All Forum Posts by: Wendell De Guzman

Thank you Wayne Brooks - I will keep that in mind and ensure I am aware of all the liens on the property.

Thank you also K. Marie Poe for your advice on what to watch out for. My knowledge and experience about foreclosures and the different stages in court will come in handy.

Bill B., sometimes being an introvert is BETTER for a real estate investor. I have seen introverts out-negotiate extroverts because introverts are less likely to name the first price or have the "foot-in-mouth" disease or "diarrhea of the mouth" syndrome.

If there is a will, there's a way...regardless of your personality.

P.S. I am an introvert, highly analytical engineer and I have done over $13M worth of real estate transactions in the past 10 years.

Mark Ferguson, I agree with your calculation.
Your CCR increased because you have less cash invested in the property even with the lower cashflow.

Amanda Felton,

The Cash on Cash return can be calculated if you know the mortgage payment on the house after you get the loan. Also, you have to factor in operating expenses like vacancy, repairs, replacement reserves, etc.

Here's the formula for Cash on Cash return:

CCR = Monthly Cashflow x 12 DIVIDE by Investment

Investment = Acquisition + Repairs (if you are buying it cash)
OR
Investment = Downpayment (on the loan - since you are getting a loan)

Monthly cashflow = Rent - Operating Expenses - Mortgage payment

I am an experienced wholesaler but I have not wholesaled land before.
Someone approached me with a land development gone "bust". The developer did not finish the project and ran out funding (he prioritized other development projects).

The land is in a good area of Chicago and I believe there is potential.
However, I don't want to jump into the deal without knowledge so here I am asking you, my fellow BPers for your help.

1) How do you evaluate a development deal, i.e., what's the project worth and what's a good price for a developer-buyer to take over the development or buy the land from me?
2) I plan to put an option to purchase on the land at one price and sell the option at a higher price. I will put minimal option consideration to control the deal. Is this the best way to control the deal?

Thanks in advance!

Alisa Markwith,

1) Your form is too overwhelming. Just ask for their email address, phone number and best time to call them. Then call them and ask them the information you need.

2) Here's a reality check: 130 letters is not enough in the preforeclosure list. These people receive 50-100 letters every week from bankruptcy attorneys, foreclosure defense attorneys, shortsale negotiators, real estate brokers and real estate investors. So far, our stats show a paltry 0.5% response rate. This means to get 1 response, you need to send out 200 letters.

An alternative is to send letters to a different list like out of state owners, probate or code violations. They are harder to get and therefore you have less competition and higher response rate.

3) Buying preforeclosures "subject to" won't work unless you're willing to pay for the seller's backpayments and make the loan current. Shortsale is the solution.

Tim Czarkowski, my real estate partner has bought several HOA foreclosures in FL and making a killing on it. However, with the "speedy foreclosure" law in FL, the ROI on these types of investments might be in jeopardy.

Jason Patterson, a simple 1-page purchase contract with purchase price being the real estate taxes due plus closing costs. Make the purchase contract contingent to the following:
1. Clear title, no liens or encumbrances other than the taxes due
2. Satisfactory inspection of the physical condition of the property

Then involve an attorney or title company (whichever works for your state.

Eric Johnson, don't lie, cheat or steal. If the seller wants you to be party to any of that, move on. Having integrity is a good business strategy in addition to helping you sleep well at night.

I agree with Steve - maybe an installment sale might satisfy her needs without you having to "fudge" the numbers.

Yes Scott Anthony and Paul Zajic, you need to have the property under contract (either Purchase Contract or Option to Buy Contract) to be able to sell it...or you are a licensed real estate broker/agent and have a signed listing agreement.