposed to an assignment, would you expect your agent to make a commission on the second deal too?

I am not trying to trash your agent/PM, but doesn't he deserve to get the lower commission since he didnt identify the current market price for this property? If he had raised a red flag and told you the property was worth much more than this offer, would you have done this deal?