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Ziv to be specific from a US point of view
Having made over 2,000 hard money loans in my day,, so basically underwriting borrowers is what we do, along with underwriting the properties we are loaning on. here is my quick list. And I believe this is germane to buying from someone who is touting to provide a turnkey experience whether you visit the property or buy from the comfort of your home.
First there is the 3 C's of lending, as it relates to who your doing business with.
1. Character
2. Credit
3. Collateral
What I see most investors buying in the US doing is only focusing on the Collateral and not really focusing on who is bringing the deal to them… At least that was the case when I first joined this site a year and a half ago.. I think we have helped educate many to look at the providers of these homes as more than just a means to an end but who are they, and do they have the 3 C's as just the basics.
When making loans how do I check #1 Character
For me as a lender I do the following …. All of this takes maybe an hour if you know where to look.
a. Check public records in the county they live in… You would be surprised at the entanglements these folks get into from not paying sub contractors to being sued by clients for fraud and other malfeasance. They will never admit this they just talk a good game.. Then as a lender and this is really not feasible for the average Client, ( although I may provide this service)
I run them through my Lexus Nexus fraud detection software.. If their application does not match the info that they have provided me on the application then its a red flagged.
Lexus Nexus is what private detectives and FBI uses to chase down people its also know as a skip tracing software., Only certain companies can subscribe and Lenders with Brick and mortar are one. I can put their name in and in 5 minutes I will know every place in the US where they have lived their next of Kin, any and all utilities in each state that may be in their name,, and liens judgments etc. Its really fascinating what you find out on people. Majority of my borrowers were straight up,, But many of the turnkey companies had major issues with clients chasing them.
b. Credit report, Do you want to trust your hundred thousand dollar investment to someone who has exhibited very poor personal management of their credit.. Here you will see all sorts of things. From Foreclosures to Liens judgments back child support payments etc. You can run a credit report for $30.00 and just asking for one will cut the wheat from the chaff if they give you excuses why they will not do one for you ( like I am selling you this property why do you need my credit) then they by and large are hiding major issues. Those like myself with perfect credit will give this info willingly ( of course not to anybody we make sure we have a willing and able buyer before we provide). As part of my Due Diligence package to my clients I provide on top of this a Criminal background check of FBI quality. And copies of all my license's and the state web sites were you can see if there is any action or activity regarding my license's in a negative manner Along with letters from my banks informing our clients of our cash positions.. Again with the Turnkey guys most of them are not licensed and its caveat Emptor, and they would never share this info.
So just for fun all you folks dealing with US turnkey guys and especially the Aussies that claim to be experts in the US and have expert partners in the US. ask for a credit report and see what answer you get I bet you get a bunch of stumbling and excuses.
c. Collateral. here is where you can get all sorts of info on line, ( although one needs to use on line valuation services as a guide not the rule) they can be wildly in accurate IE too low or too high in Values. Best to always ask for and receive a 3rd party independent appraisal ( which is what we provide for each of our investments) here your getting a much better idea of true value.. You will not end up with a property that is worth 20k that you paid 60k for… And if there is a huge value issue you have the Appraisers E and O to go after. Remember your turnkey guy is long down the road and is near impossible to get to.. Like many have discovered.
So for all you that really want to ferret out the "Spruiekers" give these few suggestions a try and see what responses you get.
Now also realize many of these wholesaler retailers turnkey guys went through some really tough times and have foreclosures and bruised credit you just want them to be honest with you up front.
So when I lend money this is what I do before any loan is made…and I think since your sitting in Oz not knowing who or what to trust this will give you some form of due diligence that 99% of the public would never know how to do or think to do.
So this all said I doubt many or any one of you reading this will have the fortitude to ask these tough questions as they think it may be rude.
I would love to hear from any potential buyer of US properties if they will actually ask these questions and see what responses they get.
Now, just a commentary,, YOu take the post of Cheeves he has been forthright in acknowledging that he had problems in the down turn… I certainly did. So someone like Cheeves who is honest and up front you can get a comfort level with he did not have to offer this info. And other than a few e mails between him and I as peers I do not know him personally and he does not know me so I am not endorsing him.. Just applauding him for his honesty. I probably lost 50 to 60% of my net worth maybe more just to scared to look.. I did though work and fight to keep my credit and have never defaulted on a loan of any kind.. And at the peak I had 18 million in Bank loans. Now I have 2 million… Plus all my rentals but those don't count as they are 30 year fixed.. Although most of those are negative geared a little bit.. ( remember that was ok 8 years ago)… But I hung in there and have paid it all as agreed by the note and terms. And of that I am extremely proud.
So Ziv, that is what I would recommend for Due diligence in more than a few words
And as I stated I doubt many or any of the OZ clients will ask for this but here it is this is what should be done…And if the shoe is on the other foot and your borrowing money from a US bank this is the exact thing the bank will ask of you to qualify YOU as a borrower, I would venture to guess the 3 C;s are alive and well in the world of Mortgage lending in OZ as well. Along with deficiency judgements if you do not pay your OZ bank. . JLH
seminars,, are big business, its the education business, just like going to the book store and buying hot to books.
With very rare exceptions ( at least here in the states) those running seminars do not and have never really owned the properties they talk about,, they may flip them, but do not own them long term…Just in it for the flip fee's and seminar and mentoring fees.
Just google the "ripoff report" and look under seminar and mentoring companies there are so many complaints
But these guys have disclosure's and you are getting what they promise which is an education… The reality is only 1 out of 50 or less actually do anything with the info.
In the states the mantra is "get rich in real estate with none of your own money and no credit" while this can happen its rare and hens teeth.. But those who can least afford it will put these seminars on there credit cards, have no real money to do any thing and just file the books and tapes with all the other get rich quick MLM stuff that they keep searching for, as they are looking for the income without having a JOB…
Ya know the pitch ( you deserve this) ( you need time to spend with your kids) I think we have all seen how these companies start their presentation with the speaker showing his kids and how now he gets to spend all sorts of time with them etc etc. When in fact if he does get more free time he is golfing with his buddies kids have to go to school
Its just the psychology of selling… they all do the same.. Make it personal make it about family and kids and how you DESERVE this.
Any vintage home that I buy the first thing I do is put a new sewer line in to the street. I doubt you will be able to replace the entire sewer line for 500.00 1.500 to 2,000 is more the going rate. Most these lines were made with Terra Cotta piping just like the Romans
and roots get into the bell housing.better to get that done than to have constant maintenance calls and tenants that are not happy because their sewer plugs up its a very stinky mess for them. If there was one major fix I would do on any rental its that new PVC sewer line.
Here's to continued success with this one.. Keep us posted after you have a few years of running costs to see where your nets fall out… US investors really do not look at Gross yields… We look at Gross rent multipliers to get a base line but its really all about net.
And as I stated I doubt many or any of the OZ clients will ask for this but here it is this is what should be done…And if the shoe is on the other foot and your borrowing money from a US bank this is the exact thing the bank will ask of you to qualify YOU as a borrower, I would venture to guess the 3 C;s are alive and well in the world of Mortgage lending in OZ as well. Along with deficiency judgements if you do not pay your OZ bank. . 
