Meet Paul Timmins
10 markets Rising
Jay's Column
Our future is Uncertain
I'll let Jim explain it: http://theburningplatform.com/economy/american-pie-1
Investment From Hell!
True story from an investor who mentioned this deal or should I say bad deal. We got him bailed out but it wasn't exactly profitable.
The Investment from Hell
Let me start by saying that many of these problems I had with this investment property were due to my greed and unfounded trust with individuals that I thought were experts in real estate investing. I would not consider myself an expert but someone that has been successful in several business ventures including hard money lending.
Lets play find the mistakes made on this property:
May 25,2007 loaned $78,000 to an investor in Tampa for an investment property in the city of Lakeland Florida. $50K to closing and the balance in escrow for repairs to the home. After several weeks a request for release of funds were sent without pictures and I live out of state. After speaking to the investor and a long time broker that handled the transaction they eased my concerns and I released funds. This process continued three more time before the investor notified me that her contractor had not performed most of the work and had taken the money and left.
She tried to continue with limited funds but was not able to make mortgage payments. I modified the mortgage to help ease her burden and loaned additional money but after 6 months she was not able to move forward. I went back to my trusted broker to find a suitable investor to take over the mortgage and complete the rehab.
Within a week a new investor came forward and was willing and able to complete the job and take over the mortgage payments. A qualified title company was contacted to complete the transaction and the parties were to meet to sign papers. After one week I called the title company to see where the paperwork was and I got no return call back. Two weeks, Three weeks and still no call.
No worries because the new contractor told me everything went fine and besides he happened to have the same last name that I have (can't be all bad, right?); and he would be starting soon but needed to borrow more money because the roof was in much worse state than he estimated. No additional money was loaned ,no work was completed, and no mortgage payment was received. Weeks turned into months and still no paperwork from the title company.
I finally was able to speak to the owner of the title company and she said they had no record of ever doing a closing for me. After contacting the original investor she showed me where the title company sent her an email with the deed and told her to sign it and then mail it to the new investor and he would mail it back to her.
So I contacted investor #2 (the one with the same last name) and he said he just went and recorded it but for $1,500 he would sign it back over even though he had not performed any work to the home.
Months turned into years and more attorney fees to get the deed back into investor #1 who now says she is ready to complete the home and even excited about getting a second chance. Remember now she will need more funds and with limited construction experience will need a contractor. After 4 months of very slow process she decides she no longer wants to be an investors and besides now the economy has turned south and the home is not worth what was originally loaned on it. She signs it back over to me, which the state now charges like a sale.
If you think it is all good from here, just wait.
I drive down to the property and notice a big red "STOP WORK" order on the window. Several windows are now broken and AC unit is missing along with toilets and sinks. I also find out there are two code violations that were ignored and now total over $10,000 in fines. Also a new permit must be pulled and any work that has already been completed must be torn down since no one ever called for inspections after repeated warning from inspectors. This home is now on a black list. Inspectors drive by at least twice a day. All new work must be performed by a licenced contractor.
I have to think that most investors trying to find a good deal would not have thought to dig deep enough to find the problems like permit issues, black listed, code violations, some of which were not showing as a lien on the title but follow the home.
Think this couldn't happen to you? Smart buyers could ask for proof that work performed on remodeled homes were done by a licenced contractor that pulled the proper permits before buying.
Signed: Anymouse
Beginning Investor Mistakes
6 Beginner Mistakes with Real Estate Investing
There are a lot of mistakes that can be made in Real Estate. In fact, many savvy investors still make mistakes or have overcome huge mistakes in their investing careers. The keys are to recognize, avoid, learn and move forward from these potential pitfalls. Here are 6 beginner mistakes when investing in real estate.
- 1. Speculate – Most new investors follow the herd, listen to the media and buy with the hope the property will appreciate. This is as much of a gamble as hand picking stocks or going to the Casino. Buy below market properties that cash flow.
- 2. Buy at Market Value – Beginners almost always buy property straight off the MLS for market value. You can find deals in any market and there are always distressed properties. Cherry pick from distressed properties at 70% or less of market value.
- 3. Fall in love with a deal – Many beginners are guilty of this one. Their first few deals they spend minimal time finding a deal. As soon as a prospect is located, they fall in love and do anything to get that property. Emotions drive the decision, instead of making an informed business decision. Key is to get as many prospects that fit the criteria into the pipeline, filter out the duds and cherry pick only the best deals.
- 4. Put too much down – Real estate is an OPM or Other People’s Money industry. You should minimize how much of your own money is in a deal. And always make sure you have plenty of reserves to handle any not so pleasant surprises.
- 5. Only 1 exit strategy – To minimize risk, it is imperative to have multiple exit strategies. If you cannot flip a property you can quickly end up upside down, behind in payments and lose the property and your credit. Instead, buy below market properties that cash flow. That way you can sell retail, wholesale, lease option, seller finance, refinance, even rent and hold.
- 6. Buy in Warzones – It is wish to buy property at a deep discount. In today’s market you can find huge discounts in many areas with the glut of foreclosures. Do your due diligence. Buying a property for 20K worth 80K sounds like a slam dunk, but not if the property is vandalized multiple times during repairs, surrounded by 20 other foreclosed properties and there is next to zero interest from renters or buyers due to the location in or near a warzone. Make sure there is strong demand from renters and/or ownership in the area.
Many gurus make real estate investing sound so easy. News flash, it is not. Many beginners make one, even all of the above mistakes and have a miserable first time investing experience. Whether you are a beginner or an expert, it is always a great idea to get as many expert opinions as you can. They will make you aware of many potential mistakes and red flags. Play the numbers game and cherry pick from as many prospects that meet your criteria as possible. Also always do extremely thorough due diligence. And finally, happy and profitable investing!!
Ryan Moeller For more Free articles, Guides and information visit us at www.realreturnrealestate.com .
Writing E Mails
R.E. Investings Saving Grace
Seller Finance to the Rescue!
R.E. Investing Web 2.0
|
