All Forum Posts by: Ryan MacDonald

@Linda Hastings

When is the next meetup? I couldn’t find the details on the website.

Investment Info:

Mobile home buy & hold investment in Schertz.

Purchase price: $6,200
Cash invested: $1

Contributors:
Logan Fullmer

This is a Mobile home on .5 acre lot. The sellers want to stay in the property for an unspecified time and will pay $450/month in rent and will cover any an all repairs with everything on the property. They will also work to clean up the property remove/tear down the existing shed structures that are unsafe.

What made you interested in investing in this type of deal?

Land value is about $40K for an unrestricted lot with all utilities. Based on our purchase price, even if we remove all items from the property including the existing mobile home, we would still be safe based on lot value and could sell it as is via cash, seller finance or even place another repo mobile home on the property and rent or seller finance for significantly more than we have in it. It also has a secondary septic which I think we can use to place a second mobile to rent for $1K/mo more

How did you find this deal and how did you negotiate it?

This was a tax delinquent property. It was in such poor shape (which the seller understood) that if they moved we would have to demo/trash the mobile home and place a new one there along with other cleanup on the property. Overall we agreed to pay off their back taxes and let them stay in the property for an unspecified period of time (we estimate 2-3 years at least) for $450 /month and they cover all repairs and improvements to the property along with their own utilities.

How did you finance this deal?

We used our own private cash.

How did you add value to the deal?

They didn't have the funds to catch up the property so I added value to them by solving their problem of losing the home to tax sale and allowing them to stay put without forcing them to leave.

What was the outcome?

We closed on the purchase and have started the first months lease on the property.

Lessons learned? Challenges?

Learning that not everyone is looking for cash when selling. You just need to focus on solving their problem and we did just that.

Investment Info:

Single-family residence wholesale investment in Round Rock.

Purchase price: $70,000
Cash invested: $1
Sale price: $100,000

Contributors:
Cameron Whitehead, Logan Fullmer

This was a wholesale deal where we had to help a family facing foreclosure on an inherited house with a total of 15 heirs and a fast approaching deadline. We ended up contracting the property for $70K and partnered with a wholesale company as our buyer since we didn't know the area very well. The wholesale company contracted with us for $100K and then turned around and sold it to another investor via their database for about $120-$130K.

What made you interested in investing in this type of deal?

It was a nice wholesale deal with a lot of distress and a good return. Overall, there were 15 heirs, 4 affidavits of Heirship that needed to be done, a divided family and a title company that didn't want to ensure title because of all of the issues that arose from a family with legal, financial and other issues.

How did you find this deal and how did you negotiate it?

It fell into our laps as a person who just started in REI had his relatives facing the foreclosure. One of the 15 heirs signed a contract with another wholesaler but could not get the remaining ones on board. With the help of the family member, we got all 15 heirs to sign with us and said due tot he complexity of the deal, we were able to payoff the remaining debts and put some money in each of their pockets.

How did you finance this deal?

We wholesaled the deal to and end buyer so there was not out of pocket expenses.

How did you add value to the deal?

We helped the family clear the title issues, connected the family across the state with mobile notaries as well as traveling to help take them to notarize documents, worked through the title issues and provided value to another wholesale company to make money, who in turn found a buyer who was looking for a fix and flip deal in the area.

What was the outcome?

We wholesaled the property to another wholesale company, who then turned around and sold the property to an end buyer. The family got money in their pocket, we made a nice profit, the wholesale company made a nice profit and the end buyer got a new project to flip.

Lessons learned? Challenges?

I learned about title companies minimizing their risk by not providing a policy due to a variety of factors that make them feel uncomfortable. Due to the wholesale companies volume that the run though their title company (30+ per month), their title company took the risk and went ahead and provided a title policy which allowed us to close the deal.

@May Emery yeah the strategy can be time consuming at times but overall it helps us get the best deals at 10-20 cents on the dollar.  Since RE is my full time gig coupled with our efficiency in finding these deals and getting them done, our return on investment and time is pretty good as well as our exposure to market fluctuations being very low.  

We are looking at ramping up our mailing campaigns.  In my  market, I have found that even seniors with long time ownership have still wanted close to market value for their homes. We are more conservative than most investors because we use our own funds and don't take outside capital from lenders so we don't really like purchasing over 50 cents on the dollar.  We are open to looking at them.  How are you determining that criteria?

@May Emery I was doing direct mail for High equity in my area but I learned that my area has relatively well educated higher net worth individuals who don't sell at discounts.  From there I eventually switched to just searching the county records for legal issues.  

Recently as of January I have once again started sending out blind offers to vacant land owners and tax delinquent properties, but most of my properties have been obtained by searching the county records for properties tied up with lawsuits.

Investment Info:

Other other investment in Canyon Lake.

Purchase price: $12,000

We purchased two vacant lots that were land locked before the tax sale from the owner. The property required getting a trust certificate made by the trustee, paying cash for the properties prior to the tax sale and now were are working on obtaining a forced easement to gain access to the main road.

What made you interested in investing in this type of deal?

It was a property going to the tax sale that had good potential value once and easement was obtained as it would likely be considered a commercial property.

How did you find this deal and how did you negotiate it?

We found it posted on the tax sale list. I originally called the owners and offered them $500 over payoff where they eventually said no. Then I had my partner call them pretending to be a different investor and they negotiated a payoff where it was worth the sellers time as they are somewhat wealthy. They simply didn't want the property anymore due to the extensive legal issues that came with it and their father's past.

How did you finance this deal?

We closed on it cash for deed with our own funds.

How did you add value to the deal?

We are reaching out to the old original owner with the criminal history (involving ordering a hit on his partner which occurred unsuccessfully, an IRS agent and the mail man). However they are not responding to demand letters asking for an easement. We were going to force the easement through lawsuit but just learned that we can request a plat and work with the local utility company to gain an easement for much less via eminent domain on the property. We will then rezone it as commercial.

What was the outcome?

We are currently working on forcing the easement via help from the utility company where we will rezone the property as commercial and substantially increase the value by about 10X

Lessons learned? Challenges?

We learned about forced easements and how to utilize the local utility company to not only get it done, but also have it done for less than a lawsuit.

Investment Info:

Single-family residence other investment in San Antonio.

Purchase price: $75,000
Cash invested: $5,000
Sale price: $175,000

Contributors:
Logan Fullmer

Fix and Flip property in extreme distress where we ended up swapping properties with the seller as they didn't want the cash, they wanted rent ready property that could bring in income right away. We found a property they wanted, purchased it, deeded the properties over to each other and then rehabbed the new property for them so that it could be rented.

What made you interested in investing in this type of deal?

It was my very first deal and I knew based on the asking price from the seller and the area the home was in, it was a grand slam deal.

How did you find this deal and how did you negotiate it?

I found it via driving for dollars and sending out yellow letters. At first the owner asked for his price, then said that instead of receiving the money, he wanted a different property that was in rentable shape where he could collect income right away. We went out and found a property that he liked and bought and closed on it ourselves. Then we swapped properties by deeding them over to each other and the managed his rehab on the new property for him.

How did you finance this deal?

I connected with Logan Fullmer who is a local investor in the area and brought him the property as payment for his mentorship and coaching. He used his personal funds to buy and close on the deal.

How did you add value to the deal?

I found the deal in a super hot area of town and helped my mentor Logan with any and all communication and execution items needed to get the deal across the finish line. I stayed involved in the deal the entire time and made sure I contributed to show my value and desire to learn the industry.

What was the outcome?

We swapped properties with the seller and managed the rehab of his newer property so he could have a rent ready property. Once we closed, we listed the property and MLS and sold it to an investor. I ended up gaining a mentor and eventual business partner on the deal along with making a $10K finders fee on the deal.

Lessons learned? Challenges?

I learned how to manage a light rehab and foundation repair on a house. It was very challenging to coordinate the deal between the owner, his son (who was on house arrest in a halfway house in another city) and granddaughter and convince them we were there to help them get what they wanted and do it efficiently.

Investment Info:

Single-family residence wholesale investment in New Braunfels.

Purchase price: $73,000
Cash invested: $1,000
Sale price: $88,000

Contributors:
Logan Fullmer

This was a SFR property that needed a substantial amount of work. Based on the condition of the home and the ARV, I decided to wholesale it and contracted it for mortgage payoff as they wanted out and were scheduled to buyer their next home. I ended up assigning to and end buyer for $15K. I also connected the sellers with a realtor resulting in an additional 25% of the realtors commission as a marketing/advertising fee.

What made you interested in investing in this type of deal?

It was a good opportunity and allowed me to get my first solo investment with no money out of pocket.

How did you find this deal and how did you negotiate it?

Direct mail yellow letters. I analyzed the property and when I determined their payoff and my comfort with exposure, I anchored them with a purchase price below their mortgage payoff if I was to do the flip myself knowing they would say no, but I had built rapport with them and new I was still safe. I ended up asking to contract for payoff and they said yes as they just wanted out.

How did you finance this deal?

I assigned the contract but had some personal funds to cover some of the initial costs.

How did you add value to the deal?

I did not do anything to the property myself. I did clear the liens and paid for them in advance of closing in order to clear title to close which took some time as they were old liens.

What was the outcome?

I assigned the contract to a buyer for $15K over payoff as well as referred the sellers to an agent who represented them in the purchase of the new build home the were wanting to buy. Because the builder was running a 5% commission incentive for buyers agents, I received 25% of her commission which equated to a little less than $3K in my pocket.

Lessons learned? Challenges?

I learned you have to negotiate the right price up front and stick to the real numbers so as to not waste time on a bad deal. Also, I learned how to request payoffs on old liens and get them cleared in order to be able to close on the property.

@Josh Dillingham I completely agree with you.  It does not make any sense to me and he is hoping to find some solution that isn't there.  I just wanted to see if anyone had some other thoughts or if there is someone out there who would touch this sort of deal which I believe there isn't. 

I've told him that I would rather deploy those $ in my particular strategy that is working where I can create significantly better returns than having my $500K tied up for the long term even if I was to get 12%.  I'm getting better returns right now so it's not a street I want to go down.