Forum Replies Created
Just one of a hundred plus clients I had in my hard money days…
Hard money lending is basically like this.
Your borrower wants to steal your money how are you going to protect yourself.
Just look at the company you sent me Ageis and there submission form..
Big D was good at what he did… If he kept his hands off the money ( we never let him near it ) he got paid a flip fee off of the HUD like any other flipper,,, But when he gets investors to send him money directly well thats creates a problem
This story unfolds 1000's of times accross the US… people send money direct to a contact instead of the Title co. or Closing attornies and this is what can happen.
I have also seen it big time in the Property management business… Nothing regulating those guys other than their word. And you get one with a gambling problem drug problem Women or man problem.. And your rents can and do go missing. Even though its not legal having all that cash sitting in an account that they can write checks off of well there you go Mortal man and temptation. Happens every day like I said in the PM business as well and PM's end up going to jail too.
speedy gonzales wrote:worldinvestor wrote:I would say another major lure to Texas is the fact that foreign investors can source finance at an attractive rate.
What I think is incredibly scarey about this one is that the investor receives a "bank valuation" and assumes this must be spot on, how could you possibly take this seriously in this current market of foreclosures, short sales, foreigners paying over the top prices.
Zillow may not be perfect and I am told it generally overstates the sale price, but alarm bells must be ringing if you are paying $50K over the zestimate. Build cost today and how much you pay per sq ft is one way of keeping the figures real.
Also, what about the investors purchasing in Texas actually taking over a mortgage, I really don't get that one, common sense would tell you that you are paying too much for the property in the first instance.
WI
WI,
You seem to make the assumption that everybody and anybody can get finance anywhere in Texas based on the above statement. Believe me finance for foreign nationals is not an easy thing to achieve ANYWHERE in the USA and you will find that it is available only in small pockets. My lender for example is only interested in North Dallas because that is the area they operate in and are familiar with. If I presented a property in Houston to them they are not interested…..(I have asked).
The investor doesn't receive a "bank" valuation as you incorrectly assume. You need to do some research on the valuation processes and what acts of law they need to follow in the USA before you make ignorant comments based on no foundation. Banks appoint companies to order appraisals on their behalf…they are not "bank valuations"…they are done by independent appraisal companies and a professional appraiser really wouldn't find it too hard to separate normal market sales from foreclosure sales…they do speak to people as part of the process you realise….people like real estate agents !!A very good friend of mine has been buying property in Atlanta…he got hard money finance at 50% down and is paying 11%. The hard money lender did an appraisal and that backed up what he had paid…he got a 22 page report which shows the comparable sales. So are you saying all appraisals are flawed no matter what city your in ??
And Zillow….really….your comparing a free online appraisal process to a proper recognised valuation. Zillow and Trulia can be miles apart with figures so which one should I base it on.
Its common for banks to finance their own inventory this could be reo's this bank owns and why the loans are regionlized.
if they are small commercial banks they are only allowed to lend in their FOOTPRINT the fed has come down hard on small banks lending out of their area so they just cannot do it anymore even if they wanted to…. My commercial bank here in Oregon is under the same order. they can only lend in the 3 county area. go 50 miles away and they cannot loan.
us investor,
I guess we all will agree to disagree about PM… It is the most thankless business I can think of in the residential relm.
Unless your really large like 2 to 10k units and mainly multi family and you run it like a well oiled corporation. And those companies that do that only buy A and B buildings your never going to get a top flight management company taking on c and lower assets.
In the SFR relm.. the business is totally fractionalized.. huge amounts of small players.. Just run the math there is already not a lot of money in the business. and most like Alex do it because they have too… they were tired of referring their PM out to third parties only to have clients complain like heck… better to do it yourself.
beleive me I have been there done that both personally and as a company,, and it was the biggest reason why I set TWH up the way we did and brought the PM's in as equity owners…. HUGE difference than a vendor relationship…
In the sandbox 90% of OZ's are playing in which is SFR's to blue color workers or Hud tenants your just going to have these issue ongoing till the day you sell the asset. Now you can get very lucky and get a good tenant that stays maybe a 2 to 3 years. but turn over and reletting fee's are industry norm..
Any property manager that actually wants to make a living better than just a living wage needs to create profit centers in their management company thats bottom line …
worldinvestor wrote:"So what I like about Atlanta is you take that same 125k Dallas home and we are all in at 50 to 70k… It sold new for 150… we are buying for far less than replacement cost. And I do beleive when all the properties get absorbed here over the next 5 years. and new construciton starts back up… New construction in these markets will be 125 to 150 for start… And these projest will pull our 50 to 70 homes up to within 20% of the new construction. there by doubling our money on capital growth. but buyer beware you buy in the wrong neighborhoods in Atlanta and or buy super cheap Atlanta and you will get the exact same experince you get in the other mid west town… troubles with rents and renters and no upside ever".
Sounds good to me.
I would say another major lure to Texas is the fact that foreign investors can source finance at an attractive rate.
What I think is incredibly scarey about this one is that the investor receives a "bank valuation" and assumes this must be spot on, how could you possibly take this seriously in this current market of foreclosures, short sales, foreigners paying over the top prices.
Zillow may not be perfect and I am told it generally overstates the sale price, but alarm bells must be ringing if you are paying $50K over the zestimate. Build cost today and how much you pay per sq ft is one way of keeping the figures real.
Also, what about the investors purchasing in Texas actually taking over a mortgage, I really don't get that one, common sense would tell you that you are paying too much for the property in the first instance.
WI
WI taking over mortgages unless there is a formal assumption which really does not happen in the SFR realm at least in the last 20 years. will open the new investor up to the loan being called due and payable at the banks option. Now if they are originating a new loan to you as in purchase money loan then your fine.
As I said in other posts there are new equity skimmy laws that preclude buying a house from a homeowner who is in foreclosure and just taking title subject to their loan…they are entitled to equity and a licensed forelcosure specialist has to do the paper work and represent the seller only.. this can be attorney , cpa , mortgage banker, certain RE brokers.US citizens are getting nailed on this scheme right and left right now…. And one poster said he knew of some OZ investors that look like they are loosing their downpayment and the homes are being taken away… Buy all cash or new originated loans and no problems. take over existing loans that are in default huge issues one needs to be aware of and navagte correctly.
emma171 wrote:OMG OMG OMG.. THAT IS SO SO SO FLIPPING FUNNY …. JUST READ WHAT I WROTE UNDER THE "NEWBIE"… THIS IS THE GUY THAT GOT ME LOOKING AT ATLANTA… I posted my reply to him that I sent to all my clients back then! THAT IS HYSTERICAL!!!!!! Seriously – Demetrius Mathis… LMAO….Lucky you did not get hooked up with him but you would have vetted him out before he stung you most likely, but he had a knack I can tell you he moved hundred upon hundreds of homes and has hundreds upon hundreds of clients that are going to enjoy seeing him paying the piper.
I feel sorry for the wife though she is a nice lady teach's third grade. Probably did not have a real scense what he was up too.
I could write a white paper on who the good guys are and who the bad guys are. I have loaned to probably 50 different turn key companies over the years
texas cash cow just reread.
I think what this guy did was the ole Subject too… Then create a trust or LLC name it the Smith family LLC or Trust… The smiths are the owners of the house… This at first fools the bank…. Then they did a little deeper at the secretary of state and see that XYZ company or owner actually owns the trust or LLC not the Smiths…. And the mailing address change along with registered agents. At that point the deed of trust has been alienated and is callable. and depending on how the transaction went down there could be claims made of equity skimming ,, Realtors fiducerery etc etc. RE brokers loose there licenses all the time for these types of deals…. I know been one 37 years. Never had a complaint. And thats in California the most complaint riden state in the Union.
Peter, glad to respond and appologize for my getting out of control…. I had a few martini's ( one olive grey goose) and my wife slipped me my half of ambien a little too early.. so the combo kind of gets me going and sometimes its not pretty.
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Its the bandit signs you see " I buy houses any price any condition" they are looking for the owner losing the house and may only need 5 to 20k to bring the loan current. Investor steps in buys the house either keeps the owner that was living there the tenant or moves another in. Well There are 2 things wrong with this scheme.. I makes the contract to buy voidable and an illegal practice, the other gives the lender the right to alienate the title.
So example:
US local guy scourse the NOD's or sends post cards and gets responces' Shows up to the house and promises to pay all the back payments and take over the house, and hopefully give the poor shmuch a few bucks so the can move on..They then flip this to a new owner making their customary flip type fees. The new owner or their LLC takes Title SUBJECT TOO the exisiting financing and it could have a great 4 to 6% fully amortized loan.. ( speedy was talking about one of those today)…
so here is the issue to help people with forclosure problems you need to be a licensed foreclosure work out specialeliest. And in most states thats an attorney,, CPA,,Real Estate Broker, Mortgage Banker, who has taken special course. Those that just show up as future owners are clearly not allowed to give advice or buy these homes under these default conditons… There are also formulas that run with these types of transactions if the house is subsequently sold the old owner is entitiled to 85% of what ever profit was made. So you can see a company like ours that would qualify as a forelcosure consultant would have a fiduciary to get the hightest price possible for the poor seller loosing their home and or try real hard to get them a loan mod so they can stay….
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The alienation clause is simple the deed of trust has the right to be called all due and payable if you transfer title, unless its spouse or family planning type stuff…. Schemers try to get around these by naming their LLC in the name of last owner. So to the bank it looks like owner just moved the asset to their personall LLC…However a check at the state and the owners of the LLC are not the old owner and this scheme gets busted.
So this is called Equity skimming and the fed does not like it any more… It is a model I used extensively until the laws changed. And prior to the laws changing because this is how I amassed more than 20 million dollars worth of real estate. one of the people that I bought the home from Sue me and turned me into the Attorney Genereal in state of WA… We ended up giving the house back ( wife never told the hubby they were having financial trouble and hubby was in Iraq) so it was a no brainer to give them the house back and it was only 10k cash down deal we did not even ask for our money back we used it as a donation to help a US military family.
So the conversation went on I got more pastinate blah blah blah…
Bottom line is if there are folks out there promoting this scheme its not legal on two fronts. the skimming laws and alienation.
NOW if you just pay cash then all is write with the world no law against that willing buyer willing seller. RE brokers though need to be careful and make sure they are doing the best for their seller as they can… A RE broker who shows a pattern of representing the selling and buying side and selling houses far under market can and will loose their license upon complaints.
Any way if you have more specifics you can shoot them to me off line and I can make a pretty educated guess.
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emma171 wrote:A guy called Demetrius Mathis actually …. if you think Atlanta is drying up… dear heavens…there are 10 times the properties here than there ever were in Vegas…..Vegas is gone…in fact, Vegas was never like Atlanta – it has been "tight" since the day I walked into it by comparison to here…… there are still the rare ones pop up that I will nab but that is one in 3 weeks…luckily everyone is willing to wait for the right one rather than just "any" but still. This is what I sent to my ENTIRE list of people that day… I think you will get the point… he has persisted to contact me – interestingly his website reads "people trust him so much and his amazing team that over 80% of his clients buy site unseen and are from oversees"… I am apparently not focusing on the right thing….. oh and he is willing to cut me in without marking up his property any more (so I really hope this doesn't get deleted for spruiking) As I am quoting him directly I will also state that should anyone be interested in pursuing an amazing deal like this, I will happily pass on his details… but quick, rush because there is a HUGE demand or something…. Dear All I have received contact from a company selling properties in another state. I will repeat verbatim my response to him…. I will not elaborate. I will STRONGLY recommend that if you are looking elsewhere that you INSIST upon knowing what the company paid for the property and justify in your own head any mark-ups. QUOTE Demetrius Fantastic – thanks for the below.. Okay. I am about to send this verbatim out to my email list. I just want to make sure I get this absolutely accurate: A house that was bought at auction for 24k on July 5 can be bought through you for $57k… Except that we have to rush because they move so quickly…. Probably this example property has been sold already…..although it has sat since July. This is a property that you are asking $20,000 more for than any recent sale within a half mile. I will pose it to my clients and let them decide. As they all use zillow, trulia, redfin and other such websites, if they do choose to pay you literally more than the house cost in commission (27k in repairs/commission for a house that cost 24k) and to pay 20,000 DOLLARS more than EVERY recent sale within 1/2 mile then that is up to them – I am more than happy for them to have choice in this market and will simply outline the services you offer. With enormous thanks…. UNQUOTE Normally I "rip" these to shreds but the only thing I couldn't fault was the yield – which was a first…… "where next" is the question most of my clients and I discuss weekly! As I always say, you just never know "where" next…Demetrius is amazing he was the first contact I made in 2003 and decided to make hard money loans to him or his clients. He did not personally qualify so he would hook up with Radio stations in LA and other marketing companies he was ahead of his time on internet marketing. And he has that Ole shucks kind of personallity… We would do 20 or so for his clients and they would go oK then the next 5 the rehab was pathetic. and I would cut him off. Then I did a home I would normally not do as a flip lost 30k
And his clients were screaming like banshi's the rehabs were so poor. This was Jackson MS. he was basically run out of town and went to Atlanta… I did 6 deals there for his clients and 5 ended up forelcosing on because it was right at the start of the price melt down. THen Big D went dark…. And you all know I can right some drunken tirades I gave him a piece of my mind one night and that was the last of him…He then surfaced looking for money a year ago and I would not even return his e mail..This case seem pretty clear clients wired in 25k he kept and spent it…. He lives in a big house drives the nice trucks and Mercedes kids in priate schools etc… Just would close deals get his money and hope they worked was basically his SOPS
He has done hundreds of deals so we may get called on this one.. they tend to dig as far back as they can find records. And Big D was very computer literate so there is probably a bunch on his drives.
The Aussie companies are not the only ones who charge up front.
this one company from Utah they are the back end boiler rooms for the Robert Kosiaki's of the guru world.. Armando Montolongo, bob diamond ,,, and others.
their site is http://www.myreostore.com they want 10k up front to look. You get 3 back on each house you buy.
they are using little to no care in what markets they buy and what property they sell. they sold off a few of my REO's i had in Indiana that I did not want to keep so I know how they present and what they make… they want to make 15 to 20k a house period.
I had this really tidy 3 plex that I sold them for 30k after I had done a nice rehab on it. they sold it for 57k. Double escrowed it and walked with 27k profit. But that LLC needed cash and they do bring in the buyers. They have over 100 people working the boiler rooms. It starts with a free seminar,, upsold to 3 day crash course,, then upsold to 10 to 20k mentor program…
Not sure if people do this type of up sell in Oz or not. But it can cost a property buyer 25k or more before they even buy their first property that they will pay far too much for.I saw 2 homes that they sold in one of my markets. and with in 120 days the houses we empty and trashed.
emma171 wrote:I love Portland … I worked with the gods of urban planning from there… George Crandall and Don Arambula of Crandall Arambula. What a great city… …don't ever pay anyone an upfront fee!Oregon land use laws are the most complicated over thought out of date zoning laws. but liberal Oregonians love them and they brag all the time about how the Oregonian zoning laws are the toast of the entire country . They are so good and admired that not one state has even remotely copied them…
but on the hand… We did not get totally over built so our values though down 30% to 50% in some areas a lot less. did not crash like other areas that saw prices fall 60 to 80% which is still hard to fathom, but it is what it is and now is the time to buy.
The play in oregon is land in the path of progress
Emma I would re think the statement about negotiating with a RE agent to manage homes and "if you will manage them for next to nothing I will buy homes from you"..
Your negotiating with a RE agent who may be starving and has never managed a property before.. He agrees to do this management as you state… they last maybe 3 to 6 months B/C management is a specialty and to manage a handful of properties is really not feasable for the average Agent… for easy math 3 houses rents 1000 and you negotiate them to 7% maybe so thats 210 a month… Any agent worth working with would not be very excited about 200 bucks a month and all the work that goes into screening leasing taking maintenance calls calls from the owner e mails etc etc. Just really do not think this would work out in the real world..Real estate agents come and go.. Also your inviting a robbing Peter to pay paul scenerio now you have an agent who may be not doing well and 3k comes into their account and now they have to pay their mortgage and their goes your rent money… I know I have had it happen to me personally with this exact scenerio a RE agent I was buying GOZONE new construction from and letting her manage them.. She ended up owing me over 5k..
Anyway… Your right about sourcing properties one can easily go to any agent and get them to e mail you listing every day. There are software systems US agents use that you just load in what the client is looking for and an e mail goes out daily with the new properties on MLS every agent has this.. I get 10 a day from all over the country when I am checking out markets…
Like I want a place in Vegas right now to get out of the NW winter… Call an agent get e mails generated daily on my criteria easy.
I think the turn key has a place when it comes to rehab though… Just calling contractors to bid on jobs when you live in OZ your defiantly taking a huge risk there,, One on quality of work and 2 on grossly overpaying….You talk about sending money to someone that will just walk away with it…
I think its more flushing out the team you want to work with let everyone make a little money and off you go.
Some states you need a RE licnese to manage and a Brokers to boot not just any agent can manage. here in Oregon its a seperate RE test altogether and different license… Indiana you need no license, you can just hold yourself out as a manager.
And actually I work with on thats pretty good in a little town north of Indy that I buy and hold in. He is retired constractor and his wife does the books they have about 30 of their own houses and manage about 50.. They don't have a web site and takes a day or 2 to get a call back, but they are decent folks and honest and do a nice job.Its USAcashflow.com
most of his properties he post are Atlanta.. although the 25k he allegedly pillfered was for a deal in West Memphis..on a multi family which of course any one familar with Memphis would recognize most of west memphis as deep in the hood
http://www.uscashflow.com I think is his web site It was still up yesterday.
Up shot is he took at 25k deposit from clients from Norway… and spent it on himself.
FBI raided him charged him with all sorts of malfesanse.. They are also seizing his home and all his other possessions to pay restition.
Of course not all Turn key companies just flat steal money like this guy did but one has to be very careful with who you deal with
emma have your brother look at my post about the FBI arresting one of the all time US spruikers… Its coming for those that have been stealing from foriegners
worldinvestor:
I would imagine what attracts the mum and pop OZ investor is the low price of entry… From what I know in OZ properties are like were I live here on the west coast and probably more akin to pricing in the San Francisco Bay area ( penninsula Side) Seattle and better parts of Portland were I am…
So I think if you can't really afford a OZ rental and you want to get in the property game people get in a trance thinking about the 20k house they can buy in KC.. sit back collect their rent and everything is great. They soon realize that the 20k house in KC is just like a 20k house in Detroit or INDY or St. Luis or Memphis… These are homes that are in areas that were very nice 20 to 30 years ago, they have suffered white flight. and now are minority rental areas pick a minority it does not matter. these homes have little to know upside ever, and are just a bear to keep rented and maintained etc etc.
So I think the attraction to Dallas and Houstan and Atlanta to a certain extent and what I have seen in Charlote with Alex. Is that you have much nicer newer homes….
Texas market did not deflate as bad as the other markets one reason is TExas is a mother on lending laws. You do not just walk away from a home in texas… The bank can and will sue you for the deficancy.. Not so in 11 other states its illegal for banks to do that or other states that they just do not choose to sue on the note… TEXAS they CAN and THEY DO… So the stratigic foreclosure is not as big an option as say Arizona or central CA.
I personally have never invested in Texas I go there often on my way to my markets…. I just know a lot of people that have and a lot of people that had horrible experinces… And other than houses flippers the average investor that by the time they buy from a Reno and marketing company they are basically paying retial.. And there is no up side….
I know one guy from SAn Joe CA. who has a nice business in Dallas, and they buy 125k to 150k houses that they make about 20 to 30k per deal on. those houses then rent for 900 to 1200 and they look nice…and they are nice. Just no Up side in them your already paying full market for them and the builders can compete with new stock and whats a buyer going to do. Pick you home that has been a rental for 10 years or this brand new home for the same money… Or very close to the same
So what I like about Atlanta is you take that same 125k Dallas home and we are all in at 50 to 70k… It sold new for 150… we are buying for far less than replacement cost. And I do beleive when all the properties get absorbed here over the next 5 years. and new construciton starts back up… New construction in these markets will be 125 to 150 for start… And these projest will pull our 50 to 70 homes up to within 20% of the new construction. there by doubling our money on capital growth. but buyer beware you buy in the wrong neighborhoods in Atlanta and or buy super cheap Atlanta and you will get the exact same experince you get in the other mid west town… troubles with rents and renters and no upside ever.
So thats how I rationalize it. Last thing on Texas the property tax's can just be monster big.. ONe needs to be very careful before they settle on a house there and get with the tax collector and see where your property tax's will be once the house goes out of Homestead or owner occuppied status to rental status.
Alex
If this was 2007 and I still had all my bullets you would be the man..
turn and burn…..
You have a great operation and I have met your staff very nice dedicated folks.. look forward to working on some long term holds
49niners 5 super bows wins.. giants I think 3…
Not sure where all this is going to go RE wise having 35 years at it…and then 08 hit.. and well everything went out the window.
I do believe those buying now will profit.
JLH
There ya go just what Alex and I have been preaching..
If you go to our web site you will see address's nothing to hide
Vincent you need to talk to me… your dealing with US flippers and you will continue to go through providers…
lease option to purchase is a pipe dream.
I bet i have done 50 to 100 over the years and can count on one hand those that have bought… And those that have, their relatives cameup with the money
