You must be logged in to reply to this topic.
-
I still own rental properties in Texas even though I live in Panama. Talk about being a long distance landlord!
My property manager sometimes sends me a photo of all the yellow letters and yellow postcards we get each week. 99% of the cards and letters all say exactly the same thing.
I have absolutely no interest in selling these properties but because the address for the owner is different than the property address, I get bombarded with letters and postcards from the “we buy houses” folks.
The problem is, these investors are all doing exactly the same thing! No wonder they have a hard time getting a deal despite spending a fortune on marketing!
Don’t do what everyone else is doing! You basically become invisible to sellers if you do what everyone else is doing. When owners get 20 yellow letters or postcards a week, they all go straight in to the trash can.
If you want to consistently get more deals, you need to learn to ZIG while your competition is zagging.
READ THIS ARTICLE to learn more….
During the Coaching Call on Tuesday, May 23rd at 7pm CENTRAL, I will also discuss the secret to getting more deals by zigging while your competition is zagging.
This is an AMA (Ask Me Anything) call so come prepared with your questions.
The call starts at 7pm CENTRAL
Call 712-770-4160
Access code 120440#To ask a question during the Coaching Call, press * (star) 6 on your phone.
I hope you can join me for the Coaching Call.
Best of Success.. and Freedom,
Jackie LangeP.S. You’re welcome to share your ideas about ZIGGING too!
Jackie,
I need you and the community’s advice. Buy Cash? (Hard $$) Option? Subject To? Lease Option? Highest Bidder Sale? We’re just not sure what to do.
Four acres and a house (not in great condition) in the city. We’ve had it pre-inspected and an appraisal with the hopes of doing a Highest Bidder Sale. My husband and I are both licensed realtors and we were asked to list this house for our attorney friend’s neighbor. The biggest problem is that the attorney, who lives across the shared driveway on his own 4 acres doesn’t want us to sell the property to just anyone. He doesn’t want an investor to just buy and flip the property. As realtors, that puts us in a bind due to Fair Housing Laws, etc. This house/land currently appraises at $140,000 but with a full rehab ($60k to $80) could sell for $240,000 +. In it’s current condition I don’t think an owner occupant could get a conventional loan, it has some plumbing issues and possible mold, wet basement, grading issues before they could buy it.
We would like to get ownership ourselves and do enough fix up work to make it saleable. Also, if we own or control the property, we should be able to pick whatever buyer we want instead of the precautions we must take as listing agents.
We have two LLCs, one for owning properties and one for managing properties, have a few subject-to’s (but don’t really like them) and at this point, after all that I’ve read and heard from you and the forum, I think there may be a better way. What do you suggest?
We don’t have $140,000 cash, we have enough to do fix up and repairs. I would really like to know what you think is the best option for this property. We’d like to help the heirs out, there is a HELOC of $80k on the property plus $600/month in mowing the 4 acres plus utilities. We also want and need to help the attorney out on who his new neighbors will be as these lots and the shared driveway are very private and off the main city road.
Since the Mom just recently passed away, the son is concerned it will go into foreclosure due to the HELOC and no more Social Security payments to pay for it. We thought we could possibly take over the HELOC and grass expenses for a few months then sell the place. Is that possible and if so, how would you suggest doing it? What type of paperwork? Once she is deceased, will that immediately call the loan due?
I really appreciate everyone’s help and advice. I may not be able to be on the coaching call tomorrow. We have a listing appointment. I will try to change it but I really like it when you allow us and do the “Ask Me Anything” calls They’re great!
Congratulations on your son’s marriage. Blessings to the new couple. 🙂
Darcy Tafoya
.
Darcy, there are some important unknowns in your puzzle that need to be explored. It’s not clear how much the son knows about the way that HELOC was structured. Some HELOCs are secured by the property as collateral. Sometimes a HELOC is secured by other investments and sometimes by a life insurance policy. If the mother was the sole participant to the HELOC setup conversations, the son may have no idea whether a life policy was used to secure that HELOC, whether the property was designated as the security, or something else.It’s also likely that the HELOC lender would not talk to you alone, but might respond favorably to an appointment with the son and you together. Such a conversation could reveal what the security was, and if it turns out to be the property, then you could learn what the lender’s foreclosure calendar looks like if no other action was taken. And that could be the opportunity to explore your ideas about taking over the HELOC, and whether the lender’s rules or discretion could permit that, and whether the numbers and calendar issues would make any sense for you.
It’s also not clear what clout this neighboring attorney thinks s/he has in the matter. Does s/he plan to make life a living hell for a new owner who doesn’t meet the attorney’s personal standards? That’s crazy. Does s/he think s/he would have any control whatsoever should the property go to auction after foreclosure? We don’t know what this attorney’s area of expertise is, but it doesn’t seem to be Fair Housing law at all. Have you met with this attorney to explore his/her concerns? And to size up whether there is a real threat of some kind in play?
—Dee
.
Dee,
Thank you for your input on my question. I always assumed that HELOC’s were secured by the property and their equity. I had no idea they could be secured by other collateral such as a life insurance policy. I’m thinking it is secured by the property, most likely, but again, something to inquire about with the son. Good points in regards to the timing of a foreclosure. Not sure if they’d allow us to continue the payment but hopefully so.
The neighbor and attorney is a friend of ours. His concerns are valid to a point as to the nature of this neighborhood. Long story. He is not making crazy demands, he just wants a nice family living there that they won’t have problems getting along sharing the long driveway and repairing and cleaning it during the winter, etc.
My biggest question is do we list it and sell it with a Highest Bidder Sale? Do an option and repair it enough to get an owner occupant and make more money than as an agent? Take it subject to the HELOC? If so, in our LLC or a Land Trust? Or just borrow some hard money and buy the family out with cash? We’d prefer to go the least expensive route so we can use our funds toward fixing it up and making a profit.
Thanks again for your advice.
Darcy
.
Darcy, there is an old Russian proverb that advises “Don’t buy the house; buy the neighborhood.” I have a friend living in a house where the HOA is predatory and dishonest, with a neighbor on one side who gave drugs to my friend’s daughters when they were teens, and a pilot on the other side who parks in her driveway, fills up her trash bin, and prunes trees and bushes on her property in her absence that she doesn’t want trimmed. Suddenly, that old Russian proverb takes on fresh meaning.But a less dramatic preventative in your case might be to suggest a prospective buyer simply meet the neighbors on both sides, keeping things cordial, but with the opportunity to achieve a mutual understanding.
But back to the rehab costs, and how long your cash (or borrowed cash) might be tied up. Some of this could depend on what state and what city this is in. I saw reports this morning of one fellow bailing out of three houses in Florida as he sees the market in his city tanking, and he’s just trying to cut his losses. I don’t know if your target house is in that kind of market, or how vulnerable it might be to what looks like a serious nationwide economic crunch facing the country this year.
Normally, the Cash Flow Depot approach is to minimize risk whenever possible, and to stay away from rehabs in general. Tying up a lot of cash for several months while the holding costs keep climbing adds to the risk considerably. The risk is even greater when facing an economic downturn where you might not get back your costs if housing prices plunge badly. In contrast, one can do several wholesale deals, HBS deals, or master leasing deals in the same time that one’s cash, energy, and nervous attention are all focused on one house, and whether enough of a return can justify that gamble. It’s probably safer for those with long experiences as rehabbers, but most risky for newbies. I don’t claim to know where you are on that experience spectrum. And, there are many investors who simply refuse to attempt deals in the presence of an HOA, period. I don’t know if your target house is accountable to an HOA, and if so, what its reputation and history are.
So you have some fact-finding ahead of you:
1. Is there any collateral for that HELOC other than the property?
2. Is the house accountable to an HOA, and if so, what is its reputation?
3. Is the house in an area that would be vulnerable to a nationwide economic downturn, and if so, how badly could that hurt your chances of getting a return OF your money, let alone getting a return ON it?
4. Given the answers to those questions, does that house represent the best possible use of your time, energy, cash/credit, expertise level, and appetite for risk — compared with all other alternatives available to you?
Fun questions for a quiet dinner’s discussion….
Here’s wishing you the best possible outcomes, usually based on wise decision-making.
–Dee
.
HI Darcy
Before you jump in to a rehab on this property, i would highly recommend that you get a professional property inspection. There may be problems hiding behind the walls which could add tens of thousands of dollars to your rehab project. Hopefully there are no hidden problems but it is better to find out before you dive in.
Assuming that you can buy the house subject to the helco, you need to calculate how long it would take to get the house fixed up and ready for resale. Besides the monthly payments on the loan and upkeep of the property, you also need to consider all the holding costs like insurance on a vacant house, property taxes, utilities. And don’t forget the value of your TIME to manage this project.
Is the profit margin worth the risks of your capital? This always needs to be taken in to consideration. What if you had to sell 10% below market to find the perfect buyer?
If the lawyer neighbor is so concerned about who buys the house, maybe HE should buy it or at least bring a suitable buyer to the table.
Jackie & Dee,
Thank you SO much for your help and thoughtfulness on this project. To answer a few questions:
No, the house does not have a HOA at all.
Yes, the lawyer has mentioned he would be interested in buying the house but since he is the neighbor’s estate attorney, he currently has some “conflict of interest” in regards to the price he would pay.
Yes, we have had a thorough property inspection. The inspector we use is extremely good and thorough. The only good report that came from it is that it doesn’t have radon in the house.
We have some rehab experience, we are landlords, we’ve been realtors over 12 years, my husband has a construction/engineer background. This wouldn’t be our first time but the fact that you brought up the costs for holding plus the costs for repairs and considering having to sell the house possibly lower than expected IS worth thinking long and hard about.Jackie, you suggest buying the house “subject to” the HELOC. That would be our best bet. We are not thinking of doing a full rehab on the house, we want to get the property cleaned up, proper drainage with a dry basement, any plumbing issues, and overall functioning so that an owner occupant could get a conventional loan and then live in the house and fix it up over time. That would be our ideal buyer. In it’s current condition, it would be very marginal if not impossible to get a loan on the property through regular banking channels. As realtors we have seen several HUD foreclosures that are difficult for our first time home buyers to buy due to a few minor plumbing issues or something similar that causes their conventional financing to fail.
Would you suggest giving the heir/son a Deed to do the Subject To as a wrap? Or would/could we do a Contract for Deed or an Option if we take the house subject to the HELOC financing? This is where I am trying to learn how to improve our deal making from our past experiences. We’ve used Contract for Deeds mostly but legally they have their own issues. I’m open to suggestions on how best to take over this note and property, do some minor improvements and sell it to a nice family.
Thanks,
DarcyYou could just buy subject-to the mortgage. If the sellers are the least bit nervous about that, then you should buy with seller financing that wraps the underlying loan. This way they get a deed of trust or a mortgage to secure their position.
Of course you should close at a title company or attorney’s office. DO NOT do your own paperwork on this one
Let us know how it goes.
Best of luck!
You must be logged in to reply to this topic.
