Forum Replies Created
- CheevesFinancial wrote:>LAWSJS: I mentioned earlier about your #2. Sometimes we allow investors to see inventory we haven't closed on yet. This would be titled still under the old seller and not us. However we never send one out that we don't have control of.
In which case there is an obvious and sensible explanation, which would clearly allay any fears anyone might have.
I have never dealt with anyone in the US who is legitimate that doesn’t get really pissed off with having to comply with sometimes crazy laws that the ‘bad guys’ simply ignore. They are rightly proud of their legitimacy and so they should be. If they are legitimate they will immediately be able to point you in the direction of the governing body or if you use a buyers agent type scenario they will be using legitimate people – an easily explained and simple legal trail is easily established.
Deal with people who must comply with the laws of the land and even you pay far too much for something but can justify it in your own mind, you will be protected from the worst of the scams.
Then you just have to find a rehab team and very good management – easy:)
Thanks guys.
Simple rules to follow:
1) Get the address.
2) Ensure the title for the address is in a company name that makes ‘sense’, not an unrelated (unexplained) 3rd party / LLC.
3) Only wire purchase money to the Title Company involved in the transaction, Never the person or firm ‘selling’ the property.
4) Always check the legitimacy/Licences of the broker or agent involved (remembering no one is perfect and everyone complains in the US!).Anyone see any glaring errors or omissions in that list?
and
3) Never wire money to the ‘Selling’ firm?
Isn’t this analogous to sending funds to a real estate agents Trust account??I haven’t bought any subprime stuff myself, but have been asked for advice numerous times. It is not simple!
So in summary you are saying there is no way of confirming the ‘legitimacy’ of any wholesaler? That would imply your credentials are a total waste of time… Very unfair on you.
The easiest check then to make (it would seem) is
1) Get an address – mandatory
2) Ensure the ‘seller’ you think should own it (i.e. a bank if a short sale etc) actually does own it and not XYZ123 LLCWould this be a reasonable/fast and accurate process? Using your experience as a wholesaler, is there a better step to ensure you are dealing with someone ‘legit’?
Thanks in advance Cheeves – really helpful stuff…
On a handheld, but regarding the $15k bill. I said $1k worth of work but the reality was they may have just changed the locks. After paying for that and property management and not getting the rent the house is now bordered up. Can you believe people could be so unethical? I didnt but I sure as hell do now!
Where do you find licenced Wholesalers?
Don’t see the point in an LLC – unless you have very serious tax issues to contend with. Provides no more security than your own name (hard and very exxy to serve papers on you in Aus) and is look through from a tax/liability perspective and immediately adds $’s to your tax returns each year.
I am intrigued with richards finance offer above. Sounds almost too good to be true though I would take at face value what anyone says – initially. I would be interested in details if you have them richard?? PM??
My ‘opinion’ is that people get carried away with LLC’s and structures unnecessarily. The easiest thing in the world to do is build up legitimate expenses. You don’t need a team of accountants on both sides of the Pacific to do it on your behalf.
Texas Cash Cow Investments Australia wrote:lawsjs wrote:These guys, it must be remembered, can read like a who's who of banned company directors in their home countries. These guys are the type who would have moved from roofing insulation to school halls, solar panels and then had the brains to discover real estate in dodgy US cities.You forgot to mention previous roles in selling two tiered real estate in Queensland
That is very very close to the truth.
jayhinrichs wrote:The incident that Lawys talks about is just flat out felonious activity… Investor buys a share of LLC, LLC is suppose to own asset A howeever does not…. and investor has bought into a shell with no assets.With luck, we may get something done on that. I wouldn’t have thought it was possible to screw up that much, but you have enough monkeys and typewriters and look what can happen!
True. I assumed all US Wholesalers were licenced. It was who they passed the sales onto that have been my main bugbear. I didn’t realise it all started (potentially) at the very bottom…. hmmmm.
Pun excused:)
Cheeves… The thing is the sales you make are then offloaded by those people who have no clue about RE. And THEY are the totally unlicensed ones.
The end result of all this will be mountainous repair bills. It has taken me 15 years to get a good team together. Why should anyone give you a good deal if they never see you again? I had a building painting quote for $34k. The ‘real’ number was $5-6k. The repairs in time will be killers unless you are very careful. Add in another 1000 properties in the same condition and your area becomes a hot bed for well paid maintenance guys…
I can’t help myself with this subject. I actually don’t have anything against US wholesalers. I only own one condo in fact and bought it from a flipper, paying $60k for the pleasure. I knew all about it and am still happy with the purchase. However:
The major problem from the Aussie purchaser’s perspective (or anywhere else) is that these deals attract the worst kind of marketeer in the business. There should be some duty of care/empathy with the purchaser. In cases I have come across there is nothing more than a desire to extract as much income for the end seller as possible. These guys, it must be remembered, can read like a who’s who of banned company directors in their home countries. These guys are the type who would have moved from roofing insulation to school halls, solar panels and then had the brains to discover real estate in dodgy US cities.
If I was a wholesaler I would be being very careful about who I dealt with and try to get as much of an understanding of the end product as possible. As I have said before US agents/wholesalers have very complex rules and regs to abide by. The types of people I am referring to abide by nothing. The shell LLC model is an atrocious one if you aren’t extremely careful. For the uninitiated all it does is allow the seller to circumvent 200+ years of property transfer protection laws by simply selling you a company. Which may **or may not** own the property that you think you have bought.
Projecting these deals 2+ years down the track I believe there are likely to be vast swathes of ghetto like areas created in hitherto nice areas, as bulk property gets passed to out of towners who have no clue about what they have bought. I know my sister has spent a huge amount of time working out management issues for the future and I know Jay’s system of partnering buildings has great merit, but for most people once you have handed over your dollars I doubt you will see the guys you bought from for dust. And as anyone in the US business will tell you, management is THE problem. I can only guess at what 1000 unkempt properties will end up tenanted with in 5 years time. Don’t kid yourselves (unless you really work the problem) that the ‘supposed’ 15-20% net returns will be that after a couple of years if your entire neighbourhood is sold through fast buck merchants from overseas who in all probability have never even seen the property they are flogging you.
My broker and my sister have been heavily involved in sorting two such cases out. I am unaware of any Jay might be involved in, but I found the ones ‘we’ know about because I was looking for them. They exist, once these guys are ‘outed’ the floodgates will open and hopefully the whole lot of these bottom feeders will be unable to feed because it will be too easy for people to find out the right questions to ask. I am not anti profit and certainly not anti real estate agents. I am anti theft – if that makes sense:)
My finance knowledge is not foolproof, but be VERY careful. I don’t dabble in the subprime pond and just got (as a non resi alien) 4.36 fixed for 30 years on commercial. It is possible. But as a general rule: Trust no one!!
Vikki,
You aren’t able to get 40% finance. These things are cash only. I can all but guarantee you the $40,000 is buying the place for cash (or almost all of it) and the finance they are ‘offering’ is actually their own profit. What you have suggested their MO is in your email would be enough to make me run a mile! Its easy to conjure up numbers on these things.This is how it works:
Last week my sister found two $15k (yes thats right fifteen thousand) properties that have almost had the required $4k repairs (each inside 5 days to complete) finished with a rental of $700. So total cost $19k with a net rental of $6800pa – 35% net. This is not unusual – a guy at work was boasting about 45%, when I asked where and how, my sisters name came up. Small world:) The point is, these buys aren’t impossible, not common, but out there.I hasten to say she only got into this business to help people avoid this scenario but, say she operated like a lot of these guys:
The price for a start looks shifty to Aussies as it is ‘too’ cheap. Nice looking places too BTW – so easy to val up. Zillow shows neighbouring properties in the $60k-80k++ region, how can you go wrong??
She offers the place for sale $60,000 and helps people gear into the investment with as little as 30% down. Amazing deal!! 15-16% gross return – 12% net!! Imagine that – buying a whole house for $60k – how can it be so cheap??? So the buyer races to the bank and stumps up $20,000 (covering the whole cost of the property for the seller) and the rest is ‘financed’ at generous rates (for the financier/seller) – and usually only for 3-5 years. If they aren’t feeling generous they will also charge for the repair with yet another generous margin thrown in. Even if they did charge they would not be after a good price for the work, so it is easy to see (and in one case we have evidence of) $10-15k being charged for maybe $1k worth of repair work. It is not a stretch of the imagination to assume that no alien will get finance in 5 years time (my finance contacts flat out say NEVER) on these properties so you could surmise without more funds from home that they will take title to the property and repeat the process with another poor schmuck buying a dream US investment property in a few years time. Nice work if you can get it:)
The scenario above is common, one case we know of the buyer didn’t even have title. The LLC purchase structure these guys use is also fraught with risk – don’t get caught, don’t use finance and if you really must buy in an LLC make sure it is an LLC name of YOUR choosing, not just any random XYZ LLC company name the seller chose along with the other 20 they bought that day….
he he he. Uncle/Auntie Jack lives in an apartment building I had a unit in and lived in for a while. Just sold that one in fact to buy a 4unit in Belmont Shore Ca. One of my all time favourite properties – sorry to see it go.
Like your work – he would have appreciated the joke!!
Bula! Fiji always has political unrest. Nothing to worry about. Unlike Syria your local political mercenary is easily distracted with a bowl of Kava. I have great sympathy for the Fijians and totally understand where they are coming from – although there are better ways to do it I thiink.
BTW I have never been but the Cook Is are supposedly the ‘new’ Fiji. I will be getting there soon as I can..
I said devaluing the Zim $ was not good for them. I didn’t say anything about the $US take-up. I bought a pair of $10,000,000,000 Zim notes last time I was in Joh’burg for the sake of posterity. I don’t think the Zim $ I got last time I was in Harare would be worth anything now. The biggest note only had two zero’s:) The street vendors always did a roaring trade in marijuana, I would guess that would be even cheaper now – hard currency???
kylermrice wrote:Who could say no to a charismatic gentleman like myself, ha!Uncle Jack???? Seriously, congratulations.
Freckle, what investment pond do you play in? Despite what you might think I actually agree with most of what you are saying, the addiction to debt has to stop. It didn’t work for the Weimar Republic and Zimbabwe has hardly been an economic powerhouse since the Zim $ was devalued… Interesting times indeed.
You are a sick puppy KO…
Unless of course you meant to capitalise the Uncle Jack, rather than just uncle…
Enjoy the sandpit Alex, no doubt catch up to you somewhere around the world….
Freckle. One property as an example, and only chosen because the time line fits. Purchased for $720k with a 70%LV loan of $500k in Oct ’06. I just got an $800k loan on it, 70% LV again. Therefore on the banks estimation (i.e: very conservative) the price rose from $720k in late 06 to $1.1 in Jan 12. That represents around a 50% price increase in my books, which makes up for the loss in the $AUD and don’t forget it has been happily spinning off cash since I bought it. Total repairs/maintenance in that time would be around $25-30k, so the price increase is not due to renovation or sweat equity. My other buildings are either older or much newer purchases which makes the numbers rubbery, but they are in the same area and are the same ‘type’ of property so I think it is fair to say this one example would be indicative of the whole.
