All Forum Posts by: Troy Gandee

@Charles Carillo You hit the nail on the head. There's a certain guru who has been enchanting quite a few people in my market lately. I don't doubt his sub-to and similar content is valuable, but the novation stuff is a problem waiting to happen.

In contract terms, a novation is just an amendment or change of contract that all parties agree to, so calling these complicated arrangements "novations" is questionable to begin with.

This particular guy is also teaching methods that are blatantly illegal in some states. Net listings are one of their tactics, which are very unlawful in my state. I was also told by one of their students that they've made agreements and contracts that are valid in "all states". That's virtually impossible. Especially regarding real estate agreements. Laws, specifically real estate laws and terms are different in most states, so claiming anything is "legal in all states" is reckless at best.

I was approached recently by one of these students on a deal they want to least. I ran the situation by 2 of the biggest RE attorneys in town to get their opinions. Both said these things sound like fraud lawsuits waiting to happen. The term "equity stripping" was used more than once. 

My state is also cracking down on assignment of contract as we speak, so I don't think these "novations" have a half life. I've been doing this stuff for 10 years and had never heard that term until this year. It seems to me to be language intended to confuse and deceive the seller. 

@Alon A. You should be good then. It's 50% of the improvement value, so as long as you're under that, you shouldn't have a problem with it. 

@Alon A. You should check with the County to be certain, but it's just the house, not the total value. Check the tax record to see what the assessed "improvement (structure)" is as opposed to the land. They are combined for a total taxable value. The County is only concerned with the improvement upon on the land in this case. You'd be surprised how little a home in poor condition can be valued by the County. You can always use a recent appraisal to challenge the assessed value, but it really just depends how much work the home needs. 

Congratulations, @Jordan Dixon. We run a big REAI in Charleston called REI Central. Feel free to check it out if you'd like to meet more investors in the area. We meet the 1st Thursday of each month.

@Alon A. Flood zones are very common in SC. It's not necessarily indicative of a house that floods. It just means in a geographical area that could flood. The flood rating is based on the likelihood of a flooding event.

The more important thin to be aware of is the 50% rule with the County. If you spend more than 50% of the assessed or appraised value of the home (not the land, just the home) on renovations, you will then have to adhere to the contemporary FEMA construction standards, which usually means elevating the home. There can be exceptions, but it depends on the home and the area. You should call the County's permitting office and ask them about that before you proceed. Cheap deals frequently encounter this issue because the rehabs are to extensive.

@Sydney George We're an attorney state. We don't use title companies, but use attorneys to facilitate our closings. 

In the Charleston area, I typically use John Florence w/ Florence Law Firm or Mark Weeks w/ Weeks & Irvine.

I will caution that the real estate commission has recently stated that anyone assigning contracts must be a licensed agent in SC and also have a signed listing agreement with the owner of record. I don't believe they've started policing this yet, but I think they eventually will. You may want to take that into consideration for your exit strategies.

@Pat Lulewicz I have one in N Charleston and one on Seabrook Island. I've brokered them all over the market. Mt Pleasant is possible, but they have a limited number of permits they approve. I've heard they plan to further restrict some time soon. Hanahan has no regulations, as far as I know, but I'm sure they'll write some up soon.

@Christoph Krekeler is one of our agents and a skilled investor, if you'd like him to take a run at hunting some down for you.

@Lindsey Johnson You can buy a one time ticket for $40 or a yearly ticket for $250. The $250 is by far a better value.

@Pat Lulewicz @John Underwood is correct. Each individual municipality in the Charleston area has their own rules and regulations. The majority of them now have STR requirements to secure a permit. Some are much more stringent than others. It really depends what areas you're interested in and what your budget is. There are a still a couple of areas that do not have permitting criteria, but it's only a matter of time until they're regulated, as well.

@Lindsey Johnson Check out REI Central. We have a big networking meetup the 1st Thursday of each month and them smaller, more focused groups the other Thursdays of the month. You'll meet most of the active investors in the market there.