Can You Still Work A S.Calif Market And Be Profitable?
Hi:
This is a question more for those versed in the S. Calif. market, although all comments/ideas are welcome. I have been working with a realtor (a few) who feel,( I am not sure they are correct), that the methods of working with forclosures in the current market just dosent work in Calif. because the cost is too high. The old ways of doing forclosures in Calif is outdated. Property in calif, even distressed, are selling WAY over asking prices. Most propertys in calif., (distressed) has 20-40 back up offers ALL over the asking price. If this is the case what a win for the distressed owner!!, Can Calif. still work and if so how? 
Yes you can!
Build (more) homes and they will sell. Over the asking price. Isn't that a good way of making pofit?
That's a good question. Personally, I don't think the current So. Cal market is good for finding foreclosures primarily because the market is too hot. I've seen absolute junk sell for $100K over asking with 20 or more offers. Where's the deal in that??
Until interest rates start rising, or some other near-catastrophic thing happens (like the early 90's) I don't see a real business in foreclosures.
However, there are lots of properties that are junkier that you may be able to get for under FMV, (whatever that happens to be from one day to the next) and either flip quick or gamble and hold if you think the 20%+ annual increases will still be around in a year or 2. I'd probably take my profit now. Good REI.
Thanks for the insight, I pretty much feel the same way the market here is hot and getting prices way over asking is incredible. Your thoughts on what does work here? I agree that building more homes and selling them over asking price works, but I am not a developer, For the "little" guy, its seems that bird-dogging, getting property "subject_to" then flipping, is a better avenue. Any other ideas?
Thanks
Quote:
On 2004-02-20 15:48, ralicon wrote:
Your thoughts on what does work here?
For the "little" guy, its seems that bird-dogging, getting property "subject_to" then flipping, is a better avenue. Any other ideas?
Thanks
I too am a little "guy". I like the idea of wholesaling, I'm not as fond of subject-to's tho, but that has to do with how tight this market is. I'm not finding too many sellers who are willing to subject-to, when they can just sell outright for a huge profit. If you have decent credit, a little cash, access to the MLS and/or a really savvvy realtor, you can find stuff for under market value, and potentially flip for a tidy profit. Good REI
Thats exactly what I was told by some RE investors and mortgage brokers here in SoCal , that the market in SoCal is red hot and foreclosure deals will be hard to come.
My partners and I have been told to bide our time on the foreclosure market, because many people getting loans, really are underqualified and when rates start rising the foreclosure market will take a turn for the good (ie investors like us).
We've decided to try and find good income property (2u-6u)here in SoCal/LV/AZ and try the foreclosure thing in LV and mainly AZ. We will try our best to do flip deals to other investors here in SoCal if by chance we come across a subject to deal.[ Edited by jcorp on Date 02/20/2004 ]
Jcorp:
Thanks for the info, it is a realistic view of what seems to be occuring in soCal. At this point I will probably bird-dog/wholesale projects to others for a fee and then step out. Az sems also like a good prospect for forclosure, at this point I will re-direct projects to those who can handle it best.
Thanks
Working the Southern Calif Market in a strong upmarket merely calls for some slight adjustments in your procedures.
Many of the foreclosures that I see are attempts to eliminate a series of judgements, liens and other Trust deeds in Junior position.
Some of the ones in Glendale and working West from there across the valley are properties where the owners seem to have some form of working relationship with the first or second. The Trust Deed in question has usualy had a substitution of Trustee, then the beginning of a foreclosure. When I query the holders of the junior encumbrances they in many instances seem to be securing prior borrowings for business ventures and some are securing funds given to buy the property or to assist in helping the owner out of a variety of business and personal jams.
When I see this, I merely attempt to buy at heavy discount the first in line of the junior encumbrances. I try to buy at really heavy discounts and a fair success at it as most do not have the money to advance to the first trust deed to cure the foreclosure. So I buy at ten cents on the dollar, or sometimes I merely take an interest in the note and trust deed in exchange for curing the foreclosure on the first and starting a foreclosure of the junior lien.
If it is really a "sticky wicket" I may not cure the foreclosure but use my discounted second trust deed as an opportunity to bid the foreclosure with ten cent dollars. Sometimes I go to own the property and sometimes I merely bid up to make a profit. Especialy if the bidding is intense and seems to be controled by the owner of the property.
An interesting social aside is that this type of event seems somehow or other to be tied to persons operating auto body shops that take a fairly new car that has been stolen and stripped down. It is bought very cheap and the necessary parts gathered here and there and within a brief period of time the car looks like brand new. They seem to be able to even prevent the title from being tagged as Salvage.
They are very skilled. I think their skill level comes from prior experience in the old Soviet Union where car parts were not readily available and one had to learn many many ways of rebuilding autos. The activity in large part is covert.
However, in their interactions with others they seem to have many falling outs. Failure to pay on notes securing business capital etc. This creates the need to try and remove junior liens by foreclosure.
It is at that instant that the Real Estate Investor who can spot this type of transaction, insert into the title by buying by assignment a junior recorded Trust Deed, can make a good return on monies invested.
What I look for is in my NOD report a mass of Junior Encumbrances and scattered along the time line over a period of several years.
A tip off is that the Beneficiaries of these Trust Deeds all seem to have last names of the same etheticity as the originating Trustor (property owner).
Perhaps this all stems from the fact that this particular enthnic group were held down and vilefied in the old Soviet Union.
Having endured a prior pogrom while under the Ottoman Empire, Not being able to advance to positions of authority they then turn to survival by forming into tight interfamily groups and take over some most necessary function of that society. In the particular instant it seems to have been auto repair and dealing.
Now that they are here and have a rather large community in and around the valley, they make a great contribution to our society and bring many skills to it.
They are flourishing in this California Society and have entered almost all parts of it. I would say within ten years or so, they will move on from this most specialized of business.
In the meantime I note that there is an investment opportunity and an enterprising Real Estate Investor might consider it.
The fun part is if you do not go for ownership of the property, just bid up with your ten cent dollars until the sweat forms on the brows of the bidders and they start checking their notes and monies. The pupils become large and the movement of arms and legs jerky. They are running out of money. You of course smile politely bow to the right and left and stop bidding. After sale you contact the Trustee running the sale and make arrangements for the nice man to send you the overbid. On second thought I might go to his office and pick it up. I hate that "Its in the mail stuff" So there you go. Never on title, never anything, just a nice check in your hand. Oh yes the no good Trustee will file a 1099. God if only I could solve that one.
Cheers Lucius
lufos, you are brilliant.
Lucius,
Thanks for sharing - I hope to one day have a small fraction of your REI knowledge and creativity to put to good use!
-e-
Ralicon:
Don't get caught up with what the real
estate agents are telling you! I want you to contact your local title company and
get a farm package on every out of state
owner for Brea. I then want you to go and make 20 cash offers a week in the
form of a letter to houses that are not listed. Structure your offer so you can make $15-$20k per deal. I guarantee if you do this you will find a deal. Tell the owners you will take the properties with the tenants in place. That is the key.
Let us know how you do.
Best Riches,
Jeff Adam
_________________
"The only place success comes before work
is in the dictionary."
[ Edited by JeffreyAdam on Date 02/21/2004 ][ Edited by JeffreyAdam on Date 02/21/2004 ]
Jeffrey
Now thats a goody, it is part of the "King of the Mountain" plan practiced by active Brokers attempting to command all Real Estate Activity in their area. I like your variation better then the original. The original was to attempt to list by contacting all absent owners. The theory being that most people handling single family rentals get rather disgusted with the continual demands of tenants and would entertain offer to list.
I think yours is much better especialy in the present up up market. Cut the crap and go direct to action. Buy the property. Of course with great care, check the value and then come in lower and with negotiation room between the offer and the True Present Time Market Sales Price.. Achieve acceptance, take a 60 day escrow and offer for sale within the period of the escrow. Always remember to contact the tenant as they might want to buy and they in many instances would be open for the savings of a simplified sale. Oh yes offer to create a 1031 sale.
Of course the advantage of being a Real Estate Broker is that you have achieved, so many discounts on escrow and title cost. I am still blown away with your deal with First American. You must let me take you to lunch, Pick your Chez Denny, I can get us a good table, I know the Maitre D!.
Lucius
Quote:
On 2004-02-21 01:15, JeffreyAdam wrote:...........I want you to contact your local title company and
get a farm package on every out of state
owner for ............
What is a farm package?
A "farmpackage" is a list of whatever your criteria you desire from a certain
demographical area. For example, I
request farm packages on all of the out
of state owners for a certain city and then
approach the owners directly, buy with tenants in place and do what Lufos mentions above. Just another way to find deals. Farm packages are generated from title company or you can purchase from First American a program called "Win2Data" and generate your own.
Jeff Adam
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Quote:
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"Perhaps this all stems from the fact that this particular enthnic group were held down and vilefied in the old Soviet Union."
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They were not simply "vilefied in the old Soviet Union"; Their disparage goes for centuries and in particular with our big friends Turks who use to demolish and destroy their lives and their villages by the rate of 4 to 5 figures a day; just as they do today with Kurds and we seat and do nothing because: Business is good! Right.
Yes, knowledge in Geopolitics helps you position yourself in business and it helps you do more in both RE and today global events' influenced economy.
There are two prevailing teachings on today's RE scene:
1) Called "Samaritaria" directs you to look for a problem to solve. You solve it and the money would come naturally as a consequence of what you did.
2) Called "Sherlock Holmes", it is more aggressive and it calls for one to look rather for a scam pattern that you can interject to earn " soft blackmail" money then to help someone in trouble.
Yes, it's up to you to decide which way to turn. And as shown above, it helps to know in this hot market who is who in your town and who is the most likely to be the one to make the next tactical move you can gleadly interject. So he found that that Gregorian ethnic group is again active and they are ( as far as I know) all the time....but for one to understand this game of chase on the small scale, one must know how it works on the global one. Rules are the same.
Armenia sets divided under demarcation enforced lines and the protective umbrella of the mother Russia in the way that our Muslim friends Azerbaijani and Turks cannot touch 'em and would otherwise make them disappear along with the Caspian oil that our giant Inc. called Halyburton wants to transport through the proprietary pipes from Azerbaijan Caspian coast to Turkey port on Mediterranean coast, without paying toll to their old Moscow friends.
So what do we as a nation do to make few of our corporations tons of money? We try to loosen the Moscow grip buy hitting them where it hurts, for example in Kosovo, but they do not budge and instead they hit us back on middle east moral by disagreeing with our Iraq invasion ... and then we hit them back on their human rights violation in Chechnya and they hit us ... then British Crown invite them both, the deal is made and we see those leaders smile.
What Lufos is doing or he tries to do is what Russia have done it in the above mentioned region. He anticipate the key players game and he "protects" the junior lien holder buy buying him out at 10 fold discount. It's a game but knowing the big one establish the pat and the niche that would work o the small scale. if you to can learn something form this lesson, good for you or simply sad: What's new?
And as far as how the Salvage scum realy went in that time, 7-10 years ago, the one example mentioned is just one out of dozens creative aproaches played nationwide in that time and sometime today and what's more imporetant, it transpires well in the current RE one: You buy one or more new or near new Audi, BMW's, Lexus' or Benz'. You park it on the street or the shoping mall garage where it gets stolen (using your spare key) and later striped on. Insurance inspect the car, at the body shop, pay the total loss and sends it to the salvage auction where is going to be sold for not so cheep but rather for an excelent price. You know where the parts are and you bid on the car high to get it under someone else's name, same as they do for houses. You put it together and you drive with difference of the money in your pocket when you decide to sell it. Never the less, arminians are not the only one that doing it. You pick the nation here in LA and I tell you the story. It apears to me that insurence fraud has no collors, scent or voice. In the end, it all translate in money and the question is: Did you join on time or you buying the old trick now when it doesn't work. Have you atend any seminars lately?
Never the less it is never as simple as it looks on the first site. In the game of salvage, in that time the NY boys came up and regularly bit locals to the punch untill the pricess went to high that no one could make any money any more regardless of the scum. Sounds familiar? Yes I agree, it resembless today's Real Estate andstack market few years back when people lost trilions of dollars in saving and pension founds. Buit before that happend East Coast paid highe for striped salvage now we pay higher for slupm housing and tomorow someone will again pay to much for stack because ore memeory is meory of conviniance and the real, money doesnt exist. It's all part of the Metrix scheme wher you wag yur own tail.
Yes, the cars were shiped to NY where the other boys didn't have any problem getting the needed parts off local cars and clean titles from Texas or elsewher to be sold as perfect cars.
Eventually, like in all stories, they did to much and FBI sad ENOUGH. Some wen to jail. Some switched the sides. Life goes on and now they come up with lien claring scam an Lucius like many others before him, cought them up read handed while he honestly tries to make some $$ on the tough SOCA market. So the other few hundred investors do and newbies are the one that will pay the price when they by expered stories like the Carlton Sheet does sell.
By knowing the sociological development of a particular nation, you can predict the behavior of it's respective citizens no meter what colors they wear this days. History buff Lucius knows his trade and he uses that knowledge to his advantage. Apparently well. You can do as well but you have to learn to jog the RE steps FASTER and SMARTER and do not belive that everything that flies you can call food. Go on. The school is in session and it's time for you to learn something new.
[ Edited by omega1 on Date 02/22/2004 ]
Jeff and Lufos:
I really envy your knowledge, your comments are terrific, needless to say I really need and want to be a student of yours, Jeff your terrific with your idea and yes I will do follow your "coat-tails"
I really dont plan on losing you both, thanks for the inspiration and wisdom!!!
Richard
Jeff:
How would you suggest I structure the letter you suggest, and what is exactly needed to structure the dealtobring in 15K. I am all ears, and wide open
Thanks
Richard
You need to be creative in writing your letter.
You need to educate yourself in structuring deals to make $15k as this is
a lengthy topic. Education is the key. If you wanted to be a dentist, you would go to school wouldnt you? Guess what, most real-estate investors I know make at least twice as much as dentist do!
They also have been to many seminars, investment club seminars, etc...
Best RIches,
Jeff Adam
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