tag:blogger.com,1999:blog-8238580336028028965.post387706484303495646..comments2021-05-19T06:18:15.443-07:00Comments on Profitable Investing Strategies: How do you find "good" deals without any competition?Jay Palmquisthttp://www.blogger.com/profile/16579050903015122895noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-8238580336028028965.post-6879087872583376722011-08-07T09:28:57.385-07:002011-08-07T09:28:57.385-07:00My friend only has an option to sub2 the deal, not...My friend only has an option to sub2 the deal, not actually taking title, until he is successful with the loan mod. or short sale negotiation... That's how he limits himself from 'rent skimming,' and the seller is not receiving anything, but the option consideration. So, no title holder is receiving 'rent.'<br /><br />He options the loan balance at the time of short sale, or loan modification. If he doesn't get the short sale or the loan mod. he abandons the option. Also, the bank could go ahead and foreclose...and in that event the option would be extinguished by default. He hasn't told me if he's had this problem yet. He's just had a problem with a seller wanting out of the deal after a year...and he gave up his position, but not after netting about $1,000/mo on the deal. So, it was still good, and worth the risk, etc.Jay Palmquisthttps://www.blogger.com/profile/16579050903015122895noreply@blogger.comtag:blogger.com,1999:blog-8238580336028028965.post-91636959856959873902011-08-06T23:44:06.526-07:002011-08-06T23:44:06.526-07:00Thank you for the response. Yes, I would use a lan...Thank you for the response. Yes, I would use a land trust to execute this. Even though I know how to conduct a successful loan mod, and have done it since 2007, I have never attempted a principle reduction. This is where I believe a good, reputatable and establised law firm might be valuable. I intent to research this possibility with potential firms. However, even if the principle isn't reduced, if the payment is lowered significantly where I can achieve positive cash flow from renting, that would also work for me. <br /><br />In the instance where the loan mod stipulates that the owner lives in the house for certain length of time, if I am eager to sell, I suspect I could seller finance for the duration of the stipulation. <br /><br />Now, in the case of your friend, at what price does he contract his option (current market value, current loan amount or modified amount)? Also, how doe he protect himself from liability for collecting rent of a default property (rent skimming)? His option protects the seller. But what about him?<br /><br />Thank you. Your willingness to share your knowledge and educate is invaluable.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8238580336028028965.post-88618537997677039962011-08-05T13:05:11.789-07:002011-08-05T13:05:11.789-07:00I'm not an expert on that strategy. However, ...I'm not an expert on that strategy. However, I talk frequenlty with an investor friend of mine who secures options on upside down houses; gives the sellers a couple of thousand dollars as option consideration; rents out the house; applies for a loan modification; and finally takes title when/if the loan mod is successful. Meantime, my friend keeps all the rents, so he wins even if he loses the deal.<br /><br />It's wise to get the deed from the seller in the meantime. The option part is just to relieve the seller of any liability for receiving rent during a default (rent skimming). And the option consideration is not taxable until the option is abandoned or exercised.<br /><br />I would put the title into a Land Trust and then you can do whatever you like in selling it via a lease/option, land contract, or whatever. I just would not transfer title until your buyer pays off the loan. <br /><br />Of course the loan modification may have a stipulation that the owner must live in the house for a period of time... This could be a problem for you. Also, loan mods rarely reduce the principal. <br /><br />So, unless this loan modification is a principal reduction and not just an artificially low interest rate... It might not be sellable after all is said and done; depends on the payment amount...Jay Palmquisthttps://www.blogger.com/profile/16579050903015122895noreply@blogger.comtag:blogger.com,1999:blog-8238580336028028965.post-75214923102344338122011-08-05T10:09:34.551-07:002011-08-05T10:09:34.551-07:00This comment has been removed by a blog administrator.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8238580336028028965.post-78956705513098102992011-08-05T10:09:05.061-07:002011-08-05T10:09:05.061-07:00How would you go about handling a sub2 on upside d...How would you go about handling a sub2 on upside down properties, or properties in arrear/or in foreclosure? I would like to target some of these owners, and hire a proven/efficient loan modification firm to handle the loan mod. So for instance, a home in foreclosure has a loan of 200k with CMV (current market value) of 90K. I would take it under sub2, and have the load mod to something close to or under the CMV; then do a lease option or seller finance above the 90k. what do you think about this strategy?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8238580336028028965.post-77327884791696647882008-07-07T17:28:00.000-07:002008-07-07T17:28:00.000-07:00That’s a great question, and there are several ans...That’s a great question, and there are several answers depending on the pressure and frequency one plans to maintain in buying and selling sub2. That is, is this a full-time effort, or not?<BR/><BR/><BR/>If this is a “one-time” proposition, it might take several weeks to locate a buyer, if we haven’t already begun a marketing campaign for buyers. <BR/><BR/>If we’ve advertised for buyers ahead of time, using our “phantom” house as bait, we’ll might already have six to ten (or more) potential buyer’s lined up, and it'll be just a few days before we can resell. <BR/><BR/>Of course we have cattle call showings, so that we can create a scarcity mentality among our buyers. This isn’t always possible, but we aim for this.<BR/><BR/>That all said, we need to make sure we know very intimately what the velocity of sales is in the farm area, and the average days on market --- and comps. <BR/><BR/>This will be a legitimate gauge as to what we can expect if we are marketing our homes anywhere near retail.<BR/><BR/>We’ve found that it costs us about 1% of the value of the house to market it for sale. So a $250,000 will costs roughly $2,500 in total marketing costs (gas, ads, flyers, newspaper ads, etc.)<BR/><BR/>We keep a leader ad running in every venue we can including “real estate” wanted in the biggest circulation paper, craigslist.com, kijiji.com, backpage.com, penny-saver, etc.<BR/><BR/><BR/>Also our ads emphasize the features of the house that attract that certain type of buyer that our house will mostly appeal to. For instance, we don't market a 2/2/1 condo as a family home. We would market it to a young married couple with 1 kid, or no kids.<BR/><BR/>As far as finding credit-challenged buyers we advertise precisely for these folks. Our headlines always read something close to this..<BR/><BR/>$20,000 down, NO QUAL.<BR/>Orange Crest 3 bed, 2 bath has it all.<BR/>2400 sqft tile roof spa RV parking<BR/>$1900/mo Call Jay Today (866)237-3847<BR/><BR/>or similarly to this... <BR/><BR/>No Credit Check! Small Down! Seller Finance! $1900/mo 3 bed, 2 baths, fenced yard, RV parking, tile roof, 2400 sqft. Call Jay Today (866) 237-3847<BR/><BR/>Those with credit problems are the ones that will first notice and respond to these ads. Also, we advertise the PI only, and not the PITI. <BR/><BR/>There’s a lot more to say here of course, but marketing for buyers will be a 24/7 effort from the moment we start looking for houses to flip, until the minute we sell the last property.Jay Palmquisthttps://www.blogger.com/profile/16579050903015122895noreply@blogger.comtag:blogger.com,1999:blog-8238580336028028965.post-38243523750034552662008-07-07T16:39:00.000-07:002008-07-07T16:39:00.000-07:00Excellent post; great way to make some quick cash,...Excellent post; great way to make some quick cash, and I like that it doesn't require any cash/credit on the part of the investor.<BR/><BR/>One question: what exactly do you do to find those homebuyers who can't qualify for a normal loan? What type/amount of marketing do you do to build up your buyer's list?Anonymousnoreply@blogger.com