All Forum Posts by: Waylon Gates

@Account Closed It is always great how everyone has so much advice for a newbie without knowing enough to answer the question, I would not agree nor disagree with the advice given, but I would ask more questions.

What are you capabilities, (financial, time, etc) If you have a million dollars to invest it would be different advice than if you have $100.  I would tell someone who has a spare 80 hours a week something different than someone who is working 60+ hours a week.

Are you wanting to make quick cash, learn, start a portfolio of rentals, do you want to loan out money, do you want to build apartment buildings...  

Maybe you can give the community a little more detailed question and that would help us in providing more detailed answers.  

What type of business do you plan on doing. There are so many different ways to set-up your affairs. It really depends on what you are doing. There are paper trusts, land trusts, partnerships, LLCs, Corporations, IRA's, on and on..

@Sabrina Kane Go talk to a title or escrow company.  They will be able to guide you on your options and how they deal with this.  If there is a way I would expect them to be able to help.  You are guessing if you don't get a professionals opinion.  You may be surprised at some way of potentially dealing with this.  Alternatively if you don't want to hassle I have connections that would be happy to see this one through.

Hi Joshua,

I would say there are a couple types of questions.  Practical feasibility questions, and then questions of the heart (or drive).  

First someone needs to make the decision to do a deal and commit to it.

Second they need to overcome the obstacle that presents itself.  (This decision is a recurring one where they will need to continue to overcome challenges and setbacks)  

How much money are they able to invest in the deal.

How much time are they going to commit to the process (this will help define a timeframe in which to set the goal of closing the first deal).

What type of risk are they willing or able to stomach?

Who do they want to work with? This would include potential partners, mentors, agents, lenders, and really anyone in their network.

It is extremely important to decide on a plan or method and then set a S.M.A.R.T. (Specific, Measurable, Attainable, Realistic, Time based) goal that puts the ideas to paper and defines a path to get there, this must be written down.

Where they want to do their deal is good to think about, and obviously critical to decide on in order to get the first deal. 

When do they want to do a deal, in the next 24 hours (yes this is possible for almost anyone), or in the next 5 years?

The list could go on and on and would vary depending upon what type of 'deal' is being pursued, but in my opinion the most important decision is the following:

Why.

The why of what you are doing is the single most important decision that you can make. If you have the why defined clearly than the twists, turns, bumps and detours in the road will be taken in stride.  If you know your why than the who, what, when, where, and how will fall into place.

Hi Dustin,  Can you be more specific, this area is the subject of multiple day seminars.  Are there more specific parts of the note that you are wanting to vet or are you just addressing this in general terms?  I was thinking that you could be talking about the financial aspect of the note, the title of the property and position of the note, the collateral condition and or value, or the financials of the borrowers.

@Dakoda Spencer You are working on something that in theory sounds like it should be able to work, however there are a lot of moving parts.  I can say that almost for certain you are going to be violating some term of the loan that you are attempting to acquire.  Generally speaking you aren't supposed to tell the bank you that are wanting to do X with a house that you are purchasing while you are planning on doing Y.  What you are trying to do, in very broad terms, is what I do on a regular basis.  Here is the BIG difference: I use private lenders to create the loan and everyone that is involved has 100% disclosure about what is going on.  Traditional banks have a very complex and far reaching set of rules that they need to follow when loaning money.  Private investors on the other hand have very few rules that they need to follow in comparison. 

In numbers here is how my typical deal would work, for ease of discussion I am going to assume the FMV of the house to be $100,000.

I would arrange to purchase the house from the current owner (doesn't matter who it is, bank, probate, private party, tax sale, etc) for approximately $85,000.   I would find a private investor that would fund a loan for $70,000 on the house.  The buyer that I find would be agreeing to purchase the house for $110,000 (a premium of $10,000 to $15,000 is normal regardless of price.) I would have the buyer putting at least 10% down, in this case $11,000.    Then I would loan the difference of the $70,000 and the $99,000 ($29,000) to the buyer as a second position loan.  Now.... Let's do the math:

Purchase price         -85,000

Private Loan             +70,000

Buyers Down            +11,000

___________________________

Net of funds other than mine = -4,000

So I end up with a loan that has a face value of $29,000 that I only put $4,000 into.   The interest rate that I do on those is very modest for the $29,000 but when you look at the return on what I have into it i am closer to 60%. 

This is not the easiest deal to structure and explain for most investors, for others it is even more difficult to understand.

The reason that I went through this exercise for you is to make this point; You need to start with a more experienced investor and work your way into REI. You are attempting to basically get around the system in such a way that is borderline loan fraud in my opinion. I realize this is a fairly harsh observation and may be hard to take, but if you want to get into REI and be successful at it you need to crawl before you walk. Based on the conversations here and the questions that are being asked I am seeing that you are needing to start with either a more simple deal, or a partner with the type of experience to guide you through the process.

I have found that most successful investors are happy to share their knowledge and help a new investor that is willing to put in the time and do a lot of legwork.  They are normally interested in helping others and sharing their knowledge and they understand that there is way more than enough to go around. Others have recommended this and I strongly agree.

Most importantly, don't give up and don't get overwhelmed with any of this and keep learning.

They are probably just using the down payment to pay the realtor, and besides what difference is it to you as long as they accept your offer. 

@Par Attaran dont listen to this guy..   clearly doesnt know what he is talking about.   Beware of any advice like this.

edit.  he fixed it.

Yes you can, the owner has full right to sell the property until the gavel drops. 

If you were buying the option and then leasing it I would say a sandwich lease.  You could just get the contact all set-up and then assign the contract as well.  Like I said there are so many ways.