All Forum Posts by: Daniel Francis

Why limit yourself to a single strategy?  If you plan to do any kind of marketing for this property, you'll find that you get sellers of all flavors, and the solution or exit strategy can be just as varied.

Not too long about, we had six seller appointments in one day.  Because we could offer anything and were flexible, we came out with six contracts.  I did a rehab on one, wholesaled another, listed 2 traditionally and listed 2 as short sales.

We closed them all... but not the way we thought.  One of the traditional listings canceled.  But after about 8 months called back.  When we went back out there, the neighborhood had seen a boom, and we ended up putting it under contract and wholesaling that one as well.

Why did we rehab one and end up wholesaling two?  Time, money, location, many reasons.  If you don't DECIDE on an exit strategy, market for motivated sellers, then take it case by case (and it helps if you can also offer to list the property), making money becomes so much easier.

I would think that would depend on your business model.  Sometimes I don't mind negative cash-flow if the property is in a high appreciating area... in that instance I'm after equity pure and simple and not paying out interest would be extremely attractive.

If you need the cash-flow or negative cash-flow puts you into a tough position, nothing wrong with that conventional loan.  At first glance, looks like that would cash-flow very well.

It might also depend on how well you like this family member :)

That's tough as most lenders have anti-flipping rules preventing a simultaneous closing.

The only way I've ever pulled that off is to receipt my contract with seller, then receipt a new contract between buyer and seller as a back-up contract.  When the buyer brings the assignment fee to closing, I provide a cancellation of contract allowing the back-up to close.  I used a fee attorney who was helpful to make that work.... not sure you could pull that off at a traditional title company.

A simultaneous close is when you buy at one closing (A to B) and sell in another closing (B to C) on the same day and use the funds from B to C to fund the A to B and keep the rest.

It's perfectly legal, but most title companies will require that you disclose that you are using "pass-through funding" to resell the property and the seller (A) will have to sign-off on the transaction

Its used mostly when you don't want to disclose to A and C how much you are making in the transaction, but because it requires 2 transactions, it is a bit more costly than an assignment.

You may consider an assignment if you are OK with either A or C knowing how much you are making. You can put your assignment fee on the HUD and "blind" the other side. I.E. if your buyer is fine assigning you $10k, you can blind the seller... they only see their side of the HUD, and the buyer can see the assignment fee of $10k on the HUD.

Your local title would be able to go over more details of what they require/expect to do these types of transactions.

Nice, good job!  No better long-term wealth building plan than buy and hold.  Great community here to follow and ask questions.

Convince yourself there is nothing more important than leads.  You can never have enough of them and if you are getting them, everything else will take care of itself.  

To learn the most, try not to script/screen on the phone.  Just make an appointment and go meet the seller.  You'll learn faster how to speak to them, the right questions to ask and how to ask them. (This is even a better strategy if you are licensed and can fall back on listing the property -- less wasted trips and more money).

You will make mistakes, but who cares?  Just go and talk to sellers!  Get comfortable with it and if you find a good deal, there are plenty of people that would jump in and help you through it for a split.  That's the best way to learn.

But without leads, you don't get any experience talking to sellers.  Without talking to sellers you get no deals.  Without deals, you make no money.

Nothing else matters without leads.  Go.  Get them.  NOW.

I don't know why you would consider HM over Sub2. With Sub2 you are getting 4.5%. What advantage is there with the HM loan other than it will cost you points, be a high interest-only payment and put pressure on you to sell.

If you take it down Sub2, you can fix, rent it, sell it, whatever you want... no pressure to get rid of it, so if it doesn't sell... rent. 4.5% is practically free money! Take it!

Banks often don't act "rationally" until you understand how they work.  We listed a short sale for 160k, got an offer for 150k., bank didn't take offer, foreclosed and re-listed for $140k.  Go figure.

But, once you understand the process, it all makes more sense.  You see, banks typically aren't really the "lender".  There is some outside investor that owns the loan (often times, Fannie Mae or Freddie Mac) and the "bank" you are dealing with is actually the SERVICER of the loan.

So they have a servicing contract.... I don't know how much they get/month per file.... it might be more like a lump sum for 2 million files. They are paid to collect payment, deal with loss mitigation and REO's. When they are collecting payment, they are making money (although a small amount per file). When they are working through loss mitigation or REO's, they are NOT making money, they are spending it.

Therefore, loss mitigation departments and REO departments are set-up to be the least expensive they can get away with under their servicing agreement... which is why short sales now take an average... yes average... of 7 months!

As part of their servicing agreement with the investor, they have underwriting guidelines. The underwriting guidelines tell them who to loan money to, but also how to conduct a short sale, or an REO sale.

They will follow those underwriting guidelines to a T because they are contractually obligated to.  Besides, they don't care what your property sells for... they just want to fulfill their obligation under their servicing agreement, meet the underwriting guidelines and do so as cheaply as possible (minimum wage or automated systems help with that).

So I'm sure the underwriting guidelines for the house you are bidding on, stipulate a listing price equal to or close to the BPO (Broker Price Opinion), with subsequent regular drops, and that allow the lender to accept an offer that is within a certain percentage of whatever the current list price is.

You can't convince them to take something different.  They have no incentive to.. that would jeopardize their servicing agreement.

So, they ARE acting rationally.... even though they aren't :)

Hi Jordan, I'm not sure I completely understand the question.  If you use an agent to buy, you do NOT necessarily need that agent to sell (or pay them on the sale).

So, agent finds you a property for $100k... you assign for $10k.... end buyer buys for $110k, 10 to you, 100 to seller.  Seller pays their agent $6k (6%) and that seller's agent pays your agent $3k.

Make sense?

Yep!  As long as you close before auction date, you are good.  The note will need to be paid off or cured or the auction day will need to be delayed (by initiating a short sale, begging the lender and/or declaring bankruptcy.... or TRO, but that's a whole other topic).

You might have to act fast, or take action to delay the auction, but we do it all the time.