All Forum Posts by: Patrick Karbon

BP Turning 6 years old?

Welcome to the site and RE Investing! Your background will make you very successful in this industry. It sound's like you not only have the personal experience but also the direct (even 'Childhood Friendships') most people don't have with your connections/family in the building industry.

I think you're very Valid in your 2-part Theory. Regarding your First part, YES definately start a seperate entity (LLC) for your rental homes. You can even form an LLC for each individual home if you like. ex: "123 Maple St., LLC" to limit your liability. Research this as I think it's one of the safest ways to hold title to properties. Your spot on about leveraging your cash with properties to own free+clear, just make sure to purchase correctly.
Have you found out what wholesale means yet? In Detroit, we go by the rule of 65% of Fair Market After Repaired Value (FMARV). You'll often see the abbreviation as you research of just ARV but beware of bloated or false comparable home-sale prices. Wholesaling is the same in Real Estate as it is building supplies- think your buddy's excess yard vs. going to Home Depot to build your houses. But with real estate you don't just settle on a purchase (Wholesale) price of 65%- you need to subtract your repair costs, holding/closing costs, and finally YOUR profit you want to make- usually $5-10k in Detroit. The term to me means simply finding (or building!!) cheap homes and selling them quickly for that profit. I think your ability to actually build homes within numbers that make sense is amazing and could allow you to form your own unique niche in your market that others don't have access/ability- if you can build cheaper than buying existing homes. To clarify, your banker friend has clients with Vacant Land, correct? In RE, 'Vacant Properties' means an actual Home that's vacant with no owner/tennant.
"Real Estate Investing" is one of the broadest investing arenas and can be overwhelming to someone whose looking down that path for the first time. Instead, picture a cartoon wall that is called 'Real Estate Investing' The wall has 3 doors marked:

Residential
Commercial
Industrial

You see the wall? Behind the Residential door is the Corridor with more doors marked as

Bird Dogging
Wholesaling-Flipping
Rehabbing
Retailing
New Contruction (Single Family Homes)
Landlording/ Rental
Land Contract Selling (WAY more Profit than Renting. Less Headache too)

I don't think your way off in the weeds at all, Mike. Actually, it sounds like you are sitting in a very unique cat-bird seat and if you leverage all of your stated available resources, I don't see why you cant create a VERY successful enterprise for yourself in the Real Estate Industry. I look forward to hearing your progress! Please stay in touch and feel free to reach out anytime!

Patrick Karbon

If the tax records didn't get you any useful information, I would suggest simply trying the whitepages with whatever last-name info you have of previous owner and call each one. i can't attest to how much or how little info you've found on here regarding skip-tracers but if you have no other (cheap/free) alternative, I would recommend giving a skip-tracer a try, assuming your potential deal is worth the effort. Another tactic is to mail a letter of intent to purchase to the home address and if it get's returned to you, it may have a forwarding address. I've had this happen with Direct Letter's I've sent only to get back a letter with a forwarding adress of the person at an address I never came across in my usual searches!!

Good Luck,
Patrick

The best bet is to check on the local MLS that the realtors use in your area. In Michigan, it's Realcomponline.com You need to be an agent to gain an account but once on, you can look up any address and any prior listings that property has had (if any). Remember that not every property has been LISTED before it was sold not to mention the original owner may have either never sold it or just passed it on to their heirs. In any case, just because a propety has transferred ownership doesn't necessarily mean that it has ever been listed.

Hope this helps!

Patrick Karbon

Does anyone know the facts of what Bank Of America's plan is to stop the selling of forclosed homes? According various radio/tv/paper news, BoA has decided to halt the sales due to an overwhelming amount of poor record keeping to flat out fraud. Thanks for any clarification!

Patrick

Great Question Charles,

I have to be an advocate of at least the 1st book in the Rich Dad/Poor Dad series (Rich Dad/Poor Dad) My partners and I all started with this basic foundation of education as an introduction of the basic principles of Assets vs. Liabilities, true definition of 'Cash Flow', and the practiality of understanding your true costs vs your true expenses (again- Assets and Liabilities) Understanding basic fundamentals of truly "Cashflowing" $100 per rental property when you have 10 properties at that rate will get anyone's attention as to the basic powerful principles of Real Estate Investing.

Easy to read and understand, I found this book was perfect for introductions into the Real Estate Investing game but you'll have to seek further sophisticated knowledge as you begin to search for and close deals.

Hope this helps!

Patrick

Great Question Travis! To answer your questions I get my owners lists from the CITY tax records dept filtered by Sales Amount under $40k within the last year in a target zipcode. I don't think courthouse will have what you need.
However, I need some clarification on what your looking for when you say 'Absentee' owner- if your talking about vacant homes with the Tax and the Mailing address being the same then you're going to have to track the name on record down yourself (in my experience)

However, as you may or may not know, if you're looking for absentee owners who may have a vacant INVESTMENT property, then the tax address and mailing address will be different as the tax bill will be sent to the owner's actual home address (not Renter's/ Subject House Address) In the essence of expediancy, trying to get a list of Tax Addresses and Real Address which are different is the smart approach IF you can create a contact/relationship with someone who will take the time to process your request as opposed to the classic clock-watcher city employee (zinger). The MLS is the alternative but much more time consuming process.

Since the parameters you're giving the person at the courthouse that may be the first pitfall as they may really not have the information you need. In Detroit, I go to the City Tax Records department and ask for the name's/addresses of anyone who bought a home under a wholesale price in a certain zip code for cash only(no mortgages) this is an indicator that the person is an investor and may not live there but even if they do and have paid cash (my parameters) under say, $40k, then I know I have a lead on a potentially motivated seller(is that what it's all about?)

The list I got under those parameters was used to find inactive but motivated sellers- Absentee or Owner Occupied. This is obviously the shot-gun method but you could lazer focus your approach by driving your target 'hood and cherry-picking individual addresses that look vacant/potential deals and search for the owner on the City Tax Record. Hope this helps!

Patrick

Just a followup as well on Driving for $$$- this used to be one of the best ways to find vacant/abandoned/troubled properties When I do drive my target areas looking for homes to buy, i'll simply create a column for each street and write down the first address I'm interested in. i can then drive faster down the rest of the street just writing the last few numbers (if a 4-5 digit address) or if i see one with no visible address, I'll just mark it as ex: "2 south of 5487 maple", etc. I'm grabbing address of homes that fit the abandoned/motivated seller stereotype- overgrown grass, mail piles, boarded windows, Eviction/Forclosure/Winterization Stickers (usually visible from street on Door or front window) Lock boxes on Door handles

Good luck!

Patrick

Hi Tom-

Where are the 7 homes located? I'm in Southfield and know the city very well and would be interested in looking at what you have.

Patrick Karbon

Hi Jason,

I've had tremendous success with bandit signs and Direct Mail letters.

Signs can be tricky and offensive to people in your target neighborhoods so make sure their placed high enough not to get ripped down and also that you don't over-saturate the neighborhood to the point of being obnoxious. If someone calls you about taking one down- Do it!! Ask where the sign is placed specifically so you don't take down anymore than necessary but the last thing you need is to annoy the people your trying to market to.

Direct mail letters can usually be done for about $1500 for 1000 targeted letters. You'll need someone who has the time to research each potential lead, merge the letters with the appropriate information ex: "Hi Mr. Tompson, I see you bought the home on 123 Maple Street" etc. I pay my guy $500 for 1000 letters, $275 for 1000 printed, color letters w/ signature (blue) $420 for 1000 stamps, $40 for 1000 envelopes and $30 for a professional Return Address Stamp total being $1265 for 1000 letters mailed to my direct target.

Hope this helps!

Patrick