All Forum Posts by: William MacBride

This is kind of the first potential deal me and my girlfriend have run down and are trying to decide if its a "good deal." I'm just putting it out there for anyone to comment on in whatever way they see fit because I'm so new to real estate.
It's 2 houses in a not that nice neighborhood in Buffalo, N.Y. They are "two detached houses." one has 2 bedrooms and 1 bath. The other has 1 bedroom, one study of some sort, and 1 bathroom. I haven't seen them yet but they must be pretty tiny. He wants 18k for both of them together.
He says he rents 1 for 280.00 a month (the 1 bedroom), and has someone lined up to rent the other one for 500.00.
The PITI on the 5 year (seller financed) note plus the utilities he pays (water and garbage) comes to about 450.00 a month. The two rents together come to 780.00. So positive cash flow of 330.00.
Its near a state university (buff state), but is not exactly in a nice neighborhood. It looks sort of like we'd be in for slum lord hassles to me, but I donno. It's just a low income area, not exactly a slum probably.
My girlfriend says zillow.com gave a FMV of 39 grand. It seems unrealistic to think we could even flip it for 30 grand if this guy's willing to let it go for 18k. Why would he do that?
Haven't done any comps on it yet.
any thoughts?

Will

in a trust deed foreclosrue sale, does the trustee get to keep the equity already in the property after paying off the defaulted loan? in other words, does the trustee just try to get the unpaid loan amount for the property or try to profit? Or turn the profit over to the lender?

for example: Scott Spivey takes out a loan on a trust deeded property, with a market value of 100k and scott took out a loan for 100k. He defaults after paying 20 k of it off. So the trustee exercises his sale right and sells it for 100k. He pays off the lender the 80k. What the happens to the 20k left over?

Will

In an assign deal does whoever's assigning the contract to the end buyer always get the contract first and include the "or assigns" verbage when he signs?
I seem to be reading in some places where the middle man doesn't even sign that first contract - it's between the seller and the end buyer, and the investor (or whatever you want to call the middle man), gets put down as a "line item" and gets an "assignment fee." How does the middle man get an assignment fee if he didn't put the house under contract himself? I realize this is just a simplification of the paperwork but why is it called an assigment fee if, technically, a contract was assigned from the midle man/investor to the end buyer.
Can anyone clarify any of this - whether it's legal, what kind of negotiations have to happen between the seller and the middle man/investor, and what forms you would need?
Actually if anyone could tell me what forms you'd need in the first case also I'd appreciate it a lot.

note: this is the paragraph I read in wikipedia in their article about double closing:
"To simplify the transaction, the middleman may make one settlement statement directly between the purchaser and seller and take his profit as a line item on the settlement statement. This line item is usually on the purchaser's side of the statement as an assignment fee. This may create a problem for the middleman, as assignment fees may be taxed at a different rate than short-term capital gains."


thanks,
Will

ah - See I didn't even know that. Yeah it did say HUD-1. I thought it was some kind of misprint. Thanks a lot Jon!

this paragraph is from an online article on wholesaling on ehow.com (which I find a very good, distilled kind of info resource by the way.)
"One of my investors wants the deal for $200,000 so I execute my option, then I assign my contract to the end investor placing myself on the HUD as a Realtor getting paid $7,500 with the remainder going to my Property Locator for his option fee. If your not a licensed agent, you go on the HUD as receiving an assignment fee."
The part that confuses me is the "go on the HUD" and "placing myself on the HUD" business. This is probably some really basic thing but what is the department of housing and urban developement doing in this paragraph? Does every real estate deal get "registered" with the HUD or something, as to the type of transaction it is and who the principal interested parties are and all that?

Will

I thought maybe this was too general or basic for the marketing and nobody answered it so I re-posted it here. It may seem general but if somebody could just say a word or two about the topic to give me a better orientation I'd appreciate it.

ORIGINAL MESSAGE:
I really need to get something fundamentally clear here. It seems like most of these posts talk about getting some property "under contract" and then finding a buyer from your buyers list. you then sell it to them in various scenarios at a higher price and make profit.
It seems to me this is essentially whats known as a "flip." I just go done reading an article that said basically that the idea of a flip is the idea of a "no money down" type deal, where you double close and all that, using the money from the resale to buy the house you're selling. It was saying that in the real world this is hard to do and can even get you in legal trouble for acting in one way or another as an agent. I myself am just having trouble seeing how or why there should be a "middle man" in the equation. so: DOES THIS OR DOESN"T THIS WORK IN THE REAL WORLD? How common is it? Why does there need to be a middle man and how easy is it to get a house "under contract" with the entire thing financed (by either a bank or some private lender)?
A case in point: My girlfriend just got hold of some guy in a town a fair distance away trying to sell his house. It's a nice looking victorian but for some reason he hasn't been able to sell it. She said he said he'd "give her 3% if she found a buyer." That definitely sounds like it'd be that illegal brokering concept. So we figured, ok just sign a purchase agreement, then get a buyer to buy it for more, and profit. This just sounds too easy somehow. this is a hosue she found on craigslist. Why does a buyer even need to go through her, having marked it up?
It seems like when people are putting together "buyer's lists" they're mainly talking about lists of investors, not end buyers, falies, etc. Why would an investor want your property when they can just find properties without a middle man? It seems they'd be the savvy ones, wanting to cut costs as much as possible.
I hope you can just get the general idea what I'm asking here. This whole type of deal just doesn't make enough sense to me in a certain way. WHY THE MIDDLE MAN?
Any replies that can elucidate this appreciated.

Will

I really need to get something fundamentally clear here. It seems like most of these posts talk about getting some property "under contract" and then finding a buyer from your buyers list. you then sell it to them in various scenarios at a higher price and make profit.
It seems to me this is essentially whats known as a "flip." I just go done reading an article that said basically that the idea of a flip is the idea of a "no money down" type deal, where you double close and all that, using the money from the resale to buy the house you're selling. It was saying that in the real world this is hard to do and can even get you in legal trouble for acting in one way or another as an agent. I myself am just having trouble seeing how or why there should be a "middle man" in the equation. so: DOES THIS OR DOESN"T THIS WORK IN THE REAL WORLD? How common is it? Why does there need to be a middle man and how easy is it to get a house "under contract" with the entire thing financed (by either a bank or some private lender)?
A case in point: My girlfriend just got hold of some guy in a town a fair distance away trying to sell his house. It's a nice looking victorian but for some reason he hasn't been able to sell it. She said he said he'd "give her 3% if she found a buyer." That definitely sounds like it'd be that illegal brokering concept. So we figured, ok just sign a purchase agreement, then get a buyer to buy it for more, and profit. This just sounds too easy somehow. this is a hosue she found on craigslist. Why does a buyer even need to go through her, having marked it up?
It seems like when people are putting together "buyer's lists" they're mainly talking about lists of investors, not end buyers, falies, etc. Why would an investor want your property when they can just find properties without a middle man? It seems they'd be the savvy ones, wanting to cut costs as much as possible.
I hope you can just get the general idea what I'm asking here. This whole type of deal just doesn't make enough sense to me in a certain way. WHY THE MIDDLE MAN?
Any replies that can elucidate this appreciated.

Will

I havent gotten to read and figure all this stuff out yet but can you tell me what the acronym "JV" means?

thanks. So in the sub2 scenario, the seller is rarely profiting from the sale of the house?

I was just wondering - in the case of a sub2, if someone already has equity in the house, you simply take over the remaining mortgage payments, technically without even assuming the mortgage, and when they're done it's considered payed for in full? Or do you still owe the seller money after the mortgage is payed off?
It seems hard to believe that somebody with a lot of equity would basically sell their house for what they owe on the mortgage.

Will