Bill O'Rafferty's daily info of importance

Bill,

Thank you for posting helpful information here. You were great and an inspiration at EDGE. Best wishes to you this year.

Cheryl & Dave

It is nice to see your post again. You have a lot of konwledge about REI and we like to hear what you have to say. It is also good to hear from a Realtors point of view that is also an investor.

Thank You
Steve.

Hi Bill

I know there may be someone else I should be asking this, but since I don't know who that is and you are perhaps the most knowledgable man on this site I will ask you. I am always interested in what you think anyway.

I have been wanting to buy REO's as a wholesaler and as a simple way around the "Assignment Issue" I am told I can just tell escrow to add my partner to title (if they won't simply let him go on without me) then I just need to remove myself via a quit claim deed or perhaps warranty deed/grant deed.

Now this seems the easiest and cleanest way to do this sort of deal but I haven't a clue what is involved to file one of these deeds to deed it over. So what would you recommend as to type of deed or document and is there a contract that should accompany it to show the money changing hands in exchange for the interest in the property? The reason I think I want that is to document my income for tax and other reasons.

I know I ask A lot.

thanks so much in advance.

steve

We can do anything with an reo the bank selling the property will allow us to do. Most of them time (really all the time) they will not allow assignments. We do double closings and it is no problem. Property records into your name and immediately from you into the assignee. Just like an interspousal deed in community property states. You just need to pay for a binder on the title policy so the transferee gets clear title. Ask escrow and title when you get the deal accepted and they should be able to lead you through this for less than $100 additional escrow cost.

If I were a new investor right now I would do 2 things. Get ready for October and November when inventory will be HUGE and banks will want to clear their books before the end of the year. Do this: get a buyer's list together and look for hard money. Real estate sales work in cycles and we are heading up again (inventory up, prices down). Get those properties in the fall for flips in the winter and early spring. Look at 2008 and 2009 as an example.

also, if you get a Twitter photo of a guy that has huge junk, it might be from me - gives junk mail a whole new definition??? Ok, you know I do not tweet, facebook or the like. The lesson in that mess is to own us to your mistakes and folks overlook it easily. Lie to try to cover it up and it will take you out.

Thanks Bill, I knew I had the right guy.

After talking with someone else (I won't name anyone here) about bank deal closings I am thinking I might not want the bank knowing that I am flipping it same day. If closing is all going down in the same house, I think I want to avoid asking them about a quit claim deed. I know they shouldn't care where the money is coming from but well,,,it's a bank who knows why they concern themselves with these things, like the assignment. I thought I would probably have to handle the QCD outside of escrow right after the closing.

Also as to how to record the transfer (assuming I don't do a double close) what do I use to sell my interest or show my transaction with my buyer so I can show that to the IRS or anyone else relevant?

Maybe I should ask a CPA about that but I think they don't usually know enough about REI to have that answer.

Thanks a million
Steve

Look up form 593-c at the California Frnachise Tax Board web site and you will find the info you need in terms of the tax consequences of the flip. A grant deed (warranty deed in some states) or quit claim deed will transfer your interest.

a lot Bill.

Steve

Not a good business strategy but I had a quick chance to make 30-40K and have 3 deals in the works right now (tied up my operating funds) so I was out of cash and not able to get some hard money that fast so I threw down the visa and bought a flipper - I might make 50K but 30-40K is a sure thing. Do you thing I care about the cash advance fee - not on this one? Anyone got a story that irresponsible?

Love your thread Bill it's educational AND entertaining.

Steve

Flips are so hard to come by in So Cal, I have started being more competitive buy offering less money than others will offer but doing so smartly. When I inspect a home I come up with a dollar amount for the repairs, resale, purchase price and such. Rather than make an offer with the hords of beaufords that are driving up the prices, I have been making all cash, all money up front, no inspection and no contingency offers and that gets an asset manager's attention. In two cases this past month I got properties where there were higher offers but the certianty of closing without hassles is getting me more deals from the banks.

I just stumbled across this feed tonight-well, now it is this morning! But the information you have here, from the first post to this last one, is outstanding.

I must thank you Bill for all this wonderful information. I am new to this and have been driving neighborhoods, doing some research on my area, and lots of reading of the DG family posts. This thread has been very helpful in clarifying some of the techniques I have been learning about.

I know this thread has taken dedication and lots of your time. Thank you again for all the information here.

I am honored you would take the time, much time, to read my writings. Hope you get some ideas you can use.

Best wishes.

I am just closing a deal with the most unreasonable client I have ever dealt with. Nice folks, but when deals start out with mountains of challenges and the people you are dealing with are the kind that want every little thing exactly the way they want it, get out early or you will have invested weeks of your time and energy into deals that get you nothing. Give and take is part of every deal and those that just take and take will kill your spirit and eat up your time. You do not just lose the time you spend, you also will lose the opportunity to make money on some other deal in the time you invest into those that cannot be pleased unless they get everything they want and your lunch too. I learned that again this week. We need to be ever wary to find the line early in the deal get out before we spend much time for nothing. The harder you have to work on the deal the less likely it is to close or make you any money at all. If they are unrealistic at first it does not get better, it always gets worse. Refer the deal to someone else or just bow out. People like this make us lose sleep or I would not be posting at 5:30 in the AM.

If you have a brilliant method we can use to avoid the need for such clauses we would all love to hear it. BTW I hope that doesn't come across as sarcastic. It's certainly not intended to be.

I know if anyone has figured such a way out it's you Bill, lol.

Steve

Bill,

Thanks for the advice. Sorry you had a rough time but, still glad you are closing the deal. Best wishes on you next deal.

Cheryl & Dave

This has been so informative and you helped me not to make a huge mistake with L/O. I will find renters and wait for the homes to appreciate. I love all of the information you have been speaking on.

May God to continue to bless you abundantly
Cynthia

died at the last minute. It was OK with me as the cosmic balance cannot equalize when the unresonable folks win. I am working on a hostile take over in Rancho Cucamonga in Southern California and will pass that along to someone else that wants it or will do it myself and tell you all the daily ins and out - anyone interested in taking the deal or hearing all the dirty details if I do it? There is money to be made but it is a long term deal which will require little or no money but some classy negotiation???

i would love to hear all the details on this deal in Rancho Cucamonga!

Since L/O is the area I am concentrating on, I would appreciate hearing what the huge mistake almost was and the advice so I will be sure to avoid that.

Thanks,
Karen

I have access to a condo that is worth 125-130K and the loan is 135K or so. You could just take it over and pay the payments with a neutral cash flow or pay off a 10K second and have a $200 per month positive. Great area, will appreciate, classic hostile take over where there is no money to be made up front but no cost either. Hold on till prices recover a bit and all the appreciation is yours. Send a PM if interested further.

Hi Bill i was reading your posts and just notice that you didn't post for a quiet a wile . I hope everything is going great for you . It will be great to read your posts again . By the way i read in one of your post that the great time to buy REO is going to be October November this year is that still valid i hope it's
I'm on the beginning of my journey and i would like to make a great choices one of which will be get an advise from someone like you.
tom

I forget to check the site sometimes and wonder if anyone is even reading, but have received a number of emails and PMs so thanks for encouraging me.

I have just purchase 3 properties after a shut out in the spring and winter of this year. We have to follow what is working when it works. Banks have let out many reo properties and this fall is a great time to buy. There are also many, many hard money lenders trying to loan out their funds and you can and should negotiate with them. I encourage you to do a deal this fall even if your profits are low on the deal, just get in the game and once you see how flipping is done, you will perfect the game. Short on time but I will follow up on the Rancho Cucamonga deal tomorrow.

Bill

on that tomorrow as well.

Houses cost what houses cost. Multi family properties are not houses - they are not homes - they are not valued at the rate of single family homes. Their value is TOTALLY connected to the amount of cash they bring in monthly. Buy a stock, buy a bond or buy a multi family property. It is all about the cash flow. If you think housing, you are an idiot. That is what a colleague told me and he was right.

I found this property with 2 homes on a lot for $115,000. I was evaluating its worth relative to other homes and the sale price I could get after rehab, relative to other homes. My error. I should have been evaluating what the property would be worth to an investor who wants to get a decent rate of return on his money. As a home, or homes, there was little there for profit. As an investment, I knew it would return about 2k per month and I also knew investors are looking for at 10% return annually on their investments. That makes the property worth $220,000 after rehab, not the $165,000 I was thinking it would be worth as housing. Because I was a dummy and fooled around a few days, I had to pay $120,000 for the place. I invested about 45K in rehab and listed it for 229K. I got 3 offers right away and netted 222K after sales commissions. After costs for funds and escrow and such, the net is 47K.

Always remember to look for the thing that is right in your face. Look at every property with this question: how can I make a buck on this place?

Great job. Glad to see you doing so well. I only wish you were up here in No Cal to show agents how to work with investors.

Keep up the good work and always glad to see your posts.

Steve.

Hi Bill,
thanks for all your useful information here. Regarding above quote, how does this work for investor with NO CASH, trying to do wholesale in SD? Seems I can't touch banks for REO or SS (because of No assignments allowed clause) been working on strategy using LP or LLC where in escrow an amendment is attached, allowing another LP to become the money/buyer, but the signor for both LPs is the same person.

I'm in a deal in escrow on SS using an agent - to get around assignment jynx. end buyer threw this amendment in at the last minute. wondering if this is how REIs in CA are getting around the assignment jynx and concurrent close option. Any input here?

you are so smart and knowledgeable. Thank you for your time and effort here

I am not licensed in SD but would think an agent or broker in SD can hire you to do marketing for them and pay you for your efforts? if they will not it is that they do not want to - find an agent that wants to.

Banks are seeing more inventory coming their way and moving homes to auction after 4-5 months on the market rather than leaving them on the market for long periods of time. A big bank had a listing at 192K that was worth 170K and would they not lower the price to 170K as they should have. I found out it was scheduled to go to auction and offered 145K and they took it. I put it on the market to sell, pending the close of the sales to my investor, and got 2 offers the first day - one at 167,000 and one at 168,000. A cool 20+K for capitalizing on their clumbsy system. Not all strategies work in all markets but some strategy will work in any market.