All Forum Posts by: Bryan Casteel

Wow, it is great to have someone here with a unique perspective on the REO market. So you are on your own now? Are you investing and if so in what ways? Are you open to leaving some of your inside REO knowledge onto this site? I have plenty of questions if you are game.

Excellent decision Josh. Many people have very worthwhile products/services/websites to promote and if they want to stick around and add to the discussion, their product will have more validity.

If you sold all of the condos then you wouldn't be paying property taxes on them anymore. You would take your profit and go do something else.

Does this answer your question or am I missing something?

Looking at the numbers more closely, all cash is correct that these are probably not going to be very good deals for you to hang onto. A very quick rule of thumb is that your monthly gross income times 100 should be more than the purchase price of the home. That is VERY oversimplified, but you can use it as a super quick calculation to see if the asking price is anywhere near where it needs to be.

As an example, a duplex that generates $1300 gross per month in rent should be purchased for less than $130,000 if it is in perfect shape. This is just another way to say the same thing that all cash said when he said that he wants his monthly rent to be more than 1% of his purchase price.

If you do sell, you should of course try to get the most you can. You may be able to find someone that can cash you out at nearly a wash. In the event that you have a loss you will most likely classify it as a loss in a passive investment. You can then bounce the loss against other passive gains that you may have (e.g. interest, stocks, etc.). You should check with an accountant for the best answer to your question. Also, I am sure there are plenty of real estate accounting books that can help you.

I believe that you have to always consider the source of any advice you get. On the surface, it looks like the interest-only is a better deal (less down and less per month) accept that every interest only loan that I know of is variable and has a relatively short balloon date. So after some period of time, the loan will start to adjust with some underlying index (T-bill, LIBOR, etc.). I would not feel comfortable at this time getting into an adjustable note considering that we are at historic lows for interest rates and every indication is that rates will climb in the near future. Therefore, depending on the terms of the note, in just a couple of years you could be paying A LOT more per month on the same mortgage (and it is all interest that is basically flushed down the toilet).

You should consider shopping around for other lenders. Take a look at mortgage bankers as well as small local savings and loans type banks. You will be amazed at the amount of different loans (called "products" by the lenders) that are available and you will most likely find on that better meets your needs.

dkdk100,

It is very difficult to justify a property manager on any type of leased residential property (SFR, 2-Fam, 3-Fam or 4-Fam). The numbers just don't support the expense. Of course, if you live out-of-state you have to have someone watch the place.

One option you may consider is to ask the current tenants if they would be interested in buying the place within a couple of years. You could turn your lease into a lease/option and then tell the tenants that they have to take care of the property and fix anything that costs less than $500 to fix. You are still the owner and you will have to fix any big-ticket maintenance problem, but that rule will cut out 99% of the nuisance calls from a tenant and get the property out of your hair in a couple of years.

tackleberry and all,

Check this one out. Seems a Senator from New Jersey is trying to go the opposite way by making real estate data now available as public record only available to licensed agents. Guess what...the Senator himself is a licensed agent - go figure...

http://walkthrough.nytimes.com/?p=370

dcn and cnew:

True no-money-down deals are harder to get on junker properties (versus nice properties that don't need any work), but it can be done. As all cash said, if the seller's problem is money, then usually only cash will solve it. It is still possible to work out creative purchases, but then there is still the cost of holding the property and fixing the property.

Just remember, though, that it isn't as important to use no money as it is to use none of YOUR money (especially if you need your money to eat). I would argue that if you have a private investor that funds the purchase and fixup costs for a part of the profit - that is a no-money-down deal for you (none of your own money).

Lucy,

I would suggest that you go into a Realtor Broker office (preferrably a big one that has a lot of signs around where you live) and ask to talk with the Broker or a Manager directly. Sit down with that person and tell him/her your story. They will tell you who the best person to use in their office is. Make sure you ask for the highest person in that office so that the first person you run into doesn't just try to steal you away. You can still get a lot of benefit from using an agent as long as everyone understands up front what your situation is and what you are looking for.

A second option (less likely to work well) is to tell the listing agent on the home that you want to make an offer and represent yourself IF they will drop the full commissions down and the seller credits those savings to your closing costs. The agent may have a 6% listing and 3% would go to your agent. If you don't have an agent, maybe the listing agent will drop their commission to 3% (as if you did have an agent) and that 3% can go towards your closing costs.

The pioneer in self-directed retirement accounts is Equity Trust Company. I have my IRA with them that I invest in real estate with. There are some strict rules around how to do these deals, but the results can be awesome.

Their website (http://www.trustetc.com) is full of great information - you should check it out. Here are some of the options for investing your retirement accounts:

* Real Estate - including apartments, single family homes, and duplexes
* Commercial property, developed or undeveloped land
* Mortgages/Deeds of Trust
* Publicly traded stocks, bonds, mutual funds
* Private Limited Partnerships
* Private Stock Offerings, Private Placements
* Private Limited Liability Companies
* Secured and Unsecured Notes
* Judgments/Structured Settlements
* Tax Sale Certificates
* Car Paper
* Factoring
* Accounts Receivable
* Commercial Paper
* Equipment Leasing

You can also set up Self Directed Coverdell Education Savings Accounts for child education expenses and Self Directed Health Savings Accounts for health care expenses.

What if you had a child who was 5 years old and you opened a Coverdell account for them with $500. Every year you wholesale flip a property from that account for $5000 profit. By the time they go to college at 18, they would have over $70K in that account for college expenses. And all you put in was $500 and a little work every year!!!

What if you are self employed and have a high-deductable health insurance policy. You could fund your HSA with a couple grand and then flip a house. You do this once a year and you will never have to pay for medical expenses again!