This is a residential property. I already have a second on the property. is there anyway I can get money out to invest? [ Edited by dexter_leon on Date 07/19/2006 ]
There are lenders who specialize in 125% loans that may be able to help, although it is not really recommended that you (or many people) go that route.
Per your requests I have edited the previously posted information extracting what I would consider an attempt at advertising, if I were placed in the position of being charged with the task of running blocker between fellow forum users and the predatory factors present in today’s business realms.
I would personally request of you (and anyone else who may read this) and consider getting into this realm of business activity do 3 things before you jump into it head first.
*** Firstly --- Invest no less than 7 days into formulating what you wish to achieve with the business you are considering (i.e.: In other words… plan out your new business venture to the point where when someone asks what you do for a living you can give them a single sentence answer.)
*** Secondly --- Invest no less than 3 days of the 7 mentioned about into a simple re-education of the differences between being an Employee, Self-Employed, Business Owner and Investor (this is not because you do not have an idea of these differences at this point in time, but the success and failure of any NEW business venture usually rest firmly in the wiliness or non-wiliness’ of the people considering a new venture to prepare themselves thru adjusting the mindset to be used in its daily operation.)
*** Thirdly --- I would suggest that from the very beginning of this new venture you approach it as a business… setting it up step by step as a business… this in short means that you must have the “Mind” of this business in place before you ever make your first attempt to achieve any business transactions. Some refer to this as the Master-Mind Group… some as the Core Directional Team, but in my world it is my Board Room ---
This consists of a 5 member team who weekly review each and every business move our business entity makes and then places a ‘Blind Vote” of yes or no if we will make any move or not. The reason for my 5 member team is simple --- no decision ever made will become a situation… (i.e.: 3 to 2 for or ‘Yes Votes’ we do the deal or 3 to 2 against or ‘No Votes’ we do not… with a 5 member team no vote will ever come back as anything other than “Yes or No”.)
One of the biggest and most detrimental situation businesses allow to take root is the situation of allowing ‘emotions’ to enter into any proposed business activity, move or transaction. Using the system I have described above… no emotions will be involved for the decision is made by a simple check mark on a pre-printed piece of paper as ‘Yes or No’… with no explanations involved, but rest assured that when you have 5 sets of eyes reviewing any given situation… if there is anything that is missed by a couple of sets of those eyes… it will most likely be seen by another somewhere along the line.
[Word of caution here: As you bring together this group of business associates it would be best if you do so outside the realm of family members--- and most especially those with whom you have done business in the past--- for they will do one thing that will and usually does cause New Business Owner giant headaches… they will “Pre-Assume” they know exactly how the others they know would approach these situations and attempt to adjust their decisions in line with those pre-assumptions.]
What I am discussing with you here is the setting up of a business entity that will have the highest ratio of successful business achievement. And here is one of the most important factors you will need to know about any venture you decided to engage in… you must prepare yourself to be a Business Owner before you will ever have the most secure opportunity to become an Investor.
Dear ellismatt, I am certain you have heard the common statistic that most New Business Ventures are out of business within the first 36 months of their operation… Correct? This is not because those who make attempts at their operation are lacking access to capital, proven business platform or mythologies… most usually this situation has its roots in one factor--- they firmly believe they can operate their New Business Venture using the very same set of solutions they have used in the past in their positioning as an Employee or Self-Employed business participant.
In other words… they simply never invest the time needed and always required in adjusting the mindsets that actually make up the core differences between owning a business or being an investor verses being an employee or self-employed. Although if you were to take those same people to a raging river and ask them to jump in without knowing how to swim… they would run off screaming as fast as possible in the opposite direction and most likely never speak with you again.
If you do not make this singular mistake made by many others I can assure you that you will have the most secure and highest ratio of successful business achievement in a short period of time. Should you decide to couple the strategy described above to the opportunity that you presented the other day you will have a business situation which will have the ability to generate you more income in one day than most average businesses achieve in any 3 years of operation.
Respectfully,
2littlewords
Quote: 2 Good To Be True?
Unknown to 99.9% of most real estate professionals today the paper side of the real estate market is by far the most lucrative, secure and easily managed investment arena to be involved in with real estate.
The situation you have described has been by far the most lucrative portion of my real estate investment portfolio since I began investing in real estate back on May 20th of 1980.
As of today the refinancing boom which took place in the past few years is catching up with many who refinanced using ARM’s without the full understanding that their mortgage payments would increase as the Prime Lending Rates regained the ground they had given up that sparked the refinance boom of the past few years. Coupled to the relaxing of Lending Qualifications by mortgage providers has created a situation where many mortgage providers are seeing a growing number of their sub-prime loans entering distressed situations daily.
As you may be well aware; mortgage providers are in the business of lending money & collecting payments… not in the business of property ownership and management. Thus many are seeking avenues by which they might clear their books of mortgages that enter distressed situation quickly, easily and most economically for their establishments.
The situation which you described is, in fact, a growing market of today where supply far exceeds seasoned investors who are experienced in dealing with providing solutions that are beneficial to all parties who are involved.
Being a realtor I am certain that you would possess all components to generate yourself a good return on your investment if structured it properly.
My suggestions here would be:
*****First you obtain a letter of commitment from the selling entity of the mortgage mentioned containing the stated price that has been negotiated to purchase the mortgage.
*****Second contact one of you local escrow or title companies and request the preparation of a listing package for the subject property.
Once you have secured these two pieces of information you will be in the position to most accurately determine the actual profitable of the deal that you are arranging. My personal no go positioning is set at no less than 21% gross ROI. This no go positioning allows me to place well structured deals within my pool of investors who are satisfied receiving 12 to 15% ROI on their investment while leaving me 6 to 8% for having the time the lack to securing and achieving the most secure location to place their investments that provide them with higher ROI and security than they could find in today’s CD, IRA or Stock market investments.
Now that you have secured the needed information to most securely evaluate your positioning as a potential Investor, as you have stated you will face the need to remove the current occupant of the property and place an occupant that has the ability to maintain the debt service requirements of the mortgage.
Once again here as a realtor I would suspect that you have access to buyers who might have the capability of maintaining those debt service requirements who would be happy to not only purchase the property, but would provide the needed rehab as well.
(Word of caution here: Most investors find themselves quickly losing their ROI positioning when they begin placing money into rehabbing properties which they have invested in… firstly because of the timeline involved in the rehab process and secondly due to the fact that once a buy enters their newly purchased home (my experience has shown that 78% will rehab the property to their personal liking anyways.)
***** Third once you have the information and set you own personal no go investment level and decide to step into the position of investor. Prepare a Certified Letter to be delivered to the current occupant offering to provide them with $3500 to vacate the subject property… leaving it fully cleaned and occupy able within a certain period of time. I usually allow 30 to 45 days… this relieves much of their stress and grants them time to actually re-fall-in-love with their home as it was before it became a burden. {Here it has been my experience that many of these investment properties have been vacated in resale shape with only a couple of hundred dollars in cosmetic up-dating, rather than fully rehab condition… remember NOT ALL WHO FALL ON HARD TIMES ARE DEAD BEAT OWNERS. Most usually they are simply people who have entered unforeseen situations for which they were not properly prepared.}
(Here you have done 3 things… one you have developed an occupant who is stress-freely motivated to get out from under the situation that has become a burden to them. Two you have, most likely, reduced you own clean up and preparation cost by 40 to 75% of hiring a local business to achieve this for you as the investor. Third is a personal call on each individual situation… you have developed a cooperative and grateful individual who might just be able to occupy another property that could more efficiently be maintained by their current financial situation.)
Remember if you approach the current occupant as an enemy they will very quickly become an enemy who most of the time will eat up a good deal of your profitability within a deal, simply because they will transform the anger of their situation onto your and your property 99.9% of the time.
But if you approach them as a solution producing associate you may have another occupant that will happily assist you in achieving another 21% ROI property quickly and easily… should you be able to locate them one to more adequately fit their personal situations.
Now make sure that your Certified Letter requires that the current occupant sign a contract to vacate within 30 to 45 days and understands that they will receive payment upon satisfactory inspection of the property. (What I do here is pay the occupant 1/3 on the day I receive the contract of vacating of the property… in most situations this- at the very least- gives them the money they may lack to vacate in the first place. The other 2/3 being paid on the final day of the vacating contract and it automatically builds into your investment position the amount you will most likely need to spend to make the property occupy able for another buyer.)
***** At this point you have a property in need of being occupied quickly to secure the debt service requirements needed to secure your ROI. What I do at this point is to place an offer with individuals whom I believe would be interested in becoming home owners, many of whom I have located due to the fact that they simply needed to down size their debt service requirements within another investment that I have acquired in another situation.
What I do is immediately resell the property by allowing a prospective property buyer to assume the mortgage which I have just purchase for a non-refundable assumption fee of 2.5% of what the face value of the mortgage at the time of assumption. As you have become the mortgage investor and have purchased the mortgage itself you have placed yourself in the position of being fully in place to make the decisions that would create the exact you desire to achieve your highest ratio of success and personal investment comfort zone.
{In the situation that you have described you would locate and place a new occupant in the $425,000 property who could supply you with a $10,625 non-refundable assumption fee.
Here you have recouped the $3500 vacating fee paid to the occupant who is currently in financial distress.
You have also acquired… what my investment group refers to as our “ROI Security Funding”… in the amount of $7125 that can be placed into a low interest securing account that can be drawn upon should a time come in the future where you had to vacate and re-occupy that property with those who you place within it initially.
In other words what you have achieved is purchasing a property with a Fair Market Value of $425,000 at a deep discount because you have the time, information and ability to provide quick, easy and reasonable solutions for current mortgage holders --- distressed mortgagee’s --- and provide an opportunity for people who have possibly fallen victim to having bit off a bit more than they could actually chew in the refinance frenzy that has taken place in the past few years.
Mr. ellismatt, once you step into the position of becoming the direct mortgage holder --- that possesses the ability to provide solutions for those who are currently holding distressed mortgages… providing distressed mortgagee with the ability to secure housing that they can actually maintain with solutions that no one else will provide them with by setting up a real estate investing approach such as I have described above.
You can and most likely will become the most sought after real estate investor in your market very quickly and cost effectively. According to the most recent information that I have reviewed as of May 2006 provided by the HUD division of the US Government there is an average of $2.8 billion of new mortgages being created each and every year within the Single Family Housing Market alone. With an average of about $392,000,000 worth of these notes arriving at the point of becoming distressed or being distressed within 36 to 72 months of their creation.
Thus in answer to you question, “Is this too good to be true”, No sir it is not… it is in fact a developing market within which there is, at this time, a very low degree of competition.
Thus I would personally suggest that you make full usage of the person who has enlightened you to this opportunity recently. Become an associate with him that allows him to dedicate his time to the location and securing the commitment of sale instruments… while you dedicate your time and effort into growing your positioning as both an investor and property occupier… and lastly I would suggest that you select an individual whom you would be comfortable with that could dedicate their time to the removal of distressed occupants (possibly into something that is more appropriate for their current needs and abilities) to prepare for reoccupation of the properties that you as an investor have secured.
Now at this time you may be asking yourself, “Why would this person share this information with me and the others who may read it as well?” Simple… because the more successful business entities that are in operation in this world... the better life is for all involved.
I do apologize for being so long winded, but I do believe you have an excellent opportunity within your grasp and also believe that if you acquire as much detailed information on the subject as available you could become quite successful in achieving what you and the other gentleman discussed recently.
Allow me to run this reply to concerns expressed over my interaction within this realm of interaction up the flag pole to see if we can separate those who know, have done and will continue to do… and well perhaps the definitions for the others is best left to your personal taste… Okay?
Mr. John Locke if you are referring to Business Strategy 8 in your covenanted ‘Police Manifesto’--- please don’t disturb yourself with thoughts of the like. There is one singular for my reply to Mr. ellismatt’s question…
And being a REI Professional you may well remember this situation… yourself.
In the post–World War II era, savings and loans began and continued to grow until the crisis of the 1980s. Efforts to make ailing S&Ls more competitive with banks and to allow them to deal with high inflation rates, the Ford, Carter, and Reagan administrations substantially deregulated the industry. To bolster their business, many associations began making high-risk/high-yield loans, but as these ventures often failed, the industry came crashing down. Deregulation had also made it easier for banking officials, attorneys, CPAs and REI Investors to engage in corrupt practices, which worsened the crash.
[Sound Familiar?]--- If not other recently shared info may assist in recollection. Mr. ellismatt’s description of the encounter he had caught my attention because I had not heard anyone speak such a situation since many of us REI assisted in the bail-out of those S&L’s mentioned above back about 1985 -89.
Now as to your concerns Mr. bargain76… had you been a numbers person such as most of us REI people are and ever dealt with investments outside the third, fourth and fifth “Flipped Property Inventory” found on 99.9% of courthouse steps across the 3042 counties in the USA--- you would have known;
That I personally would have done my home inspection at the time I delivered the first installment to the “Distressed Owner” who had already verbally agreed to just sign-off his interest (and usually life saving) only to get people to quite reminding him he was in financial distress. [Notice I said I mailed the ‘Vacate Agreement’… if that signed agreement does not arrive back at my office in 7 days time… I’m knocking on the door with a pen and cashier’s check in hand.] The moment he signs the document (which by the way I always have a spare in my back pocket) … and places his fingers on my check any legal situation arising from his point has gone null & void.
In the old days this strategy was used to purchase the redemption rights to the property as well, but since most states have either decreased or total eliminated we hardly ever need to go after the redemption rights any longer in most cases.
Now you expressed a concern about the percentages that I placed in my reply. Well Mr. bargain76… here is where REI becomes an ART that few REI people ever master or for that matter ever even attempt. Once Mr. Distressed Property Owner gives me what I request… I make the offer to make sure he gets what he wants--- the dollars and cents.
I offer to drive him directly to the bank to ensure he has no trouble at all cashing the check I have just placed in his hands. Now do you know what happens 10 out of 10 times right here? I get a no thank you and 20 questions as to why I would help him out like I was doing –(as he is walking me back to my truck)- where laying open on the front seat is a picture portfolio of other properties that I am in need of occupants for.
One single question usually ‘Flips” Mr. Distressed Property Owner from enemy to another 21% or more in my business;
By the way where are you and the family going to live when you move from the home you have here?
Well we were going to get an apartment down on Schiller Street.
If it were possible wouldn’t you actually like to live in a house free of all the apartment noise and congestion? [And say absolutely nothing at all until he completes explaining why he can not afford anything other than an apartment.] This is where the Judgment Call I mentioned to Mr. ellismatt comes into play… for I have had very few who have not told me the complete story of how they ended up standing next to me by my truck… many times with tears in their eyes and voices and very seldom without any misrepresentations at all.
Now Mr. bargain76… do you know what I have done here? Without badgering the Distressed Property Owner in any way I have gotten him to tell me how much he believes he would be able to pay for a home to live in. I’ve located where he and others of his association my desire to live next… [And since I do not ever participate in any deals outside of my self-imposed 3 county buy-zone at any time]… only once in the last 52 deals I have personally been involved in was I without at least 2 properties that I could show Mr. Distressed Property Owner during this truck side conversation only once] – And that was because the lady had 5 kids and had already signed a government support contract the day before I arrived.
Now I’ve don my inspection of the property (which by the way I trust a whole lot more than those pay by the hour property inspectors.) I also have the property occupying associate I suggested Mr. ellismatt pull into his team from the beginning arranging an occupancy situation on her end.
Now you raised a concern about purchasing a mortgage and not actually owning the property… Correct? Well here is a question to ponder for a moment or two. “If someone has more legal power to take something away from you than you have to keep something… Who is the actual owner by any stretch of the imagination or law?”
Now back in the old days when I purchased moldy, rundown half decayed properties that had sat without any care at all for a year so from the county court house (we use to go to the coffee- not the steps) along the Mississippi River land where I grew up pulling 21% out of a property meant a lot of $10 per hour sweat, pain and aggravation for myself.
But I met a sexy little redhead lawyer on a hunting trip to Colorado long about March of 1987 who enlightened me to a formula that encompassed within its legal realm of capabilities my fully secured position of owning both the mortgage & the property… from that day forward it remove any and all need I would ever have to engage in any foreclosure activities ever again within my realm of REIing.
Now Mr. bargain76… being the seasoned REIing Professional that would be able to achieve the possession of a writ of possession against the properties I invest in. I am quite certain you would be able to quickly and easily dislodge the JTWROS that when I place my hand to immediately become the possession of the corporation that is taking ownership of the property under my direction… Correct?
For you see the way these JTWROS have been setup in my investing strategies since that sexy little redhead lawyer lady put my first one together for me back in May of 1987, in every investment I make I own the land and the occupant owns the building which they are buying from my corporation. That portion of my legal ownership states without any doubt of sideways language… payment due on the 1stday of every month… day 3- I call… you explain… day 5- I knock on the door… and day 7 you ain’t paid --- you get another $3500 check –[and you become someone else’s problem child!]
Which by the way those of you whoa are reading and asking --- yes I ended up marrying her, but she passed from my life in July of 1991 when her heart collapsed.
See Mr. bargain76… I deal in Private Held Mortgages and Private Held Mortgages Only--- and in my world of investment Private Held Mortgages is defined very simply--- I control ever aspect of that properties livelihood from the moment I place my dollars and cents into the Escrow account to make the deal exactly what I want it to be. If it does not become exactly what I want it to be do you know what I do? I toss it back out into the raging river where you and others such as yourself can compete for it on the court house steps.
And since all of my deals are Private Held Mortgages and I have eliminated the need to jump through any hoops involved with those high ROI Foreclosures everyone seems to love so much… I get an average of another 2% that would otherwise be wasted on Mortgage Insurance each year… which I believe if memory serves me correctly I only have one commercial property that needs a few bucks added each year to cover all taxes and replacement and liability insurance needs.
So Mr. bargain76… the next time 4 men walk up to you while your having dinner with your wife and kids in a restaurant… hand you a business card a say, “Call us Monday morning we have some investment funds we like to roll… remember to tell them that unless you are investing in real estate off the court house steps--- all else is and I quote “Absolute BALONEY, IDIOCY, LUDICROUS!” unquote.
Mr. ellismatt you have a very firm grasp on the situation as you described it back to Mr. bargain76…but a couple of things.
Don’t make a habit of ‘Flipping’… although it can and does put money in your pocket it will not generate a reputation as a long term solution provider--- where the big dollars and cents are found--- just as old Sam Walton’s make one cent profit from each sale ludicrous business strategy he pitched to the Ben Franklin Boardroom members who laugh him out of the room back in 1960 has built his business into the most powerful business on earth today…
Don’t get involved in any deals where you are in control or you do not walk away from the Escrow Signing table with check in hand.
And work on developing a second nature knack for listening to what people tell you they do in their business situations and perhaps you may not see a need in replying to a business person that opens their business interaction with as such…
Happiness is: Buy low [when a person’s down kick them],
sell high [when you see a profit never look any further],
collect early and pay late [and only do what is best for you whenever you can get by with it].
Well I believe today is the day I have to be on the court house steps first thing this morning, thus I guess I’d best tone up my best bidding nod and boggy off.
And remember why Ford Motor Company is most successful business out of the 250 others that competed with it back in its day… because in today’s world it is just as Henry Ford said… “A business that makes nothing but money is a poor business.”
2littlewords...Are you still rambling on? As ellismatt the newbie asking if you title search before you buy? Or as ellismatt the sophisticated investor/ Realtor who has finally done a deal?
Or as the pompous scam artist?
[addsig]
This is a residential property. I already have a second on the property. is there anyway I can get money out to invest? [ Edited by dexter_leon on Date 07/19/2006 ]
There are lenders who specialize in 125% loans that may be able to help, although it is not really recommended that you (or many people) go that route.
Why is it not a good idea to use lenders willing to do 125% financing?
Dear ellismatt,
Per your requests I have edited the previously posted information extracting what I would consider an attempt at advertising, if I were placed in the position of being charged with the task of running blocker between fellow forum users and the predatory factors present in today’s business realms.
I would personally request of you (and anyone else who may read this) and consider getting into this realm of business activity do 3 things before you jump into it head first.
*** Firstly --- Invest no less than 7 days into formulating what you wish to achieve with the business you are considering (i.e.: In other words… plan out your new business venture to the point where when someone asks what you do for a living you can give them a single sentence answer.)
*** Secondly --- Invest no less than 3 days of the 7 mentioned about into a simple re-education of the differences between being an Employee, Self-Employed, Business Owner and Investor (this is not because you do not have an idea of these differences at this point in time, but the success and failure of any NEW business venture usually rest firmly in the wiliness or non-wiliness’ of the people considering a new venture to prepare themselves thru adjusting the mindset to be used in its daily operation.)
*** Thirdly --- I would suggest that from the very beginning of this new venture you approach it as a business… setting it up step by step as a business… this in short means that you must have the “Mind” of this business in place before you ever make your first attempt to achieve any business transactions. Some refer to this as the Master-Mind Group… some as the Core Directional Team, but in my world it is my Board Room ---
This consists of a 5 member team who weekly review each and every business move our business entity makes and then places a ‘Blind Vote” of yes or no if we will make any move or not. The reason for my 5 member team is simple --- no decision ever made will become a situation… (i.e.: 3 to 2 for or ‘Yes Votes’ we do the deal or 3 to 2 against or ‘No Votes’ we do not… with a 5 member team no vote will ever come back as anything other than “Yes or No”.)
One of the biggest and most detrimental situation businesses allow to take root is the situation of allowing ‘emotions’ to enter into any proposed business activity, move or transaction. Using the system I have described above… no emotions will be involved for the decision is made by a simple check mark on a pre-printed piece of paper as ‘Yes or No’… with no explanations involved, but rest assured that when you have 5 sets of eyes reviewing any given situation… if there is anything that is missed by a couple of sets of those eyes… it will most likely be seen by another somewhere along the line.
[Word of caution here: As you bring together this group of business associates it would be best if you do so outside the realm of family members--- and most especially those with whom you have done business in the past--- for they will do one thing that will and usually does cause New Business Owner giant headaches… they will “Pre-Assume” they know exactly how the others they know would approach these situations and attempt to adjust their decisions in line with those pre-assumptions.]
What I am discussing with you here is the setting up of a business entity that will have the highest ratio of successful business achievement. And here is one of the most important factors you will need to know about any venture you decided to engage in… you must prepare yourself to be a Business Owner before you will ever have the most secure opportunity to become an Investor.
Dear ellismatt, I am certain you have heard the common statistic that most New Business Ventures are out of business within the first 36 months of their operation… Correct? This is not because those who make attempts at their operation are lacking access to capital, proven business platform or mythologies… most usually this situation has its roots in one factor--- they firmly believe they can operate their New Business Venture using the very same set of solutions they have used in the past in their positioning as an Employee or Self-Employed business participant.
In other words… they simply never invest the time needed and always required in adjusting the mindsets that actually make up the core differences between owning a business or being an investor verses being an employee or self-employed. Although if you were to take those same people to a raging river and ask them to jump in without knowing how to swim… they would run off screaming as fast as possible in the opposite direction and most likely never speak with you again.
If you do not make this singular mistake made by many others I can assure you that you will have the most secure and highest ratio of successful business achievement in a short period of time. Should you decide to couple the strategy described above to the opportunity that you presented the other day you will have a business situation which will have the ability to generate you more income in one day than most average businesses achieve in any 3 years of operation.
Respectfully,
2littlewords
Quote: 2 Good To Be True?
Unknown to 99.9% of most real estate professionals today the paper side of the real estate market is by far the most lucrative, secure and easily managed investment arena to be involved in with real estate.
The situation you have described has been by far the most lucrative portion of my real estate investment portfolio since I began investing in real estate back on May 20th of 1980.
As of today the refinancing boom which took place in the past few years is catching up with many who refinanced using ARM’s without the full understanding that their mortgage payments would increase as the Prime Lending Rates regained the ground they had given up that sparked the refinance boom of the past few years. Coupled to the relaxing of Lending Qualifications by mortgage providers has created a situation where many mortgage providers are seeing a growing number of their sub-prime loans entering distressed situations daily.
As you may be well aware; mortgage providers are in the business of lending money & collecting payments… not in the business of property ownership and management. Thus many are seeking avenues by which they might clear their books of mortgages that enter distressed situation quickly, easily and most economically for their establishments.
The situation which you described is, in fact, a growing market of today where supply far exceeds seasoned investors who are experienced in dealing with providing solutions that are beneficial to all parties who are involved.
Being a realtor I am certain that you would possess all components to generate yourself a good return on your investment if structured it properly.
My suggestions here would be:
*****First you obtain a letter of commitment from the selling entity of the mortgage mentioned containing the stated price that has been negotiated to purchase the mortgage.
*****Second contact one of you local escrow or title companies and request the preparation of a listing package for the subject property.
Once you have secured these two pieces of information you will be in the position to most accurately determine the actual profitable of the deal that you are arranging. My personal no go positioning is set at no less than 21% gross ROI. This no go positioning allows me to place well structured deals within my pool of investors who are satisfied receiving 12 to 15% ROI on their investment while leaving me 6 to 8% for having the time the lack to securing and achieving the most secure location to place their investments that provide them with higher ROI and security than they could find in today’s CD, IRA or Stock market investments.
Now that you have secured the needed information to most securely evaluate your positioning as a potential Investor, as you have stated you will face the need to remove the current occupant of the property and place an occupant that has the ability to maintain the debt service requirements of the mortgage.
Once again here as a realtor I would suspect that you have access to buyers who might have the capability of maintaining those debt service requirements who would be happy to not only purchase the property, but would provide the needed rehab as well.
(Word of caution here: Most investors find themselves quickly losing their ROI positioning when they begin placing money into rehabbing properties which they have invested in… firstly because of the timeline involved in the rehab process and secondly due to the fact that once a buy enters their newly purchased home (my experience has shown that 78% will rehab the property to their personal liking anyways.)
***** Third once you have the information and set you own personal no go investment level and decide to step into the position of investor. Prepare a Certified Letter to be delivered to the current occupant offering to provide them with $3500 to vacate the subject property… leaving it fully cleaned and occupy able within a certain period of time. I usually allow 30 to 45 days… this relieves much of their stress and grants them time to actually re-fall-in-love with their home as it was before it became a burden. {Here it has been my experience that many of these investment properties have been vacated in resale shape with only a couple of hundred dollars in cosmetic up-dating, rather than fully rehab condition… remember NOT ALL WHO FALL ON HARD TIMES ARE DEAD BEAT OWNERS. Most usually they are simply people who have entered unforeseen situations for which they were not properly prepared.}
(Here you have done 3 things… one you have developed an occupant who is stress-freely motivated to get out from under the situation that has become a burden to them. Two you have, most likely, reduced you own clean up and preparation cost by 40 to 75% of hiring a local business to achieve this for you as the investor. Third is a personal call on each individual situation… you have developed a cooperative and grateful individual who might just be able to occupy another property that could more efficiently be maintained by their current financial situation.)
Remember if you approach the current occupant as an enemy they will very quickly become an enemy who most of the time will eat up a good deal of your profitability within a deal, simply because they will transform the anger of their situation onto your and your property 99.9% of the time.
But if you approach them as a solution producing associate you may have another occupant that will happily assist you in achieving another 21% ROI property quickly and easily… should you be able to locate them one to more adequately fit their personal situations.
Now make sure that your Certified Letter requires that the current occupant sign a contract to vacate within 30 to 45 days and understands that they will receive payment upon satisfactory inspection of the property. (What I do here is pay the occupant 1/3 on the day I receive the contract of vacating of the property… in most situations this- at the very least- gives them the money they may lack to vacate in the first place. The other 2/3 being paid on the final day of the vacating contract and it automatically builds into your investment position the amount you will most likely need to spend to make the property occupy able for another buyer.)
***** At this point you have a property in need of being occupied quickly to secure the debt service requirements needed to secure your ROI. What I do at this point is to place an offer with individuals whom I believe would be interested in becoming home owners, many of whom I have located due to the fact that they simply needed to down size their debt service requirements within another investment that I have acquired in another situation.
What I do is immediately resell the property by allowing a prospective property buyer to assume the mortgage which I have just purchase for a non-refundable assumption fee of 2.5% of what the face value of the mortgage at the time of assumption. As you have become the mortgage investor and have purchased the mortgage itself you have placed yourself in the position of being fully in place to make the decisions that would create the exact you desire to achieve your highest ratio of success and personal investment comfort zone.
{In the situation that you have described you would locate and place a new occupant in the $425,000 property who could supply you with a $10,625 non-refundable assumption fee.
Here you have recouped the $3500 vacating fee paid to the occupant who is currently in financial distress.
You have also acquired… what my investment group refers to as our “ROI Security Funding”… in the amount of $7125 that can be placed into a low interest securing account that can be drawn upon should a time come in the future where you had to vacate and re-occupy that property with those who you place within it initially.
In other words what you have achieved is purchasing a property with a Fair Market Value of $425,000 at a deep discount because you have the time, information and ability to provide quick, easy and reasonable solutions for current mortgage holders --- distressed mortgagee’s --- and provide an opportunity for people who have possibly fallen victim to having bit off a bit more than they could actually chew in the refinance frenzy that has taken place in the past few years.
Mr. ellismatt, once you step into the position of becoming the direct mortgage holder --- that possesses the ability to provide solutions for those who are currently holding distressed mortgages… providing distressed mortgagee with the ability to secure housing that they can actually maintain with solutions that no one else will provide them with by setting up a real estate investing approach such as I have described above.
You can and most likely will become the most sought after real estate investor in your market very quickly and cost effectively. According to the most recent information that I have reviewed as of May 2006 provided by the HUD division of the US Government there is an average of $2.8 billion of new mortgages being created each and every year within the Single Family Housing Market alone. With an average of about $392,000,000 worth of these notes arriving at the point of becoming distressed or being distressed within 36 to 72 months of their creation.
Thus in answer to you question, “Is this too good to be true”, No sir it is not… it is in fact a developing market within which there is, at this time, a very low degree of competition.
Thus I would personally suggest that you make full usage of the person who has enlightened you to this opportunity recently. Become an associate with him that allows him to dedicate his time to the location and securing the commitment of sale instruments… while you dedicate your time and effort into growing your positioning as both an investor and property occupier… and lastly I would suggest that you select an individual whom you would be comfortable with that could dedicate their time to the removal of distressed occupants (possibly into something that is more appropriate for their current needs and abilities) to prepare for reoccupation of the properties that you as an investor have secured.
Now at this time you may be asking yourself, “Why would this person share this information with me and the others who may read it as well?” Simple… because the more successful business entities that are in operation in this world... the better life is for all involved.
I do apologize for being so long winded, but I do believe you have an excellent opportunity within your grasp and also believe that if you acquire as much detailed information on the subject as available you could become quite successful in achieving what you and the other gentleman discussed recently.
Respectfully adjusted by,
2littlewords
2littlewords,
Have you ever read the "Forum Police Manifesto"?
This is my "hint" for you.
John $Cash$ Locke
I gave you my take on your posts.
Have a great day!
[addsig]
Dear ellismatt and fellow forum members,
Allow me to run this reply to concerns expressed over my interaction within this realm of interaction up the flag pole to see if we can separate those who know, have done and will continue to do… and well perhaps the definitions for the others is best left to your personal taste… Okay?
Mr. John Locke if you are referring to Business Strategy 8 in your covenanted ‘Police Manifesto’--- please don’t disturb yourself with thoughts of the like. There is one singular for my reply to Mr. ellismatt’s question…
And being a REI Professional you may well remember this situation… yourself.
In the post–World War II era, savings and loans began and continued to grow until the crisis of the 1980s. Efforts to make ailing S&Ls more competitive with banks and to allow them to deal with high inflation rates, the Ford, Carter, and Reagan administrations substantially deregulated the industry. To bolster their business, many associations began making high-risk/high-yield loans, but as these ventures often failed, the industry came crashing down. Deregulation had also made it easier for banking officials, attorneys, CPAs and REI Investors to engage in corrupt practices, which worsened the crash.
[Sound Familiar?]--- If not other recently shared info may assist in recollection. Mr. ellismatt’s description of the encounter he had caught my attention because I had not heard anyone speak such a situation since many of us REI assisted in the bail-out of those S&L’s mentioned above back about 1985 -89.
Now as to your concerns Mr. bargain76… had you been a numbers person such as most of us REI people are and ever dealt with investments outside the third, fourth and fifth “Flipped Property Inventory” found on 99.9% of courthouse steps across the 3042 counties in the USA--- you would have known;
That I personally would have done my home inspection at the time I delivered the first installment to the “Distressed Owner” who had already verbally agreed to just sign-off his interest (and usually life saving) only to get people to quite reminding him he was in financial distress. [Notice I said I mailed the ‘Vacate Agreement’… if that signed agreement does not arrive back at my office in 7 days time… I’m knocking on the door with a pen and cashier’s check in hand.] The moment he signs the document (which by the way I always have a spare in my back pocket) … and places his fingers on my check any legal situation arising from his point has gone null & void.
In the old days this strategy was used to purchase the redemption rights to the property as well, but since most states have either decreased or total eliminated we hardly ever need to go after the redemption rights any longer in most cases.
Now you expressed a concern about the percentages that I placed in my reply. Well Mr. bargain76… here is where REI becomes an ART that few REI people ever master or for that matter ever even attempt. Once Mr. Distressed Property Owner gives me what I request… I make the offer to make sure he gets what he wants--- the dollars and cents.
I offer to drive him directly to the bank to ensure he has no trouble at all cashing the check I have just placed in his hands. Now do you know what happens 10 out of 10 times right here? I get a no thank you and 20 questions as to why I would help him out like I was doing –(as he is walking me back to my truck)- where laying open on the front seat is a picture portfolio of other properties that I am in need of occupants for.
One single question usually ‘Flips” Mr. Distressed Property Owner from enemy to another 21% or more in my business;
By the way where are you and the family going to live when you move from the home you have here?
Well we were going to get an apartment down on Schiller Street.
If it were possible wouldn’t you actually like to live in a house free of all the apartment noise and congestion? [And say absolutely nothing at all until he completes explaining why he can not afford anything other than an apartment.] This is where the Judgment Call I mentioned to Mr. ellismatt comes into play… for I have had very few who have not told me the complete story of how they ended up standing next to me by my truck… many times with tears in their eyes and voices and very seldom without any misrepresentations at all.
Now Mr. bargain76… do you know what I have done here? Without badgering the Distressed Property Owner in any way I have gotten him to tell me how much he believes he would be able to pay for a home to live in. I’ve located where he and others of his association my desire to live next… [And since I do not ever participate in any deals outside of my self-imposed 3 county buy-zone at any time]… only once in the last 52 deals I have personally been involved in was I without at least 2 properties that I could show Mr. Distressed Property Owner during this truck side conversation only once] – And that was because the lady had 5 kids and had already signed a government support contract the day before I arrived.
Now I’ve don my inspection of the property (which by the way I trust a whole lot more than those pay by the hour property inspectors.) I also have the property occupying associate I suggested Mr. ellismatt pull into his team from the beginning arranging an occupancy situation on her end.
Now you raised a concern about purchasing a mortgage and not actually owning the property… Correct? Well here is a question to ponder for a moment or two. “If someone has more legal power to take something away from you than you have to keep something… Who is the actual owner by any stretch of the imagination or law?”
Now back in the old days when I purchased moldy, rundown half decayed properties that had sat without any care at all for a year so from the county court house (we use to go to the coffee- not the steps) along the Mississippi River land where I grew up pulling 21% out of a property meant a lot of $10 per hour sweat, pain and aggravation for myself.
But I met a sexy little redhead lawyer on a hunting trip to Colorado long about March of 1987 who enlightened me to a formula that encompassed within its legal realm of capabilities my fully secured position of owning both the mortgage & the property… from that day forward it remove any and all need I would ever have to engage in any foreclosure activities ever again within my realm of REIing.
Now Mr. bargain76… being the seasoned REIing Professional that would be able to achieve the possession of a writ of possession against the properties I invest in. I am quite certain you would be able to quickly and easily dislodge the JTWROS that when I place my hand to immediately become the possession of the corporation that is taking ownership of the property under my direction… Correct?
For you see the way these JTWROS have been setup in my investing strategies since that sexy little redhead lawyer lady put my first one together for me back in May of 1987, in every investment I make I own the land and the occupant owns the building which they are buying from my corporation. That portion of my legal ownership states without any doubt of sideways language… payment due on the 1stday of every month… day 3- I call… you explain… day 5- I knock on the door… and day 7 you ain’t paid --- you get another $3500 check –[and you become someone else’s problem child!]
Which by the way those of you whoa are reading and asking --- yes I ended up marrying her, but she passed from my life in July of 1991 when her heart collapsed.
See Mr. bargain76… I deal in Private Held Mortgages and Private Held Mortgages Only--- and in my world of investment Private Held Mortgages is defined very simply--- I control ever aspect of that properties livelihood from the moment I place my dollars and cents into the Escrow account to make the deal exactly what I want it to be. If it does not become exactly what I want it to be do you know what I do? I toss it back out into the raging river where you and others such as yourself can compete for it on the court house steps.
And since all of my deals are Private Held Mortgages and I have eliminated the need to jump through any hoops involved with those high ROI Foreclosures everyone seems to love so much… I get an average of another 2% that would otherwise be wasted on Mortgage Insurance each year… which I believe if memory serves me correctly I only have one commercial property that needs a few bucks added each year to cover all taxes and replacement and liability insurance needs.
So Mr. bargain76… the next time 4 men walk up to you while your having dinner with your wife and kids in a restaurant… hand you a business card a say, “Call us Monday morning we have some investment funds we like to roll… remember to tell them that unless you are investing in real estate off the court house steps--- all else is and I quote “Absolute BALONEY, IDIOCY, LUDICROUS!” unquote.
Mr. ellismatt you have a very firm grasp on the situation as you described it back to Mr. bargain76…but a couple of things.
Don’t make a habit of ‘Flipping’… although it can and does put money in your pocket it will not generate a reputation as a long term solution provider--- where the big dollars and cents are found--- just as old Sam Walton’s make one cent profit from each sale ludicrous business strategy he pitched to the Ben Franklin Boardroom members who laugh him out of the room back in 1960 has built his business into the most powerful business on earth today…
Don’t get involved in any deals where you are in control or you do not walk away from the Escrow Signing table with check in hand.
And work on developing a second nature knack for listening to what people tell you they do in their business situations and perhaps you may not see a need in replying to a business person that opens their business interaction with as such…
Happiness is: Buy low [when a person’s down kick them],
sell high [when you see a profit never look any further],
collect early and pay late [and only do what is best for you whenever you can get by with it].
Well I believe today is the day I have to be on the court house steps first thing this morning, thus I guess I’d best tone up my best bidding nod and boggy off.
And remember why Ford Motor Company is most successful business out of the 250 others that competed with it back in its day… because in today’s world it is just as Henry Ford said… “A business that makes nothing but money is a poor business.”
Respectfully,
2littlewords
2littlewords,
You are only on Convenent 5, 8 comes after you set the hook.
However, you will have to get by me first. Just like the song goes "It is only a matter of time."
John $Cash$ Locke
[addsig]
Just out of curiousity... Do you get paid by the word on these long, rambling posts?
What 2 little words just said Yeah!!!
2littlewords...Are you still rambling on? As ellismatt the newbie asking if you title search before you buy? Or as ellismatt the sophisticated investor/ Realtor who has finally done a deal?
Or as the pompous scam artist?
[addsig]