All Forum Posts by: Mike Neubauer

I have no problems getting a sale date postponed, and having a sale date is not too late to get the short sale going. I have not had too many problems getting the BK court to release the property for short sale when the owner prefers that. But my question is when someone calls on my marketing and says, "I'm already filing bankruptcy so my credit is shot, what benefit is it to me to do a short sale?" How do I respond?

Thank you for the idea that if they file the BK just for the sake of staying the auction for a few more months, then the deficiency judgement is still a selling point.

I have recently been getting a lot of calls from people that have an upcoming foreclosure date, and are in the middle of filing bankruptcy. They say they would do a short sale if it would benefit them. The points I make of waving a deficiency judgement and less severe hit on credit report are mute to them because I believe the deficiency will be waved as part of the bankruptcy and their credit is shot with bankruptcy anyways.

Any pointers on some benefits to explain to them to make them want to do a short sale?

Also, is there a chance the deficiency judgement will not be waved just because the property is part of the bankruptcy?

A HUD we just bought was 75% of asking price. When we got the appraisal from HUD (after bid acceptance) they had a BPO on it of 86k. We bought it for 59% of that at $51k.

Listed on 12/17/12 at $77,400
Dropped 1/8/13 to $ 68,800
1/9/12 We bid $50,754, they countered at $51,240 or 75% of the $68k.

*These are purchase price amounts, HUD netted slightly less, and when HUD counters they counter what they will accept as a net, which was about $48k on this one.

A few quick ideas:
If you can manage to purchase the real estate with just your funds and possibly a non-resourse loan if needed, then let your friend manage the project. Then do vice versa where you manage your friends project that he purchased with his IRA-LLC. This solves the problem of any question about prohibited transactions. You just cannot take any money from the profit of your LLC's project and the loan must be non-recourse. Depending on your experience level, some hard money lenders will do non-recourse.

Also, if you plan to buy and hold vs. fix & flip, you will want to check with a real estate tax accountant. Buy & hold properties have many tax advantages in themselves as the tax code greatly benefits passive income. By buying your property in an IRA, you lose these benefits because you are investing in a tax deductible investment inside a tax deferred account. 2 tax advantages = a tax disadvantage.

Let me give you a rough example: I rent a home that cash flows $500/mo. After the many deductions of owning an investment property I should be taxed very minimally on this income of $500 per month. I may have to pay taxes on $100 per month at the most at the end of the year. A good real estate accountant will be able to find enough deductions to defer most of the income. Therefore you are making $500 per month but really not paying taxes on it. Now if you used an IRA: You would make the $500/month cash flow. This amount is tax free anyways because it is inside an IRA. You now lose out on the deductions allowed to you by owning investment property. You still have the same costs of managing and upkeeping the property but lose the deductions they offered owning it outside an IRA.

Fix and flips in an IRA are a different story because the profits are not passive income and the deductions of fix & flips will not come close to the profit made on 1. Therefore by fix & flipping in an IRA would be a great tax benefit, but you can't touch those chunks of income until you retire.

Sorry for the long and probably confusing answer.

The quickest way is to have your realtor pull a 1 line CMA report on all of the 3 and 4 bedroom properties in that area. You can look at the active, pending, and sold properties in the past 6 months to see what is selling best in your area. Look to see how much more (if any) people were paying for 4 bedrooms. Also, look to see which properties had longer days on market. This should give you a good idea. It doesn't matter what you prefer or any of us, what matters is what the potential buyers in the area prefer.

I saw you already made the decision, but maybe this idea will help a little in the future. It is also an easy way to double check your realtor to see if 4 bedrooms are truly selling for more.

Quick easy way to find some possible phone numbers is whitepages.com. I would also send a letter in the mail, and possibly check some social media websites to see if you can track them down. If you are feeling real adventurous, go knock on the door and introduce yourself. The more ways you attempt to contact them, the better chance you have of success. Just make sure you have a plan of what you can offer them once you do get a hold of them. You don't get a second chance at a first impression.

Call a few contractors out for estimates. We just re-sided a house in NW Indiana. It is 960sq ft. and had cedar wood on the front and aluminum on the other 3 sides. Total price for tear off, put up new vinyl, and wrap windows was $3750. Both above answers are very correct, but you can find some better deals if you do some shopping of contractors. Just make sure you are getting quality work. Ask for some references on other jobs the contractor has done. Now is the time if you are in a cold state because most of these companies have little work around this time.