All Forum Posts by: Wendell De Guzman

Brian P., I like your approach. By law, the code violations list is public information and one should be able to access it by asking their city's building department, or health department. It also took me a while to find the list because I was given the run around by the city but once I got the list, it was a goldmine.

I have response rates of 20-30% when I send direct mail to owners of properties with code violations.

Adam Spears, how much are the repairs? At 15% of ARV this could still become a deal depending on how much work it needs. Being on demolition list does not mean much if there is still a lot of time before it gets demolished. Also, since it's in a nice area, if the numbers are right and you work with the city building code enforcement department, this might actually be an awesome deal.

Chris Delacruz, you don't have a deal per se. However, as Jon Holdman said, you can make this into a deal through a shortsale.

You can get a discount on the first AND the second. You just have to ask. I can get the second mortgage to walk away for 5-10 cents on the dollar. And the 1st, can be discounted down to 80% if you know what you're doing. Hence, here's what will happen with a successful shortsale negotiation with the lenders:

1st Mortgage - $293K - shortsale down to $234K
2nd Mortgage - $63K - shortsale down to $6K
Total of Mortgage Pay off: $240K (75% of market value of $325K)

In addition to shortsale (which could take 3, 6 even 12 months), there is also a way to leverage on the foreclosure situation to generate cashflow from this house while you are negotiating the shortsale. But I need to know the details of their foreclosure (e.g., have they received the Summons to Foreclosure yet) for me to know what strategy is viable.

I have a wholesale deal - a retail space that used to be a Walmart in Dayton, Ohio. Walmart vacated it because it built a Super Wal-mart.

Here's the cool part: the property is listed in Loopnet for $3.5M but one of my partners got it sooooo cheap (power of negotiating). We can sell it for only $995K to a CASH BUYER. If you can help me sell it, I will give you a check for $99,000 at closing. No kidding.

Here are the details:

119,000+ square feet of retail space
Market rent is $3/sqft/year
Year built: 1991
Land Size: 10 acres
Sales Price: $995,000

Here's the picture:

A deal like this does not come very often but we need to move FAST. If you snooze, you lose. Call me at 714-270-6438 if you have a serious buyer and I can set up a showing asap. Since the price is so low, there's no negotiation, and again, this opportunity is only open to a CASH BUYER (so no financing contingency).

David Weiss, I agree with you. I have wholesaled houses myself and I have bought houses from other wholesalers. Wholesalers provide value in the marketplace and that's why they exist.

Here's an example where a wholesaler (me) produced a win-win-win scenario for the seller, myself and my buyer.

1. A seller called me based on my marketing. She said she does not want to make any money from the house. She just wants out of the mortgage.

2. I realized she was behind on the mortgage and I negotiated a shortsale. I got the house under contract for $71,000.

3. I then marketed the property and found a rehabber buyer for $98,000.After renovation, the property sold for $140,000.

The seller was happy she told me that now she can have peace of mind. She was surprised I was able to sell the house quickly and she did not mind me making a profit. The rehabber was happy because he made a lot of money and I created the value/equity in the house that did not have equity. And of course, I became $17K richer.

Wholesalers who are ethical and leave money on the table for their rehabbers deserve to be business. Wholesalers who are greedy will not be in business very long.

Cook County is terrible for landlords as they are tenant-friendly. As *********** said average eviction time is 8 months. If you want to invest in Chicago turnkey properties, insist on getting guaranteed cashflow or at least guaranteed 1 year rent and get rental income insurance.

Wendy BK, consider selling the properties that you have that have the lowest cash-on-cash return or properties that have the lowest ROE (return on equity). By doing this, you can generate cash that can be used to acquire properties with higher cash-on-cash return.

Debbie David, I have done a lot of subject to's.
The risks are:

1. Due on sale clause (can happen but not likely to happen): this means the bank can call the loan due because there is transfer of title

2. Tenant/buyer or end buyer does not pay and you're stuck with the mortgage payment (to me, this is the biggest risk which you can mitigate by getting a good tenant/buyer with substantial non refundable option consideration)

3. Property does not appraise for the Option price you agreed with your tenant/buyer (I stopped buying subject to's when the market went down precisely because of this issue)

4. There could be liens and other title issues (what if there is an unrecorded lien on the property). This risk can be mitigated by doing a title search and buying title insurance.

5. Liability issues - there is a possibility the seller can go after you, say if the mortgage payment is not made and the property goes into foreclosure. You don't plan in doing this but it can happen specially if your tenant/buyer does not pay the rent (and consequently, you can't pay the mortgage). This can be mitigated by getting a good tenant/buyer and keeping 3-months of mortgage payment as reserves. You can also get rental income insurance (not available in all states) and you can have up to 6 months of rent guaranteed.

Michael Quarles, thanks. I'm an experienced investor but I have learned something new from how you present to sellers. Cool!

Gwen Trotter, we do double closings and assignment of contracts all the time. Look for a different attorney. I have a good real estate attorney but he charges an arm and a leg. The good thing though is that he has helped us close every deal.