All Forum Posts by: Andy M.

Yep, free rental and an extra 2k. Again, small numbers I know, but still cool.:)

I know for sure that these guys aren't actors, but they definitely are hamming it up for tv. Crews wearing hard hats, come on. Like I mentioned earlier these guys are in my market. I've met them on multiple occasions over the years and I've never been very impressed. I don't know about everyone else on BP but it seems to me that most foreclosure auction guys are the same. They seem to have this eliteist attitude about real estate. They walk around with this cool guy attitude because they pay cash at the auction, big deal. Every time I go down to those auctions chasing a property those "regulars" pay way more than I would. They seem to think it's okay because they have there own cash and they don't pay interest/hard money costs. Ever heard of opportunity costs guys?

Sorry for the rant but my distaste for auction buyers attitude has been pent up for too long. This show making rock stars out of two over dramatic clowns in my market pushed me over the edge.

Anyone else ever see the foreclosure auction regulars attitude or is it just my market?

Just wanted to share a small success story with BP. I recently bought a REO condo as a rental. I had a hard time talking myself into it because I HATE condos but alas, I did it. Here is the brief story:

Condo is a 900 sq ft 2/1. The bank fixed it all up (carpet, paint, etc.) so it was ready to rent. The list price was $41,000. I negotiated the bank down to $31,000 and put it under contract. Once under contract I did a little more research and found out the going rent wasn't $750 like I thought, it was $600-650. Based on this and a few other minor reasons I came back to the bank and said I needed it for $25,000 in order for it to meet my rental criteria (ROI). My agent passed the information to the REO agent (in his office) and the agent felt pretty sure they would say no. I didn't hear anything else for a few days and asked my agent about my earnest money so he prepared an official cancellation form. Once the REO agent passed it to the contact at the bank they told her to ask if I would take it for $26,000. :lol:

I couldn't refuse that so I bought it with cash and just planned on renting it for a 15-17% return (numbers below for the nerds):

Rent $600 (went below $650 to get good tenant)
-$97 (HOA)
-$25 (insurance)
-$50 (taxes, which I appealed with my HUDs so it might lower :lol: )
-$80 (vacancy, misc repairs)
-----------
$348 / m net so approximately 16% on my cash, not great but okay.

Then I found a local credit union that will do a 65% equity line non owner occupied with no seasoning at prime plus 1.5% (so 4.75% currently). Appraisal came back $43,000 (which is accurate for the complex). So 65% of 43k equals $27,950.

So there you have it, I know the numbers are small but I thought it was amazing that I could pull this one off given the current lending environment. Free rental in my book because I still have full access to use the 26k (er... 28k). :)

I love the idea of owning a fleet of rentals just like this with equity lines for access to money for flips or HML's.

Anyone else done this or employ this strategy?

Now that a few have weighed in I'll give my opinion. I agree with Joe, way too much drama. Plus these guys are never on the projects. I laughed so hard when they showed these guys with brooms and paint brides in their hands.

I watched it and I have a biased opinion as I'm in their market and know these guys. What did everyone think? Better, worse, or the same as every other flip this house show?

Jeff, $1,000 earnest money is pretty common. Deed restrictions happen, but not all the time.

Nathan, I think UBIT still applies, even in a Roth. I currently have a SD Roth and I almost bought an owner financed deal with it. The seller was willing to carry the whole thing non recourse with a 10% down payment but according to my administrator it would have been subject to UBIT. I ended up doing the deal anyway just not inside my roth. Unless you can pay for the whole property, or a large amount with you IRA it doesn't seem worth it. Currently I use my IRA and my wife's as participants in HML's. This creates a good return and allows the account to grow. I also plan on wholesaling with my IRA to grow it quickly (optioning property with IRA and selling the option to end buyers, option route gets away from UBIT).

Why not do some good old conservative HML (combine with others if needed to get into better loans) and leave 5k or so liquid and wholesale properties with options. So instead of filling out a REPC and giving earnest money you fill out option paperwork and pay them an option fee out of your SD IRA. This way $500-1000 of option money can turn into a tax free 5k or so. Lend out your wholesale profits, rinse and repeat.

Save up enough to pay cash for your house then get an 80% equity line on it. That way you can spend your cash and still have your cash. Get some room mates for a little extra rental income while single.

Will is right, just put in the time and you get it for free. I do this about once a year. Get on the MLS and search for the big REO agents cash sales, write down the date sold and address. Then go to the county recorder to check who the buyer was. Note the ones who have bought 4+ properties this year then go find them. Hint: go to their last purchased property, if they aren't there then their crew will have the bosses number.

This is also a good way to see who experienced cash buyers use for private money, you might be able to call up their lenders as well. You will definitely learn a lot from this exercise and I recommend all new investors do it. You might even find a local investor that sees you work hard and are serious and they might just mentor you.