All Forum Posts by: Simon Campbell

Sweet! Great job! Thanks for letting us know what happened in the end. Sounds like it turned out to be a very profitable investment. I'm assuming you plan to take out the over-sized A/C and heating units and sell them while replacing them with more appropriate units? 

@Wayne Brooks 

On Jan 7th the question of the legal description was answered. Here is the quote:

Originally posted by @Marcus Kennedy:

...So this is a foreclosure. The house sits on lots 13-16. Apparently the bank only foreclosed on lots 13-15 and the people getting foreclosed on still own lot 16. There is part of the house and the driveway that sit on lot 16. I guess I would have to buy the home from the bank(Lots 13-15) and then purchase lot 16 from the people being foreclosed on.

A lease option is a really good safety net without opening the door to be taken advantage of. The lease gives your brother the time to get himself situated financially in order to qualify for a loan. The option allows him to build equity - or essentially a down payment. 

Meanwhile, you are both in a legally binding agreement without any handouts or room for hard feelings. 

The lease agreement can be a standard agreement you can get online for your state. In fact, you can get lease option agreements online as well - though you might want an attorney to draw it up just to make sure everything is done properly. 

I would make the offer as clean as possible. Close as soon as you are comfortable. Make sure you get a home inspection completed. Do not try to get the seller to pay closing costs. REO, especially, hate that and often that is a deal killer. The greater the market discount, the less they are going to throw in "extras."

The best way to make a decision is to create a spreadsheet analyzing your cash flow with and without mortgages over, say, the next 5 to 7 years. Factor in a property appreciation of 3% per year (conservative but at least keeping with inflation).

Eventually, you are going to run into problems getting other mortgage. Honestly, I would max out as many mortgages as I was traditionally able without taking on too much financial risk. Then when the banks start fussing about jumbo loans or 6 months of reserves, start paying off the mortgages. Once one is paid off, invest in another. 

Great retirement plan!

Oh, but what if the owners of Lot 16 know what they have? Unless they live under a rock, they are going to know there is a broken chain in the title and they will know you are caught between their rock and a hard place. You cannot clear the title or the encroachment without that lot. 

I would first find out what is the true market value of the property assuming it is vacant. Would it be a buildable lot on a stand alone basis? Talk to an experienced real estate agent here to get an accurate idea of the true value.

Now, you can offer whatever you want, but I would recommend being prepared to pay full market value for the lot and then nail the bank for a big discount on their problem property. I think you will be able to make a much better case that way.

Sure, you could use non-traditional financing, but without a steady job, how will you afford the repair/renovation/utilities/taxes/insurance/lawn care etc etc etc. Investing in real estate is a great way to build wealth, but unlike wholesaling, fix and flip takes money to make money.

MLS systems that I have ever worked with are not even whole state systems. Often they will only cover one or two counties. You would need to see if the MLS would offer reciprocal access to others in the state. To access other in-state MLS systems, you are going to have to register with each, pay the annual membership fee plus monthly account dues.

You will definitely not get access to other states. Your best bet here is to team up with real estate agents in the areas that you would like to buy. You could offer them a flat fee for their assistance or even split commission on your purchases. 

Skip the college class. It will teach you the technical book knowledge but none of the practical side of real estate. If you insist on taking classes, got for your real estate agent license. 

But, first, I would recommend you figure out what you want to do in real estate and then use BP forum to read about how to go about doing it. From there, we are here to help you and advise you along the way. 

I agree with the comments here. Before moving on to other properties make sure of the following:

(1) All your current properties are generating cash flow - money in your pocket every month after setting at least 5% aside for capital repairs, 10% for vacancy and paying all other expenses including mortgages. If not, sell the non-performer and replace it with a better investment.

(2) Make sure that you have 6 months of living expenses set aside in savings. Make sure that you have a capital reserve fund that is large enough to pay the mortgage on all your properties for at least 3 months. This creates a safety net for a worst case scenario.

Once that is established, then continue to use leverage to purchase good investments - but be patient. Make sure they are good investments and not just any investment. Because you will quickly reach the 10 loan limit and that's when the awesome investment passes you by.