All Forum Posts by: Account Closed

I am lookinng for an agent in Dayton OH.

If you are part of the local Realtor Board and your focus is Dayton get in touch. Email is preferred. PM is fine. Or you can post here. I should notice new posts.

John Corey

Do good deals.

If you can not close them but you can find them be willing to turn them over to more capable investors. The scum that steal them and cut you out are people you want to identify. The savvy investors worth making a friend for life will find a legal way to keep you in the game or share the profits.

Under promise and over deliver. Know you game. Get out there and be active so that you always have something new and interesting to talk about when with experienced investors. If they provide feedback really listen. Maybe you will not follow the advice or maybe you will. At least listen. They likely are much further down the track than you so maybe, just maybe they know something you do not.

Not all old time investors are current with the latest trends. Some of us find something we like and stick with it. Call it being in a rut if you like as it can be that we are stuck with old school thinking. At the same time if we have made money that way maybe there is something to it.

As a general rule the US students are much less respectful to their teachers than in many other cultures. Maybe this is why many more Americans are entrepreneurs. It also means that teachers have less incentive to share when the students do not care to listen. It can cut both ways.

Keep reading and learning. Find a deal worth discussing and then bring it to the table for a discussion. Once you get a reputation for finding good deals the savvy investors will be buying you lunch or looking for your posts on the various forums.

Good hunting!

John Corey

As an agent you can get into lot of trouble if you flip a deal. One or both sides might have a valid claim against you and your broker if they feel that you did not represent their best interest. You really need to be very careful about everything you say to either party so they are never confused as to who you represent. Even if they should not be confused the judge might think differently as agents are armed and dangerous compared to the public.

In some brokerages there are house rules to prevent what you want to do. Or there are extra disclosure forms to sign, etc.

Be very careful when acting as a principal. More so if you ever contacted the seller about maybe listing their property. That is all that the judge needs to hear to say that you did a bait and switch (started out representing the seller, they said some things about what they would be interested in and then you switched sides so you could make a larger amount of money).

Many investors refuse to hold an RE agent's/broker's license for the above reasons.

Oh, then there is paying the person who found the buyer. If they are not an agent you can not pay them a fee based on the successful closing of the transaction. A tiny gift might be OK in some states. $50 is the limit in one state I know. If you pay a fee to a person who is acting like a broker (putting together a buyer and seller) you will lose your license if discovered. If you try to hide the deal rather than do it legally you are even worse off.

You need to know the laws, the house rules for your brokerage and remember the public (including bird dogs) do not have to meet the same standards that you are held to.

Good luck.

John Corey

First. Read your contract to see what you are obligated to do. You might have options you did not realize.

Options that generally apply.

1. Walk from your deposit. Default on the contract to purchase and limit your loss to what you have in the deal already. Make sure you can cleanly do this with no future claim from the developer. You and the developer both took a risk. If you can walk then the developer now gets to deal with the situation. Do make sure that if you walk the developer has no further claim against you for non-performance. Consider it a paid education in how the RE market does not always go up.

2. Buy and hold. Pour more money into the deal and expect to be a long term investor. All the risks you might expect. If you had to rent for a really good rent (good to the tenant) just how much would you continue to lose monthly if you held for 5 years? Would the market be any different by then?

3. Sell out your position for what ever price the market will pay. Exit at all cost and expect it will cost you. You messed up and you are paying for the education.

4. Sell a partial stake to another investor so that you share the pain. They get a better deal than you but they effectively let you execute on #2 above. Some pain now and some pain later by selling a partial stake. Likely you also have the hassle of a partner.

John Corey

You need to look at the deal and figure out the market.

In some situations the developer is offering a true discount to today's prices by putting into the pot the savings they expect. If they pre-sell then they have less marketing, lower carry costs, etc.

In another situation a developer might need to sell a certain number of units to secure the construction financing. Hence they can provide a true incentive to the investor so they can secure the full project. Like when investors want a partner to get a SFR deal done so they split some of the profits with the cash investor. Developers can and will do the same.

The above is much more likely when you are talking pre-sales for a large condo development that needs to start now but can not release units for 2-3 years. To motivate investors to put up the cash and commit to buying the developer has to offer something other than just the price in 2-3 years.

Rental income is another can or worms. Granted when an apartment building is being built the lender and the developer are both taking a view about the likely rents in a months or years to come.

The problem is you can not accurately predict the future. Still developers build. Spec build and they are really making a bet. Pre-lease or pre-sales implies that someone else is taking on some of the risk. Many projects are built every day based on projections about the future. It is normal business. Some investors are more comfortable about co-investing in such situations. Some are obviously much less interested.

As All Cash has indicated he likes to use zero debt and frankly focuses on today's values. Hence he would not likely be a developer or someone who projects what is likely to happen in the future and then builds a commercial building, an apartment or a housing tract.

The British call this horses for courses. Different folks do different things and take different risks. Some are just dumb and will soon lose their money. Others are more skilled at certain types of transactions and can mange the risk. Construction is such a large segment it is obvious a few people have figured it out.

John Corey

In CA the trustee is the one handling the foreclosure from the start. Hence CO might not be as different in that speciifc respect.

There are many states that want to protect a borrower who is losing their home. Even states that do not have clear laws have judges that can undo what the investor has set up. A seller facing foreclosure is a seller who is emtionally challenged and might not be able to sign a contract.

There are landmines.

In some states the laws have become a bit one-sided. Expect that there will be more REOs or at least properties that go to auction. Is this better for the borrower (having a foreclosure on their credit report and being evicted). Hard to say. I have a view but I do not write the laws and I am not trying to be an elected official.

If you want to specialize in a particular state you need to know what works there. If there are a lot of bargains compared to your home state maybe the differences come from a structural problem that will bite you when you dive in. Or maybe you are better at your game than the locals so can dive in and be successful. Hard to tell as the theory would need to be tested.

Keep looking and then decide if it makes sense. It might be the best move of your life or it might confirm that your backyard is a pretty good place to invest.

Is the grass really greener or is it the person who is looking can not tell the difference? Really. It could be perspective or it could be reality.

John Corey

You could have a good deal but the details are still a bit thin.

if the value is that high and the loan balance that low then you could work a deal. Maybe to live there or maybe to make a profit from reselling so you can buy a different home.

Have you made contact with the seller? If so what is going on? Why are they not just dumping the property for a fire sale price and walking away with a large check in their pocket and no foreclosure on their record? There is likely a lot more to the story.

If you reply and I fail to respond send email or try Skype to get my attention.

This could be a deal or a dead end. Hard to say until there is more info.

As to your and your other half. What sort of credit do the two of you have? What are you qualified to borrow? It could make a difference to the deal (more if you want to live in the place than if you just flip it).

Remember that there is always another deal out there. Work this one but do not get too attached. If it turns out to be the deal of the decade then great. If not there will be another in a week or so once you get good at searching for them.

Yes - I stole the line. Some might know the guru that uses the phrase.

John Corey

A bank is in the business of lending money and collecting savings from people with surplus cash.

They are not in the business of brokering real estate. Understand there are lots of legal liabilities associated with being an RE agent.

There are many agents out there pounding on the door of the bank asking to handle the bank's listings for no money up front and a success fee if they get the job done. Under those conditions why would a bank consider taking on an employee with the overheads and legal issues?

From a practical point of view just assume that all REOs get listed and all listed property will be in the MLS. Some REOs do get sold in bulk or individually to external firms prior to listing. A buyer who is willing to pay the price the bank wants is still a buyer. The point about listing is the bank can ensure that there was little room for insider deals getting done. The national banks are more likely to use a large corporate to dispose of properties across the country (brokerage or the large company buying the portfolio). Local banks will have local contacts who are agents. Likely they are bank customers.

You can get good deals from MLS listed REOs. That tends to be true when it is a buyer's market and the bank is under pressure to clean up its REO portfolio. Down markets where things are not looking good. Too many REOs and the bank loses its license so there is a penalty if the bank does not clear the books.

John Corey

Liking the property could be the first mistake. Like the cash flow and be more neutral about the property.

Understand that a mixed used property is slightly harder to finance so less likely you will have an abundance of great options.

If the seller can not understand that they have mis-priced the property then educate them. They might not get it or they might come around.

Make the offer that the property can support based on doing your homework. If it is rejected let the seller know that they should not lose your contact details as you will take another look in the future. If the cash flow has improved you can reconsider your offer. If the cash flow is the same then your offer will still be the same.

You have the money. They have the problem. If you are going to buy their problem then make sure they are paying you to do so.

John Corey

At some level the land will have a value even if you have to scrap off the existing structure. Understand the zoning and if you can replace the building. Figure out the highest and best use.

Then consider the cost of tearing down and replacing the present structure. That is likely almost the worst case if the damage is not extensive.

When refurbishing the present structure be aware that major work might force you to bring the whole building up to present code. That could involve major rework of the existing units even if they were not damaged.

If the deal was easy someone would have done it. There could be a deal there or it could be that you learn it will be a hard slog. Granted finding out there are major issues can be used to motivate the seller as to their real options.

John Corey