All Forum Posts by: Rick Allen

I understand you desire to buy notes to foreclose and take back the property.  When I first started buying NPLs in 2012, it was for the purpose of getting houses at a deep discount.  I came from a wholesaling background and had just sold off my wholesale company when I started in the debt space.  I know the desire to get the real estate is strong becasue that is what most people coming into this space are comfortable with, but what I have found after purchasing around 200 NPLs is that there is a great profit to be made from turning assets in RPLs and then reselling them.  The cash burn that you will face during a Foreclosure can be staggering and derail you from the get go.  IF you are dead set on buying an asset to foreclose, I would buy one that is close to judgement, or one that already has judgement.  You will most likely limit the amount of time that you are in litigation, and may give you your end result of getting the asset back.  As @Bob Malecki stated, the days of taking assets to foreclosure and having them sell at auction for a massive profit are few and far between,  That being said, we have one that is going to auction on 2/22/18 (16 days) in Tampa that the borrower signed a consent judgment on and the house is worth around 220k fixed up.  We have been trying to sell the $185K judgement for 135-140k with no luck, so we will see what it sells for at auction. 

If you do find yourself with an NPL and want to try and get the property back, I would explore deed in lieu or consent judgments as an alternative to fighting the borrower in foreclosure.  

The thing that stands out most to me when it comes to turning an NPL in to a RPL is that you have the ability to change the life of someone and give them a second chance at keeping their home.  A majority of the borrowers that we deal with have had legitimate hardships and have been mistreated by the larger institutions.  There is no better feeling than helping a family save their home, getting them off the foreclosure merry go round and providing some stability in their life.... oh and there is the high double digit returns that seem to go with it.  

Ok that is pretty clear. What about assigning beneficial interest in a trust? Or perhaps, selling a single use LLC that has a property under contract? IF you have the funds lined up to close a transaction, does the state have viable case?

Really, the answer is get licensed and avoid a lot of the issues.  

I am not an Attorney or legal counselor and  I am not offering legal advise. 

I am going play devils advocate for a while.  With regards the legality of the wholesaling of property in FL:

Those waters are very grey on weather or not you need a license to legally wholesale a property.  For the record I am licensed and have been since I began my wholesaling career back in 2014.  IMO, most people blast out FL Chapter 475.43 and how it legally prohibits someone from wholesaling without a license in the state of FL without reading or fully understanding the statute.  The statute reads: "475.43 Presumptions.—In all criminal cases, contempt cases, and other cases filed pursuant to this chapter, if a party has sold, leased, or let real estate, the title to which was not in the party when it was offered for sale, lease, or letting, or such party has maintained an office bearing signs that real estate is for sale, lease, or rental thereat, or has advertised real estate for sale, lease, or rental, generally, or describing property, the title to which was not in such party at the time, it shall be a presumption that such party was acting or attempting to act as a real estate broker, and the burden of proof shall be upon him or her to show that he or she was not acting or attempting to act as a broker or sales associate. All contracts, options, or other devices not based upon a substantial consideration, or that are otherwise employed to permit an unlicensed person to sell, lease, or let real estate, the beneficial title to which has not, in good faith, passed to such party for a substantial consideration, are hereby declared void and ineffective in all cases, suits, or proceedings had or taken under this chapter; however, this section shall not apply to irrevocable gifts, to unconditional contracts to purchase, or to options based upon a substantial consideration actually paid and not subject to any agreements to return or right of return reserved."

I believe that the phrase "Substantial consideration" (SC) is one that provides most leeway for  unlicensed activity.  There is no definition for what is considered Substantial Consideration, however, the IRS considers $100 to meet the criteria of SC.   That used in conjunction with theory of "Equitable Rights" may provide enough to beat the the licensed activity issue.  

Now all of that being said, I would recommend getting a Real Estate license. I wouldn't want to even consider running into the authorities on an unlicensed selling claim.  

@Adrien C. its definitely not scalable if that is your only method for buying houses.  Like I said, direct mail marketing via absentee owners is a must, but as an investor, my eyes are always open to potential deals.  I would say anytime that I am out in a neighborhood and I see a house that peaks my interest, I am at the very least sending them a letter right there on the spot. If I have time, they will get a door knock or sticker as well.  

I believe so much about wholesaling and the direct mail marketing has to do with getting out into the field.  I agree that you need to blast marketing letters out, but I also feel like most people miss the mark when it comes to direct mail marketing and driving for dollars.  Some of the greatest buys I have made have came from the one-off letter that I sent an owner when I saw there house while driving around a neighborhood.  @Adrien C. is right, so many people are blasting letters to the same list of people, but fewer people are driving for dollars. 

When I am in a neighborhood to look at  house that we are going to make an offer on, I always drive the neighborhood to look at comps and other houses in the neighborhood.  I use a mix of letters, door knocks, door stickers, and just talking to people to make quality buys.  There have been times that one afternoon leads to 2,3 or even 4 buys.  There are so many ways to buy a house other than the 1 or 2 ways that a majority of wholesalers never utilize.  

Wholesaling can be difficult, but I believe it is doable.  I also  believe that wholesaling can be a doorway learning multiple real estate investment strategies.  I began wholesaling 13 years ago and it has taught me a lot about not only investment real estate, but also traditional real estate.  It is a smart decision to begin with getting your real estate license and I applaud you for jumping  in and starting to learn .

Good luck. 

Are you tired of writing down addresses while you drive for dollars.  Have you used an app that requires you to pay per address, leading to a more expensive D4D option.  Apple users enjoy a two week free trial when you download Letterfly.  Letterfly is a direct mail marketing app designed to record addresses to a spreadsheet for future use, simplifying to the task of writing down addresses and adding them to a spreadsheet for a mail merge.  You can also send a pre-written letter directly from your smartphone, with nothing else to do but take the phone call and close the deal. 

See this video for an explanation.   Letterfly

Driving for dollars shouldn't be so time consuming.  Please watch this short  video and check out this app.  2 week free trial to save and download as many addresses as you like. 

https://youtu.be/twaQRNEYbPI

Thanks @Franklin Fletcher.  I know Colonial Capital has a fund that is targeted towards accredited investors and they do a very good job.  Eddie is a wealth of knowledge and pretty much has been through the ups and downs of multiple real estate cycles.  They offer a great mentor-ship program for those who want to take an active role investing in the note space and can afford the upfront cost.  Lets keep it going. 

If you feel that there are others that should be on this list, lets keep this an open thread and please add other vendors for this space on the list.