All Forum Posts by: Dave W.

That's a very good question. And you pretty much hit the nail on the head--the house immediately next door to ours just sold in the last 6 mo, & it was a short sale. We orig purchased our house for $289K, then refied at around $350K, when it appraised for $425-450. It probably peaked out at $550K. Our loan amt is up to approx $409K, but our house would probably appraise around $250-280 (???). So, what's our incentive to keep paying on it? I struggle w/ the ethics of walking away. On the one hand, we entered into an agreement to pay $X amount of money to the bank. OTOH, we put up our house as collateral (or, more accurately the bank owns the house), which the bank agreed to. So, if we walk away, the bank is getting what they agreed to take if we didn't pay them.

Ya, I think that b/4 I can think about investing long-distance, I'm going to have a good grasp of what it would take to invest locally. Even if the deals are few & far between, I'd rather learn how to do it locally first. It's not a sprint, anyway.

If the properties won't cash flow where you're at, do you then invest long-distance? And if so, how do you get to know an area, how do you evaluate specific houses, etc? In "Weekend Millionaire" he promotes walking different areas & physically meeting residents getting to know them in person, making contacts, connections, etc.

Excellent point, Mike! Ironic, too, when Chap. 17 of the book is titled "Profit is made when you buy". Thanks for that example!
Dave.

Also, I've seen a lot of reference to the "50% rule" here on the forums. Is the Weekend Millionaire's method of valueing a property & determining NOI complete & accurate, or are they missing anything important?

Just for clarification, can you give an example of where they interchange Price & Terms incorrectly, so I can keep it straight in my head?

Also, does anyone know if the forms in the back of the book (inspection form, etc) are available online to print off, or will I have to photocopy the ones in the book, or create my own?

A friend of mine went to one of Robert Kiyosaki's 3-day workshops, & one of the things she shared w/ me from the seminar was this:

"The best information we got was the reason to incorporate, preferably in Nevada. We were told to first open a C or S Corp. and then an LLC (LLP?). Put your personal residence first
into the C or S Corp and then move it into the LLC. That way if someone sues you they cannot even locate the house to try to take it. He also told us to make yourself the beneficiary of the LLC and your attorney the trustee. That way if you have to go to court, as he did, you can claim the 5th and not give them the information/access to your assets, and your attorney can exercise the attorney/client privelege and cannot be forced to give them the information either. Our son said that one of his coworkers had done very well with rentals until one of the residents learned of her holdings, sued her and got it all. She acknowledges that she messed up and should have opened the corporations regardless of the cost as she lost it all. If you have a corporation that you open in Nevada it is much cheaper and taxed at a lower rate. You can still do business in CA but you need to know how to do that without having to pay the much higher CA taxes if CA finds out you are doing that."

Is that accurate? Is that the way to protect yourself in the event of a lawsuit when owning property?
Dave.

Thanks, David.
Good info. And you're right, if our home went up in value, we wouldn't feel like a victim, but then again we'd be able to either re-fi or sell the house to get out of the loan.
Our lender, Wachovia, has given us an offer to re-fi. I posted some details of it here, w/ a request for feedback:
http://www.biggerpockets.com/forums/99/topics/25876

We currently have a pick-a-payment ARM. We're not behind in the payments, but are paying the minimum pymt, resulting in about $1k/mo being tacked onto our outstanding loan amount each month in deferred interest.
Our lender contacted us w/ an offer. They will have the property appraised (the loan amount is up to $409K, the rep on the phone guesstimated the value to be around $241K--not sure how she arrived at that), and give us a 1st mtg (FHA) at 97% LTV, with the remaining amount up to what we currently owe put into a second mtg w/ 0% int for 3 yrs.
As of 11/6/08, the estimated loan amt would be $241,530.00, at an int rate of 5.75%, w/ an APR of 6.155%. Lender would pay $6,411.00 in settlement charges, & we would pay $1,532.00 (interest for 9 days, hazard insurance, & recording fees) .
We've heard a lot of info on the news about banks not wanting to work w/ homeowners, or not taking the first offer the bank comes up with, etc. We live in Lodi, CA, so I don't know if the market's hit bottom yet, or when it might start going back up. Of course, if I knew that, I could be a rich man!
I'm wondering if we should take this offer, or tell them we want the FHA loan at 80% LTV, with the remainder on the 2nd so we don't have to pay PMI? We don't want to stay in this house, so we're also thinking of renting it out & keeping it, or renting it for a while until the market picks up & then selling, or ??? Even though we're not behind in the pymts now, if the mtg goes to 125% of the original loan amt, they can recast the loan immediately.
Hope my explanation was clear, & included enough details.
Any suggestions?
Dave.

Well, for one, after the appraisal came in a little lower than expected, the broker who set us up w/ this loan contacted the appraiser & got it bumped up a bit in an effort to get the loan amount we wanted to pay off some bills. If our memory serves us correctly, our income-to-debt ratio didn't qualify us to make the standard 30-yr pymt, but we could make the interest only or the minimum pymt.
We tried working w/ World Savings a while back (before it was bought out by Wachovia), in an effort to change our loan to a fixed rate, & they wouldn't work with us.
Also, some of the criteria listed on "voidmymortgage.com" fit our situation. For example, our loan is an ARM & our house was appraised at a higher value than similar homes in the neighborhood were selling for brand new at that time.