All Forum Posts by: Account Closed

Sundar, that sucks to hear that. There is no way to really appraise gold because of the vast difference between products. As I mentioned, the quality and purity of the gold is a significant factor. Without consistency across the gold product line it is very hard to appraise. This means there is a very good opportunity for arbitrage and you can see that in a lot of those "we buy gold" companies. These companies do not give the true value of the product but can offer those in need cash for their jewelry, albeit for probably less than they are worth. I really don't know how these "we buy gold" companies make money or how their business model works, but I bet that they have some extremely clever way of arbitraging the jewelry of those in need vis a vis their knowledge of futures markets. Does anyone know how these companies work!?

Just don't mail your jewelry to glenn beck.

Sundar, It is very hard to use gold as collateral because it is easily faked. As you noted you will need an appraisal, however I doubt a bank will accept jewelry. I am not really familiar with gold as security for golds, but I can tell you about gold assets in the futures markets from my fund days, and it may be able to help you.

In futures markets you can take delivery of gold however it is very difficult to use it. For example, if you take delivery of a gold contract, they will generally send it to a bank and you will highly discouraged to take it out, mainly because gold is so easily manipulated (Gold bars can be melted down and you can put some type of steel in the centre). If you do decide to take the gold out of the bank, in order to put it back into the bank it will have to get it appraised.

Thats the thing about gold, the important thing is the purity of the gold and jewelry is rarely pure because the softness of gold means you almost have to mix gold with another metal in order to make jewelry. However, something tells me you are not talking about gold bars, or are you?

FYI I am not an expert in gold, its just a few things I do know about it. The only experience I have with gold is in trading the futures contract.

Jerrold, Here in Chicago there are a lot of big companies that somehow have relationships with the city to take control of properties that have violations as the receiver. For example, check out CIC. They are a legit company with a long history. The word on the street is that in the past, they used to report violations of properties themselves to the city and when the sheriff came to evict everyone because of dangerous conditions they were first in line to take control. A lot of people in the community don't like them because they come off as just trying take control of properties. However, they now do financing for small-medium apartment buildings for individual investors. So they take control of property from the owner, the owner forecloses, they are in receivership control and then they also sell the property as a broker and provide financing. Pretty genius and amazing actually, especially since they have played a role in fixing up all those dilapidated apartment buildings that attract all kinds of vagrants. If you notice, half of Douglas Blvd in North Lawndale have "FINANCED BY CIC" signs on them.

If you are interested in brokering these kinds of properties, it is very difficult because bankers base a lot on reputation and track record. However, a good book I have found onthe topic is "REO Boom: How to Manage, List, and Cash in on Bank-Owned Properties: An Insiders' Guide for Real Estate Agents" by Tim and Aram Shah. You can get it on Amazon Kindle for like 10 bucks.

Good luck.

I think for those looking to find asset managers an important thing to remember is these are people too. They cannot take a constant barrage of cold calls from real estate investors - they wouldn't get anything done! Oftentimes, an asset manager will go out of their way to stay out of LinkedIn and other online things.

The truth is the way to get to know asset managers is through the old way - friendships and relationship building. If you walk up to a person and the first thing you talk to them about is YOU, or the real estate investment that YOU want them to give you, then the asset manager probably isn't going to be interested in talking to you. The bank is taking losses, the guy is managing $500 mil in "Special Assets" and you want him to give you real estate to buy? Who are you again?

Get to know these people! Get to know their friends, through social organizations, through doing more deals, through drinks after work and lunches. Word of mouth, personal referrals and relationships work better than cold calls and emails. Someone always wants to do deals with people they like, so go out there and be useful and likeable! Its not Chicago politics, but is just good business. Be genuine to the people you meet and they will give you a shot.

I would do rehabs of multifamily property and holding for rental. I am doing this now (but not with my own money - don't have it). The cheapest properties are those that are the most distressed. Buying gut rehabs making them nice and renting them out is what I would do. I currently do a lot of work in lower income neighborhoods, including what some on this board degradingly call warzones. Section 8 rents are very high, sometimes 5-15% higher than market rents. We manage property in house and have a good team and system for getting it done. After gut rehab our target caps are 15-25%. I would not even use leverage.

Not surprising to me that you are having difficulty getting in touch with the owner.

There are a lot of ways companies are acquiring property and they are often big funds and other entities that own property enmasse. For example, I know of a small real estate firm that recently bought a portfolio of 40 mortgages from a bank, which were all owned by one person. The owner was in foreclosure as stood to loose everything. The bank already had an assignment of rents, and the firm ended up negotiating with the owner, who was in bankruptcy, to get all the deeds in lieu. The firm however did not file deeds in lieu with a number of properties but continue to collect the rent. On paper, the owners of the properties are still the old owner. The reason they have not filed the deeds in lieu are because they don't want to take responsibility for the homes that are in bad shape. I was talking to one of the principals of the firm and he said he is worried now that there are new laws on the books that require the mortgage holder to perform some maintenance on vacant properties. I'm not sure if they intend on on filing them ever. They have to eventually if they want to sell them.

In this situation there would be no way you could find out who the owner is. You could call the old owner and he would give you their number, or the bank would probably tell if you called.

The point is just because its not recorded doesn't mean anything. These days its a wild west game. Lots of times no one really knows who owns what.

Another issue in this vein that could be a problem is in the situation of a tax sale. If a property that has had its taxes sold has passed its redemption period (2 years in Illinois), the tax buyer has the right to take possession. Nowadays there are large entities like hedgefunds that will bid the heck out of those tax sale auctions. However, we have been finding that many properties that are past their redemption continue to sit vacant. A lot of funds are not excercising the right to take possession of the property. In this situation, who is the real owner? The property is vacant and the person that lived there is long gone. Even if they lived there it is past the 2 years to redeem the property. The hedgefund that owns the taxes doesn't want the property and won't redeem. What happens then? It can be confusing. Good luck!

QE3! QE3! QE3! Let the good times roll!

Can I ask what is defined as really rich? One of the first posters said $10mm cash on hand, what about Mitt Romney rich? In the hundreds of mm? 20-50mm per year?

Churn em and burn em!! Pimco is a huge and successful fund but is not always right. Earlier this year they got burned big by shorting US treasuries. I am sure the losing trade did their investors a lot of good. There are a lot of people who are all about the inflation, like the Pimco fellas. They were wrong and Pimco is back on page with the Big Ben Bernankie. As they say don't fight the fed. Let the money flow and the good times roll!

Thomas, I just acquired a portfolio of 15 properties in Cicero and Berwyn. Its not really a great neighborhood but its not as bad as the West Side. These are where the deals are, if you are buying property for rental in nice neighbrhoods in Chicago you should be looking at 7-10 cap. In middle class neighborhoods you can expect 10-15 cap. In bad neighborhoods we are doing deals at 15 to even 35 cap. Remember you make money on the buy, not on the sell. Assuming no capital improvements, both units rent for 580, assuming 4k taxes (Cook county), 1k annual repairs, and vacancy, you are looking at about a 10 cap or so. This is not a bad deal really... though you can get much higher yields in the same neighborhoods. Craigslist is not the place to look. For example, who is putting up the ad? Homerun Real Estate? Are they an agency? Are they wholesaling it? Anyways good luck!