All Forum Posts by: Tammy R.

Love your info Finanance Examiner. It also depends on your area. If you're in an area where there are postage size stamp lots with many homes like the general LA, Orange and San Bernardino areas of CA, an appraiser will never go past 1.5 miles unless it is a more rural area. This is good to know about sparsely covered areas though, I did not know an appraiser would ever go out as much as 5 miles!

Originally posted by Financexaminer:

As to comps and range. First you look in the subdivision, then move out within 1 mile, then within 3 miles, then within 5 miles, then over 5 miles. Taking all the comps in the same subdivision takes into consideration the maturity of the subdivision and per centage of the built up lots. In a mature subdivision you can do that and when there are sufficient homes to ensure that three sale do not skew the analysis.

For example, in a new subdivision, where 4 out of 30 lots were built and sold are not good comps for the 5th house, 2 comps in that subdivison might be used with another from the neighborhood.

A neighborhood is not necessairly a subdivision, it is a generally more of the soci-economic area identifed by similar attributes. It is very common for values to be significantly different from one neighborhood to another or one subdivision to another. These factors must also be considered as to the desirability (which reflets on marketability) from one area to another and such assumptions can usually be shown in the market. Failing to identify these differences will skew your analysis as valuation is not strictly a math formula of square footage costs and adjusting for amenities.

These influences will be magnified as you move further away from the subject property. For example, while a house may have a similar price, the proximity to a hospital or shopping area may be different than one close r to an industrial complex.

It's an art as much as a science. Study it as an art and you'll get the science.

Originally posted by Jon Holdman:

I do not believe this is an accurate method. Its not what an appraiser will do. If you have a fair number of comps, more than half a dozen or so, look at the $/sq.ft. If they're all very close, then this method may be accurate. They probably won't be.

Hmm, I've always gotten within 3-10K of what the appraised value is this way... always has worked for me like a charm here in Southern CA, and every time my value was less than the appraisers because they only take 3-5 comps, and you do never know which ones they'll take; but here in LA area, if you took all the comps you'd have 100s of them at times depending on how dense the area is. I always do take ALL the comps within the immediate area that are within 500 square feet (or less) though, as they do not use comps that are too big or too small , ever.

Try to keep your comps within the last 3 months; oftentimes trulia and zillow are not recent and can be deceiving. You can only get an idea, but at that they are not what you want to rely on for comps.

There is a site in many major cities across the US called redfin. (unfortunately its not everywhere). I love redfin, and it has 10 comps at the bottom, but even better than that, you can pull up a map and go directly to handpick your comps.

1. Try to stay in the same neighborhood like many have said here, but if there isn't enough comps, stay within a mile if possible.

2. Try to only go back 3 months; if there aren't enough try 6

3. Stay within 1 bed and 1 bath, and try to stay the same if possible

4. Stay within 500 square feet; the close in size the better

5. I like to use 10 comps, but try to use at least 5 (the more the better). I like to be conservative because usually the appraisers are.

6. Do not use listings; use sold comps

7. Calculate the cost per square feet for each .

8. Remove the highest and lowest PER SQUARE FEET values

9. Take the remaining prices per square feet and find the average.

10. Multiply that number by the square footage of the property you are comping.

If I'm doing a rehab on the property requiring more than $25K, I usually subtract $10K from the ARV only because our market in my area is still declining slightly, and that will usually take 3 months. You can talk to a realtor in your area to find out the market trends for your city; or you can look in the paper in the real estate section; there is usually a section that talks about the trends.

What state are you in and what is your tenant selction process Northshore? :)

In my experience, the properties I've bought that were already rented out by realtors acting as property managers and/or property managers have had TERRIBLE tenants in them and took the first applicant based either on credit or their word on their application *shudder*. Needless to say, the tenants in your property make you either hate or love being a landlord. That's how PM get a bad name.

I have

Originally posted by Northshore Beachbum:

Jeez, do you guys really think ALL property managers operate the same? If so, you would be wrong.

Let's put the shoe on the other foot... as a PM, I will state that, in my experience, 50% of "investors" should never have gotten into the business of REI. Over the years, at least 40% of my clients came to us with run down properties and numerous tenant problems solely as a result of the investor's poor hand's on management and actions (or lack thereof). They were clueless as to LL/tenant laws, maintenance issues, and simply did not have the most basic knowledge or skills necessary. More than one of these types of investors went into bankruptcy as a direct result of their errors.

Easily another 40% bought their properties without consultation with the PM, and as a result were disappointed with returns due to unexpected expenses and true market rents. Over time, most of these clients end up ok with the appreciation, but better planning initially would have allowed a better bargaining position on the purchase, or a different property altogether.

The remainder of client's have been savvy investors that worked closely with our sales staff on purchases and built a nice, solid, portfolio. They actively strategize with the PM on purchases (with or without financial participation by the broker), capital improvements, and any significant issues. They understand the value that experienced professionals bring to the table, and they know what questions to ask. They also have a reasonable view of the Big Picture.

As with most professions, there are specialists for different aspects of the game. Do not assume that just because someone is a licensed real estate person, that they are capable of competently handling ALL types of real estate situations. This is no different from the fact that some investors only do flips, while others do lease-options, or buy and hold. These are different areas of focus, and while there IS some overlap for certain aspects of a transaction, an expert in one may not be expert in the other.

just my 2 cents...

I manage my homes on my own; even my out of state homes. What I do with out of state is build a good relationship with a neighbor. I also have in my leases that the tenants will show the property at the end of their term. To do this, I scrutinize my tenants VERY carefully. My out of state strategy for buy and hold is near a military base. There is always a great pool of renters and they get in trouble if they don't pay their rent by their superiors, so it has worked out great! Its always important to have someone local to work with, though. :)

I am buying units in IN (a duplex and a fourplex) and will hire that out until I get them up to code and the current tenants leave. The selection of tenants has not been done right with those; so far while I'm in escrow, 2 of the tenants have gone to jail, so the property manager did NOT do the job of screening. Its HARD to find a property manager that cares about getting a good tenant in.

Jackie, I didn't sign any confidentiality agreement or even look at the program, but I can take a good stab at what it is.. Using trusts to do simultaneous closing is nothing new or patentable.

The premise is you put the property under contract with the a trust as the buyer and then sign over the beneficial interest and/or resign as the trustee, or both. Then the trust either becomes null and void after the change of ownership, or, they can elect a new trustee to keep the property within a trust. This way, there is no official change in ownership because the trust isn't recorded with the county. Ideally, it is a way to essentially have no out of pocket transactional funder costs.

To make it work with REOs you need to have 'direction to the trustee' accompany your offer to the bank.

Is this the 'dovetail' method? I have never heard of it or know of the site as I didn't bother to research the term, but this is NOTHING new or patentable for sure!

Its much like buying a property in an LLC and then selling the LLC to someone else; which holds the property.

Originally posted by Duane Ortega:

Hello everyone,

I fund the Dovetail creators' back to back transactions regularly. Currently, I am funding an FHA end buyer transaction for them and their students close with Dovetail for BofA deals.

The Dovetail method was created by John Grant and Jerry Ballard. They're SREC coaches and offer this product along with Jeff Watson and Josh Cantwell.

[solicitation removed]

We don't see other trust closings other than Dovetail currently so this may new to some and not new to others as Maryann stated above.

However, my mantra is, it never hurts to listen and maybe learn something.

Best wishes,
Duane Ortega.

How does AHP do it then? I am new to this site, don't know the posters, and yes, I am for real. I think I will refer my friend to AHP and see if they have a referral fee. Doesn't hurt to try...

Originally posted by Jon Holdman:

Not at all sure the poster in this thread is for real or not, but it gives you an idea of what you're getting into if you try this. Keep in mind "mikeso" and "amv" are the same person. You might be the white knight at the start of this deal, but you will soon enough turn into the evil investor.

I don't want to leave my home

Illegal? Not directly. But the lender who approves the short sale will likely make you sign a statement that the borrower is receiving no benefit from the deal.

Another seller stays on horror story.

Noticed you said the seller is an old friend. You can probably kiss that relationship goodbye, too, if you do this deal.

Hello, I know this is an old message, but short sales are one of those areas in REI I haven't stepped into because I've tried to get several of them with no luck. I now have a short sale negotiator and have run into this situation that this thread discusses.

Is it still legal to rent back to the original homeowner? I thought that the owner could have no part in being in the home on the other side of the short sale? Am I misunderstanding something? How does AHP do this if this is actually not legal anymore, (or is it legal?) Does anyone know for sure?

My seller/renter is in WI.

They filed chapter 13 to try to save the home, but have a payback so their payment is $2300. Their original mortgage is with Litton, who told them just to not pay and submit their paperwork for a modification, all the while playing games with them. (wish she'd come to me first for help :( ) at a lofty 8%. Both have steady jobs and income and could easily afford a lower rent payment.

Property was purchased 2007 at the height of the market for 225K, is worth about $175K ARV right now, needs quite a bit of work including new roof, a leaky basement, and several other repairs. They don't care about the work needed.

I'd try to get it as a short sale for $125K, and then rent back to the owners (who happens to be a friend I've had since age 4, so there is a high degree of trust between both of us). Is this really possible to do?

Of course, with a price of $125K and needing about $15-20K in work, I could rent it back to her and her family and still make a good profit on it monthly.

Any extra input would be greatly appreciated!

Trust VS LLC

Ok, this is a topic I've learned a lot about but have only applied once as its time consuming for me to get all my properties into a trust. (I'm also a stay at home mom that homeschools -4 kids)

You can get a trust that is cheap and use one for each property, but most likely, the way its written will be too vague and not do too much good. Having a trust that is written well and covers most of the 'what ifs' is imperative. So, it is probably best to pay an attorney who specializes and KNOWS all about land trusts (very important, they are far and few between! Especially in CA!) to cover you well. Or, if you have a trust, you can take it to a trusted attorney (is that an oxymoron?) :mrgreen: to look yours over its MUCH cheaper than paying them to create the trust from scratch. BUT, once you have one done, you can use it for EVERY property you have, just change the property info, the trustee, the beneficiary, the director (if you choose to have one) as you would like it to be.

As far as trusts are concerned, they can hold the property in one state and follow the laws of the state of your choosing, to add yet another layer of confusion to someone pursuing a lawsuit.

It is possible for a trust to hold another trust that holds another trust and layer trusts within trusts to the nth degree, which can all be held within a living trust. What it does is makes someone who tries to penetrate the trust VERY expensive. It costs a lawyer several thousands of dollars to find who the beneficiaries are that way, and usually they will require a retainer for someone trying to file a law suit.

Also, if you have each individual property in a trust, you liability is indeed limited to ONLY what is in that trust. What this does is instead of the RE being real property, it becomes personal property. So, as someone else was saying

You can even put all of your assets in individual personal property trusts if you really want to protect your assets and make it really difficult for someone to get anything. This is what The Donald does.

He was in a car accident and the lawyer proceeded against the owner of the car. He had it in a trust. (not a land trust, a personal property trust). They ended up ONLY being able to sue for the car after a lot of time and effort because they knew he was the owner.

Costs for a trust are minimal as you do not have to get title insurance again,there's a law that allows you to transfer your property into a trust.

The toughest thing I found when doing trusts is finding an insurance agent that understands how they work. They are much like a corporation set up, but confuse the heck out of insurance people for some reason!

There's so much info on trusts, this is a bare minimum, but they shouldn't be overlooked as a great tool for us as investors.

Originally posted by Mitch Kronowit:

Originally posted by Marcus ONG:

I heard that setting up an LLC in Neveda is the best because of the privacy policy there. Is that true?

Plain and simple, Nevada corporations and LLC's are for Nevada businesses.

We have a California LLC and enjoy just as much, if not more, privacy than any Nevada entity.

Mitch,
I've had a CA LLC for 7 years now, and I'm thinking of doing an S Corp to separate out my fix and flips due to being able to take the profit and split it over salary and dividends saving a lot in taxes. Do you know if you open an entity in another state if you still have to pay the $800 a year. That $800 a year is regarless of money made and CA is the one of the least business friendly states out there. Just wondering if you knew