The Smelliest House I Blindly Invested In – Local Records Office

The story of the worst house I’ve came across in my life . . . Some of the articles I have written lately have been on topics of a more serious nature so I thought I would write about an abandoned house that I discovered a few years ago that was so unbelievable…. Well it was unbelievable. I thought I would tell this true story to show the lighter side to the business.

Fishy Smell That Would Give You a Headache

I was out searching for abandoned houses with my cousin, Peter Christenson, one hot summer day in July of 2016. I remember the temperature was over 100 and that meant that any abandoned house we found would be extremely hot inside. Inspecting the upstairs of a 2-story house, with no air conditioning, in the dead of a Texas summer, well that’s just not something they glorify on the infomercials. The house we happened upon is a perfect example of one of those properties you never hear about on TV.

Abandoned House With the Smell of Death

We found a house that we determined was abandoned. When we got about 10 feet from the door, we had to step back because there was one of the most foul, unpleasant odors coming from the inside…And we could smell it from outside. All the windows and doors were closed and it still smelled something awful.

We had to take turns running in the house, while holding our breath, to open a window and then run back out to gasp for fresh air. We both ran in & out of the house for an hour or so and yet the stench was still present. Airing the house out was not working so after another 30 minutes, we decided to run to Home Depot and buy some respirators so we could get in and inspect the house without gagging.

We opened up every closet door, every cabinet door and looked just about anywhere we could think of where the smell could be coming from. The house was totally empty but we began to think that the previous occupants had maybe buried an animal nearby or maybe they had buried a dead body under the house. It was such a horrible smell that our curiosities had us determined to find the source of it all.

Searching for the Smell

After we had searched just about every inch of the house and still came up with nothing, we looked at the ceiling and then we looked over at each other, eye to eye and without saying a word we set out to find the access to the attic. Since I was the lighter of the two of us, he propped me up and I got up through the hole and into the attic. I reached back for Peter and pulled him up through the hole. It was HOT up there! I’m not sure what the temperature was but I am sure it was in excess of 125 degrees.

We slowly started to crawl across the ceiling joists with our spotlights. We got across the main part of the house and came up to a double wall that separated the garage from the rest of the house. The open void between the two walls was about three to four inches of open space. When I got directly over the void and looked down with my spotlight… I froze right there after seeing what the light was revealing. I slowly looked over at my cousin, who had also stopped dead in his tracks. He slowly looked up and over at me and then rolled his eyes back down into the wall void. We had found the source of one of the most god-awful odors we had ever encountered.

It seems the previous occupants wanted to go out while leaving a statement. Something that would really get the attention of anyone that set foot in the house after they left.

Smell We Couldn’t Escape

It got our attention! The occupants had gone through the considerable trouble of getting up in to the attic, crawling across the ceiling joists to get to the void in the wall. At that point, they had actually dumped thousands and thousands of…. FISH! Yes, FISH! Tons of them! None of them were really that big but most of them were the size of Sunfish. We couldn’t believe it. It must have taken them weeks to haul that much fish up into the attic to dump between the walls. That was the only way anyone could have got anything into that space.

We came down out of the attic and went to talk to the neighbors. They told us that the house had been vacant since March and it was July when we discovered the house. That was a good five months for all that fish to fester and bake in the hot Texas heat.

Criminal Charges?

We later learned that the lender had pressed criminal charges against the previous owners because what they had actually done was intentionally destroy the property.

The fish had been in the house long enough for the smell to penetrate every part of it and it was eventually bulldozed because to get the smell out, all the drywall and the wood in the frame would have had to be removed and replaced. I guess the insurance adjuster figured it was a total loss.

Conclusion

Experiences like that, is why I love real estate. There are no two houses alike. And anytime I think I have seen it all…. I stumble upon a house like the “Fish House” and think to myself… “Wait ‘til everyone hears about this one!” So the next time you happen upon a house where something seems “fishy” grab your flashlight and go look in the attic.

To learn more about real estate and Local Records Office go to http://www.LocalRecordsOffices.net

Follow us on Twitter twitter.com/RecordsOffice

Like us on Facebook facebook.com/localrecordsoffice

Watch us on Youtube youtube.com/user/LocalRecordsOffice

Review us on Yelp yelp.com/biz/local-records-office-las-vegas-2

Watch on Vimeo vimeo.com/localrecordsofficevideo

Talk to us on Disqus disqus.com/by/local_records_office/

Look for us on LinkedIn linkedin.com/in/localrecordsoffice

Pin us on Pinterest pinterest.com/localrecords/

Tumble with is on Tumblr localrecordsoffice.tumblr.com/

Watch us on Dailymotion dailymotion.com/local-records-office

Find us on WordPress localrecordsoffices.wordpress.com/

 

Real Estate: How to Help Your Tenant Can Get Their Loan the Easy Way

LOCAL RECORDS OFFICE – Real estate has been booming in 2016 in this article the pros at Local Records Office will be talking about tenants and loans. Because homeownership is often less expensive than rent, we could see some of our rent-to-own tenant buyers start trying to execute their options. If you don’t have tenant buyers, you may want to consider using them for your rental property. You will generally get more rent and less hassle. In my experience, less than 20% of tenant buyers end up buying the home, but for me, I am happy when they do.

 

I like getting a large payday, with no Realtor fees that I can roll into another deal. For this reason, I want to be sure my lease option documents are prepared correctly, to help their chances of getting a loan.

Buyers vs. Sellers

 

There are many effective and valid ways to structure a lease option transaction, depending on the parties involved and the objectives in mind. What a lot of sellers and buyers often overlook is that one of the most important “parties” to this transaction is the underwriter on the buyer’s loan, when the time comes to exercise the option.

 

One of the most important things to know about today’s new underwriting climate is that the tolerance for inaccuracy is down to almost zero. Much like I would recommend a good attorney review your documents, I think it is crucial for a good mortgage broker or banker to do the same. Here are ten helpful hints to ensure the tenant buyer’s loan closes:

 

“Rent credit should be allowed to be used towards the buyer’s down payment”

 

Rent credit should be allowed to be used towards the buyer’s down payment or minimum borrower contribution only if the rent actually charged does not exceed the fair market rents in that neighborhood. It is actually best to write your agreement that the rent credit reduces the purchase price and is NOT considered down payment. If they need the additional down payment, you may be asked to prove the rent credit is equal to the amount they paid above market rent, which is not going to be an easy task.

 

Fair market rents will be determined by the appraiser in the subject property’s appraisal report. Credit for down payment must be accrued for a minimum of 12 months.

 

It is best to get as much money upfront as possible because all of that can be credited as down payment. You can reduce the amount of money the tenant buyer needs by offering to pay their closing costs. This could also be part of the rent credit, if it is structured correctly.

 

The Lender Needs the Right Documents from You

 

The lender will require a copy of the rental or purchase agreement evidencing a minimum original term of at least 12 months, clearly stating the monthly rental amount and specifying the terms of the lease.

The lender would like to see that the lease agreement references the purchase option and vice versa, or they are contained in a single contract, so the underwriter can have documentation of both aspects of the transaction. I have my option reference the lease but I want the lease to stand on its own; so for me the lease is a separate agreement that does not reference the option. This is how most attorneys would suggest you do it, so it is a good idea to run your contracts by a competent attorney AND a mortgage professional.

 

In no case should the seller ever commingle the borrowers rent credit, purchase option deposit, or security deposit with their own personal accounts.

 

Make Sure to Document Every Transaction That way You’ll Be Prepared

 

Any rent credits, option payments and security deposit funds should be thoroughly documented to include copies of the original checks, copies of the cancelled checks, and copies of the account statements showing their entrance into and retention in those accounts.

 

Lenders will require copies of the buyer’s cancelled checks or other proof of payment for the last 12 months evidencing the rental payments. Be sure the tenant knows this if they are paying with money orders.

 

Equity

 

Sweat equity is normally not an acceptable source of funds or credit; only actual monies paid as outlined above, so don’t count on the buyer “earning” their down payment in lieu of rent payments.

 

Taking the above measures should help ensure a successful closing if your buyer can still qualify in all other required areas. With that said this article is not meant to replace a competent mortgage professional. Please visit Local Records Office’s webpage for a list of vendors they recommend.

 

To learn more about real estate and Local Records Office go to http://www.LocalRecordsOffices.net

What is Bankable and How is it Used in Real Estate? Local Records Office

LOS ANGELES – Webster dictionary defines the word Bankable as – bank·a·ble: 1. Acceptable to or at a bank; 2. Guaranteed to bring profit

 

As investors, we hear and see all of the opportunities related to owning rental property: rents are up; prices, vacancies and rates are down. We are being told that there has never been a better time to buy real estate, with lending guidelines changing drastically from just a few short years ago.

 

That being said, it is now incredibly important to stay “Bankable”. When I first heard this term it made perfect sense to me. As investors, we often need to borrow money meaning that, in our everyday lives we needs to keep control of debt to income ratios, claiming enough income on tax returns to qualify for loan programs and keeping a safe amount of reserves available. I have said it before and still truly believe that the most important piece of the investing puzzle understands the financing. Once you understand how to leverage your money, acquiring properties becomes much easier.

 

Most of the topics I will touch on are more stringent in the long-term financing world and not always true for hard money. We have been able to close deals while facing over 200% DTI, unemployed or 550 credit score; because other qualifying factors in each case allowed us to get comfortable with the borrower.

 

When we think we have seen it all we take an application from a client that surprises us. One of my best client’s tax returns show year-over-year losses in excess of $100,000 and this particular client hoped to acquire some buy-and-hold properties. When I told them it wasn’t going to work and why, they explained they worked their entire life to not have to pay taxes/show income and now I am telling them that they need to show income in order to buy rental properties.

 

I have seen applicants that hope to buy and hold rentals as an investment when they are in foreclosure on their own home and taken phone calls from individuals that want to get a loan but all of their cash is in the sock drawer because they do not believe in banks. Some pretty extreme examples, but the point is that staying bankable is important in a lending environment where it takes more than a pulse to obtain a loan. Here are some tips to staying Bankable:

 

Income is Important When Being Bankable

 

Income: For some, income is much easier to verify than others. Namely, W2 income vs. self-employed. A borrower with decent W2 income that does not take a lot of deductions is typically the easiest borrower to approve for long-term financing. Because the income can be verified so easily, with one piece of paper, these borrowers can find out “how much they can borrow” with little hassle. For those who are self-employed however, a trip to the dentist might be more enjoyable than proving income. Keeping good books and not writing off everything under the sun will make documenting your income much easier. The easier your income, not losses, can be seen, the less trouble you will have obtaining financing.

 

Debt to Income is Crucial

 

DTI: Debt-to-Income is the most important part of obtaining long-term financing because it includes two parts of the equation that you have some amount of control over. Conventional financing requires a DTI ratio of 45% or less and, in some instances, up to 50%.

 

Every mortgage, loan, credit card, student loan, and time-share on your credit report stacks up against your income to create this ratio. If you want to acquire rental properties or financing, think twice before opening that Best Buy card for your new 100” flat screen TV and understand where your DTI stands. The good news is some debt, like mortgage on a rental property, can reduce your DTI because it creates income past the monthly amount owed. For example, let’s say that you purchase a property and the monthly PITI is $500 per month and you have it rented for $1,000 per month.

 

Conventional financing is going to count 75% of gross rent towards your income, so after debt service your monthly income increases by $250 per month. It is very important to understand your DTI ratio and where it needs to be to achieve your real estate goals.

 

If You Are Self-Employed You Have to Read This

 

Self-employment: Most investors and real estate professionals are self-employed, which creates challenges in lending if not done correctly. Trust me, I do not enjoy paying taxes any more than the next person, but it is a necessary evil in qualifying for long-term financing. Investors cannot expect to write off all of their income and obtain a mortgage. In fact, I have seen a married couple where one has W2 income and the other is self-employed but the self-employed spouse writes off so much that they show a loss large enough to eliminate the W2 income.

 

Typically, when self-employed, the lender takes a 2-year average so unless this couple amends taxes and belly’s up to the tax payment, they might be 2 years away from obtaining financing. I do not want to discourage any self-employed borrowers because there is financing out there, as evidence by the two rental properties that I just refinanced out of hard money. Just note that there are additional hoops to jump through and it’s up to you to decide how difficult it will be.

 

Dealing With Liquid Reserves

 

Liquid Reserves: Reserves is the number one most important qualifier for our hard money loans, also important in conventional financing and should be a priority for all borrowers. In this business, we all know some properties can be challenging, and as a hard moneylender, we want to know you have reserves available in case your project costs run over or it takes longer to sell or refinance than expected. In the conventional world, the underwriters assume that at some point all of your properties are going to be vacant for the same 6-month period, and they require reserves to handle such a phase. Once an investor has four or more mortgages, the requirement is 6 months of payment reserves for every property.

If you have 6 properties, all with a $1,000 per month mortgage, you need to have $36,000 in reserves. Check with your mortgage professional to see what they can qualify as reserves, 401k, HELOC, personal line of credit, etc., and how long the funds need to be seasoned. As an investor, everyone should find the value in having funds readily available as we never know when the buyer’s inspector will find that the sewer needs replaced or an appraisal comes in low requiring you to bring a chunk of money to closing. Although some deals are no money down, it doesn’t mean you qualify with no money in the bank.

 

Keep Your Paper Work Organized

 

Be Organized: I am often surprised at how unorganized investors can be. At the end of the day, we are running a business, or at least hoping to, so having the right documents in order makes life easier for everyone. Let’s remember we are obtaining loans for hundreds of thousands of dollars sometimes with no money down, so having your taxes in a place they can be easily accessible is probably a good idea.

 

I joke about this, but ask any loan officer which loan is on the top of their priority list and it will be the one in which they have what they need to complete the file. Most of the documents required for a loan can be stored electronically and very easily emailed. If you are actively doing deals or looking for financing, build a package and update it monthly to give your lender what they need when requested. This will keep your loan moving through the process and the lender won’t bother you for missing pages.

 

Banks Around Your Area

 

Local Banks: Occasionally, investors can find funding through local banks, either through lines of credit for operating capital or financing non-owner-occupied properties. Freddie and Fannie, the largest buyer of conventional loans, will only allow a borrower to obtain 10 mortgages but your local bank does not have a limit other than their own risk tolerance.

 

The terms are different from 30-year-fixed so you should expect to pay a slightly higher rate and with shorter terms such as 5, 7 and 10-year balloons. Depending on the bank, they may be more interested in the property than the borrower, but most cases will also require a banking relationship (deposit accounts).

 

I hope you find this information valuable and can better plan ahead for your real estate investment goals. If you have any questions about the article please feel free to contact us at our office.

 

To learn more about real estate and Local Records Office click here

Follow us on Twitter twitter.com/RecordsOffice

Like us on Facebook facebook.com/localrecordsoffice

Watch us on Youtube youtube.com/user/LocalRecordsOffice

Review us on Yelp yelp.com/biz/local-records-office-las-vegas-2

Watch on Vimeo vimeo.com/localrecordsofficevideo

Talk to us on Disqus disqus.com/by/local_records_office/

Look for us on LinkedIn linkedin.com/in/localrecordsoffice

Pin us on Pinterest pinterest.com/localrecords/

Tumble with is on Tumblr localrecordsoffice.tumblr.com/

Watch us on Dailymotion dailymotion.com/local-records-office

Find us on WordPress localrecordsoffices.wordpress.com/

Easiest Way to Burn Money in Real Estate – Local Records Office

LOS ANGELES – One of the large mentorship programs – and star of a reality TV house flipping show – preaches debt stacking your real estate deals to reduce or eliminate yours out of pocket requirements according to the Local Records Office in Norwalk, CA.

Potential real estate flippers are sold on this because they hear that they will get infinite returns with little or no risk. On paper this sounds great but there are several fundamental problems with this, especially in the markets in which Pine Financial does business.

 

Paying for Bad Information That Doesn’t Help or It’s Outdated for 2016 Standards

 

The sad thing about this is that people pay $44,000 or more to learn this information. What’s worse is that people buy into this so much that they try to teach people how to do it or brag about how they do it on social networking sites like Facebook and at offline networking meetings. The purpose of this article is simply to share my experience with this way of operating and to try to protect you from falling into this trap.

We are in the middle of foreclosure with one of our clients in Los Angeles, CA. We are probably about halfway through the process but our client has the house under contract to sell. The problem is that there is not going to be enough money to pay us back and pay back all her “gap” funders.

I would define a gap funder as a private lender willing to lend on a piece of real estate in a junior position to cover the gap between what the primary lender is willing to lend and what the borrower wants or needs to get the deal done. The numbers on this deal look like this:

  • Purchase – $115,000
  • Repairs – $73,000
  • Our appraised value – $280,000
  • Our Loan – $196,000 (notice this is enough to buy and fix the house)
  • Gap funder Loans – $80,000 (3 different individuals)
  • Contract price – $225,000 (they will need to subtract costs to sell to get a net figure of available cash for all the lenders)

We were off on our value because the client made some fatal mistakes: she originally listed in the mid-$300s and it was not complete (that was way too high to list this house); there were very few price adjustments; the work that was done did not properly adjust the floor plan, and it just recently received an appliance package.

How can you expect to get top dollar when the house is not staged and it does not have appliances? It was on the market for over a year. The biggest problem was the floor plan but the fact that it sat on the market so long really hurt its true market value. Properties get a stigma if they have too much MLS exposure.

Buyers automatically think there is either something wrong with it or think they can get a bargain because the seller should be motivated. Had the house been listed closer to the true value of $270-$280k and listed after it was complete and staged, I am confident it would have sold for much closer to our original estimate of its value.

 

Borrowing Much Money for Rates That are Too High

 

The reason she had to borrow $80,000 above our loan was mostly because of holding costs, so a lot of that would have been eliminated had the property sold. I am not sure where the rest of the money went but it makes you wonder.

I have had conversations with two of the three gap funders and they all paid $44,000 to learn how to lose $80,000. They all have their sad story and to be honest it breaks my heart. One of the three spent all of their savings on this deal and will likely get none of it back. I am not sure what our client told these people to get them to invest with her but if any of it was misleading, there could be a fraud case here as well.

You might have noticed that the total loan to value based on our original value is 100%, which means that these lenders would likely take a loss even if the house sold for its full value.

With as bad as this deal turned out, we are still going to get our money back. This is why hard money lenders loan at 70% of the value. That leaves room for mistakes. In California and Nevada, there are hard money lenders that loan up to 70%.

If the deal is too much higher than that, the flipper probably should look at doing a different deal or consider cheaper funding sources like cash or a bank. The worst things flippers can do are borrowed hard money and then use gap funders, thus increasing costs and risk in the deal. It is my strong opinion that if a flipper needs gap funders they should not be doing the deal.

 

Gap Funding to Fund Portion of Profits

I have also heard of real estate investors who use gap funding to fund a portion of the profits upfront. (Is this what happened in my example?) I guess this is to help them with their lack of cash flow. Why in the world would they borrow their profit and pay interest and possibly fees on that money unless they really could not wait until they got the deal done?

If the client is not liquid enough to wait for their money, my guess is they are not liquid enough to handle a problem with their deal if there is one – unless, of course, they are borrowing more money. That is exactly what happened to our client in the above example.

I can go on and on but as sad is my story is, I have heard even worse. We get calls a few times a month from “gap” funders that need to foreclose but do not have the money to buy out the senior debtors.

They are asking us for money to either buy out the senior lenders or redeem from their junior position. If you don’t have the funds available to protect your loan you are really making an unsecured loan and could possibly be making the loan to an investor that does not have the ability or wherewithal to pay it back.

Follow us on Twitter twitter.com/RecordsOffice

Like us on Facebook facebook.com/localrecordsoffice

Watch us on Youtube youtube.com/user/LocalRecordsOffice

Watch on Vimeo vimeo.com/localrecordsofficevideo

Talk to us on Disqus disqus.com/by/local_records_office/

Look for us on LinkedIn linkedin.com/in/local-records-office

Pin us on Pinterest pinterest.com/localrecords/

Tumble with us on Tumblr localrecordsoffice.tumblr.com/

Watch us on Dailymotion dailymotion.com/local-records-office

Find us on WordPress localrecordsoffices.wordpress.com/

 

Contracting A Trustworthy Contractor to Get the Job Done by Local Records Office

LOS ANGELES – There are three things every real estate investor needs in their arsenal: money, deals, and a good contractor (there are probably others, but these are key). Good contractors make life much easier. All too often people – myself included – don’t like the idea of hiring or interviewing people; it’s a daunting process.

 

Unfortunately, this can lead to rushing into choosing the first contractor that gives a bid just because it’s easier. We all know – even though we may not admit it out loud – that a little due diligence up front often pays off in the end. Hopefully this article will shed some light for those starting and maybe even some of the experienced investors out there. But, before we start interviewing, take a deep breath and relax – this is fun!

 

Contractors Are the Root of the Real Estate Market

 

Tip #1: Set up interviews for 4-6 contractors; 5 are often the sweet spot. Yes, this will ultimately mean that you have to tell someone they are not getting the job, but that’s okay. It’s business and as long as you keep it that way, you shouldn’t shy away. As a general rule, if you call 4 contractors, 1 will not show up/cancel, 1 will show up but not bid and 2 will give you bids. I don’t mean to insult or bring down contractors with this, but it’s often what we see.

 

The idea behind calling 4-6 is to get 3 bids total. If you get many more than three, it’s too much time and work to compare. Plus, if a contractor knows he’s bidding against 2 others for one job and 6 others for a second job, which one is he more likely to put the time into bidding on?

 

Tip #2: Have a detailed scope of work and provide each contractor with that scope for bidding. It’s really easy to walk into a property and say, “Here’s my project. I want some new lighting here, new kitchen there, some carpet and some paint.” This will only lead to confusion and an impossible comparison of contractors’ bids. Take the time to develop a clear, detailed scope of work.

 

This can be anywhere from 60-120 lines on a spreadsheet, depending on how big the job is. After you’ve developed a relationship with a contractor, then this may get a little more lax, but err on the side of details! Having a detailed, line-by-line scope will ensure that you and each contractor are on the same page both through the bidding and when the work is done.

 

One last note on this point is that contractors will often have their own way for bidding jobs. I understand that may be easy for them, but this is your project and if you want to be able to compare apples to apples, they need to use the scope you give them and price it the same way as everyone else. If you aren’t in control for something as simple as the scope of work, what’s going to happen when you have a difference of opinion on where that wall goes or when something needs to be completed?

 

Being Cheap May Cost You More

 

Tip #3: Cheaper isn’t always better. Don’t be afraid to pay your contractor for good work (you’re welcome contractors…). A good contractor can be worth what he charges. And you also have to consider the nature of the relationship early on. If this is the first job you’ve given a contractor, he’s probably not as keen to give you great pricing until you are able to keep him busy.

 

There are always exceptions to this, as sometimes the lowest bidder will do nice work. That’s great- hold on to them. But I think it’s more often that the lowest bidder gets selected, only to end up either over in time or budget, or even too difficult to work with. Getting references can often help with foreseeing these issues and that leads us to our next Tip.

 

Hire Licensed Contractors ONLY!

 

Tip #4: Make sure your contractor is willing to provide license, insurance, W9, and references. Any contractor that is serious will have each of these things and not shy away from providing them. License and insurance are pretty self-explanatory. You want to make sure your contractor is skilled in what he or she claims and is covered by insurance if there’s an accident.

 

The W9 is so that you aren’t paying his taxes at the end of the year. Equally important- if not most important – is the references. Get at least 3 references for good work and at least one for something that went wrong. Why something that went wrong? Because it is always going to happen- miscommunication, error in ordering, etc. It’s important to know how the issue was resolved. Don’t be afraid to have the contractor show you some of the jobs that they are currently working on.

 

Requirements and Restrictions Are Going to be Necessary

 

Tip #5: The contractor needs to be okay with your contract documents and the requirements in it. A good contractor will be okay with your contract; make sure it’s fair for each side. You may want to include a daily penalty for late work and/or a bonus for early work. Just make sure both sides agree and are happy with it.

 

Tip #6: Follow your gut. This is the last tip I have for you. Sometimes you’ll get to the end of your contractor selection process and the differences are negligible on paper. In this case, go with your gut. How did you feel while talking with them? Doing the walk-through? Go with that little tingle you feel in your gut, it’ll steer you where you need to go.

 

To learn more about real estate and Local Records Office go to http://www.Local-Records-Offices.co

Follow us on Twitter twitter.com/RecordsOffice

Like us on Facebook facebook.com/localrecordsoffice

Watch us on Youtube youtube.com/user/LocalRecordsOffice

Review us on Yelp yelp.com/biz/local-records-office-las-vegas-2

Watch on Vimeo vimeo.com/localrecordsofficevideo

Talk to us on Disqus disqus.com/by/local_records_office/

Look for us on LinkedIn linkedin.com/in/localrecordsoffice

Pin us on Pinterest pinterest.com/localrecords/

Tumble with is on Tumblr localrecordsoffice.tumblr.com/

Watch us on Dailymotion dailymotion.com/local-records-office

Find us on WordPress localrecordsoffices.wordpress.com/

 

 

Wholesaling Real Estate in its Simplest Form is Just Getting Houses Under Contract

LOCAL RECORDS OFFICE – A decade ago I got home from a night out with friends, It was after 2am and I was not tired so I turned on the tube. Crazy I know, but I was young and full of energy.

Back then we did not have “on demand” so I was at the mercy of plain old cable TV. I was flicking through channels when I saw Robert Kiyosaki. He, of course, is the author of Rich Dad Poor Dad, and one of the people I was studying at the time. He was selling his Choose To Be Rich home study course. That was the first and only time I purchased something on late night TV, and I don’t regret it.

Real Estate

When the product arrived I was excited to start listening to the CD’s. I can’t say that it was a huge benefit to me, but there was one thing he said in that course that really got me thinking. He said that rich people find ways to create money. It is like pulling money out of thin air just by being creative.

One example of that is to negotiate deals, on real estate, that are marketable. In the markets we do business in, we hear people complain that they can’t find good deals.

“One of the easiest ways to do this is to make your contract assignable and assign your rights in the contract for a fee”

They complain that they want to wholesale deals to generate some income, but no one is accepting their offers. Wholesaling real estate in its simplest form is just getting houses under contract that you can sell for a quick profit. With this strategy you don’t need any money or credit, and you take virtually no risk.

This is a very attractive strategy for people starting out, so most of the gurus will tell you they can show you how to do this in hopes of you buying their course or going to their seminar. One of the easiest ways to do this is to make your contract assignable and assign your rights in the contract for a fee according to the Local Record Office in Norwalk, CA.

The last time I wholesaled a house I made $15,000. Right now I am working with a client that will make over $125,000 on a wholesale deal. He and I have been part of a deal where the wholesaler made $250,000. Now most of that is not the norm. What is more common is $3,000 to $5,000 per deal.

Understand What Wholesale Really Is

When you think of a wholesale deal, you are thinking of a steep discount property that you can buy to fix and resell for a profit. Most often, that is the case; but not all wholesale deals need to be big discount properties. I and some people I know would be very interested in buying some deals with great terms. In fact, I could pay full retail price if the terms made me money.

Equity is Nice but, Not Necessary

A buyer looking for a long-term deal wants to know what it will cost him or her and what the monthly return will be. A simple example could be a house worth $100,000. If you are able to negotiate with the seller a lease option, subject to, or some other type of installment sale, you can create cash flow that is marketable.   Let’s say you are able to take title with no money down and a payment of $800 interest only a month.

“Tax benefits and possible loan pay down, depending on how the deal is structured”

The term might be 10 years, in which the full $100,000 becomes due. If this house rents well, you might get as much as $1,200 a month.   If you account for vacancy and maintenance, your net income might be 80% of gross without a management company (this is on a single family home).

Your income would be $960 a month minus your payment of $800 for a total net cash flow of $160 or $1,920 a year. That agreement is valuable. In fact, if you sell that to another investor for $6,000 that would be a 32% cash on cash return for them. That does not include appreciation; tax benefits and possible loan pay down, depending on how the deal is structured.

For the wholesaler, they have no risk or money into the deal and just made $6,000. (You should actually make more than $6,000 on a deal like this one).

Focus on Your Marketing

The key is to focus your marketing on sellers that might be motivated and in a position to work with you. From my experience, people with little or no equity that need to sell are pretty easy to negotiate with.

They, of course, need to have a good loan in place to make the cash flow attractive.

I also want to point out that when you work in the MLS and make offers on REO properties, you most likely will not be able to assign the contract. That is not true when dealing with homeowners. In fact, I have never had a seller not sign an agreement because it was assignable.

My guess is you would be one of very few attacking this market, which could really separate you in this business. While everyone else is looking for big equity deals in the MLS, you will be quietly making a fortune.

The Worst Tenants of All Time – Local Records Office

LOCAL RECORDS OFFICE – Renting an apartment to tenants is not easy, many tenants pay rent late, are filthy, have more people in the apartment than what they put in the application, have loud pets that bother other tenants, smokers and many more.

I manage over 20 properties right now and spend less than 4 hours a week and am even reducing that.   Right now is a great time to own rental homes for both cash flow AND appreciation. When I ask rental property owners to explain their asset most will start telling me about the physical property. I disagree.

Your biggest asset is your tenant. Finding a good tenant is so important I want to talk about some of the high-risk tenants that I have encountered. You have to be very careful here as these could be protected classes and I am not saying to rent to anyone on this list. I am simply pointing out that these could be a higher than average risk for you as a property owner. Please do not discriminate against a protected class.

Young Tenants That Have Never Lived Out of Home or With a Partner

You will normally see this with younger people. Often times they have recently left home and need roommates to help cover some of their costs. This is exactly what I did. The biggest problem here is that people that have never lived together soon learn that they can’t.

You know what I am talking about; one is a slob, one stays up partying too late, one does not cover their portion of the bills, and this list can go on and on. Trust me if they don’t get along and one moves out you will soon find yourself with a vacancy and possibly one that is returned in less than desirable condition.

Tenants Who Are Divorcing

Again be careful here as this is a protected class. As we know many marriages end in divorce and often times it is not pretty. If a divorce is going to happen it may happen sooner than later so a recent marriage can be risky but the biggest issue here is a recent divorce. One of two things could happen with a divorce and one of the two moves into your house or apartment.

They don’t get along and the ex-spouse comes over causing problems after they have had a few drinks. The next thing you know the neighbor is calling saying the cops are at your house again.

Or even worse, they decide to get back together. I know I’m so harsh. When they get back together what do you think is going to happen? That’s right, you have another vacancy.

Tenants Who Work Part-Time or are Self-Employed

I hate to say this since I am self-employed but the fact is most small businesses go out of business. If you are reading this you don’t fall in that category. Have you ever rented a contractor or handyman?

I have several times with less than desirable luck. Most small business owners are great at what they do but aren’t so great at running a business. They don’t understand how to generate business and how to keep the income coming in. They get busy doing what they do and when it is done they don’t have anything to do. Make sense?

If they do run their own business be sure to ask them questions about how they generate leads and how they keep their cash flow positive. Also, ask for a business card to help verify that they are really not self-unemployed.

Tenants Who Lost Their Job or Are Changing Jobs

This is especially true if there has been more than once in the last 24 months. This is an indication of instability meaning unstable in your rent also.

Often times they will not disclose many jobs or resident changes on the application which is why calling the last two landlords and asking how long they have lived there is important. Also, many times recent addresses will show up on the credit report so you can use that to verify missing information.

Tenants Who Have Annoying Dogs or Cats

These tenants are the worst; they have loud pets that bark all day and all night. I was renting to a certain tenant who left their small dog while they go to work from 9am to 5pm.

The dog will bark from 9pm to 5pm it will bark because it was along, it will bark at other residents who pass by, it will also bark at people who it saw pass by in the window. When the tenant came home from work the dog will continue to bark. I got so many complaints from the neighbors.

The Tenants Who Think They’re in a Rock and Roll Concert

I want my tenants to enjoy the apartment they rent but sometimes I get people who play music so loud they must think they’re in a rock and roll concert, they play music so loud they make the entire building vibrate. I find this disrespectful and ignorant.

The Filthy Tenant Who Infests the Building With Cockroaches and Rats

These are the most disliked tenants; these types of tenants could infest the entire apartment building with cockroaches and rodents. The tenants will usually not pick up after themselves and leave garbage all around the apartment and garages and therefore attracting mice.

Please use this information for what it is worth. It is not a reason to deny a prospect but is a good way to raise red flags and to be extra careful with the screening process.   Good luck!

To learn more about real estate and Local Records Office go to http://www.LocalRecordsOffice.co

Basic Real Estate Statistics Explained for Beginners – Local Records Office

LOS ANGELES, CA – Local Records Office is going to define some of the basic real estate statistics that get thrown around on a regular basis. To do that, we will use one real estate market, located in Los Angeles County. Even more granular, we will use the single-family numbers for homes in Long Beach, CA, a medium size city of approximately 500,000 residents, which has seen substantial real estate growth in the past 12 months. It is important when reviewing real estate statistics to use a group of numbers large enough for consistency, but granular enough to tell your story.

 

Real Estate Statistics for Newbies

 

Local Records Office says, “The statistics that we will be referencing are true and accurate for the year discussed but are being used to define the real estate statistic itself.”

 

We have chosen Long Beach, CA as our example because the growth of the local real estate market that make the statics stand out.

 

Anytime you are evaluating statistics, especially in real estate, the source of the numbers are extremely important. In most instances, the MLS (Multiple Listing Service) provides the most accurate numbers when referring to real estate says, Local Records Office. This is because they have all listings by all local real estate broker in their database. For the sake of explanation of the data, we will be looking at the numbers for home sales in Long Beach, CA, directly from the MLS. These numbers are meant to give an example of how to read the statistics themselves. Anytime you evaluate real estate numbers, its important to pay close attention to how the numbers are gathered. In this instance, we will be using ONLY single-family properties in the city of Long Beach, California.

 

These Are Basic Real Estate Statistics

 

Number of Sales – This one is pretty self-explanatory. It is simply the number of single-family homes sold in a particular month. In January of 2015, they had 51 single-family homes sold. One thing to pay attention to when looking at this statistic is are they using the Under Contract date or the day the property actually went to closing says, Local Records Office. These two dates are usually between 30 and 60 days apart, so its critical that you know which one is being referenced. In addition, many of the homes that get calculated, if you are using the “under contract” number may not actually close! In our example, we are using the number of homes that actually closed. In January of 2016 they had an increase of over 49%, which brought the total to 77 from 51. Growth of that level is very seldom ever seen.

 

Sales Volume – Sales Volume is simply the total amount of dollars spent on single family housing within that month. Once again, when reviewing this statistic, it’s important to keep the property types consistent. If you are comparing two areas to see which one has grown more and you include vacant land in the number for one area, you must include it in the other too says, Local Records Office. As previously mentioned, our examples only include single-family properties. With Number of Sales looking at the units, you would expect the Sales Volume to go up appropriately, but in this instance, it went up even more than the units (by percentage). The total Sales Volume of single family homes in Long Beach in January of 2016 was $15,191,500 as opposed to the January of 2015 number of $9,281,915. That is an increase of over 63%. Because the Sales Volume went up at a larger rate than the number of units, this reflects the average home sale being much larger in 2016 than 2015.

 

Months of Inventory – Local Records Office says, “This is a commonly referred to statistic when examining a real estate market.” This statistic refers to at the current rate of sales, how long will it take to sell through the existing level of inventory. This reflects the supply and demand for the market. In our example, in January of 2015 the level of inventory was 9 months and in January of 2016 it had dropped to 6 months. That is a 33% drop in available inventory! This means if you are looking to buy a home in Long Beach, CA, it will be a little tougher in 2016 as there are fewer inventories available to buy.

 

Median Days To Sell – This stat simply refers to how long it takes for single-family properties to be put under contract. Don’t let the “to sell” confuse you. To accurately show the demand for active homes, you really want to track how long it takes to go “under contract”. The process of acquiring final lender approval, insurance and getting to a closing can vary on a variety of factors. In January of 2015, the Median Days to sell was 88 says, Local Records Office. That number dropped by over 30% to 61. Once again, this tells you if you are looking for homes in Long Beach, CA, you better get your offers in quickly as the most desirable homes are going fast!

 

Average Price – This statistic can be derived in a variety of ways. We are going to use it in its most raw form and simply be the Average Price of Homes Sold within that month. Be careful when looking at this statistic printed anywhere as how the user defines the date sold can vary. Needless to say, Average Price can be used for active homes for sale or for the homes that sold. The Average Price of ACTIVE homes for sale is generally a pretty useless number as you can list a home for any price, without any possibility of it ever selling. Many homes listed for sale are at unrealistic prices thus the Average Price of Active homes for sale can fluctuate dramatically and give little insight into the market says, Local Records Office. You will want to look at the Average Price of SOLD homes. In January of 2015, the Average Home Sale was $181,998 and it jumped to $199,888 in the same month in 2016. This is an increase of almost 10%. This is not a number that truly tells the increase in home values across the board, but simply of the homes sold in that month, what the average was. Check out videos here.

 

Median Price – The Average Home Sales Price can be skewed by a variety of factors says, Local Records Office. All it takes is one 5 million dollar home sale to throw those numbers off. To get a better view of the overall increase in value, it can be better to look at the Median Sales Price. Median Sales Price takes the number that is perfectly in the middle. For instance, if you have 11 homes that you are using in your statistic, you would take the sales price of the 6th one. This leaves 5 homes sold higher and 5 homes sold lower. In this instance, they are pretty close as the Median Sales Price increase from January 2015 to 2016 was 9.69%. This shows that we didn’t have the Average Price skewed too much because of an extremely large or extremely small sale.

 

There are hundreds of ways to look at the same numbers, when referencing to real estate, so be very careful to read the fine print on exactly what numbers they are using says, Local Records Office. When making comparisons, you will want to make absolutely sure that both are referencing the same property types, dates etc. It like the old saying says… there are lies, damn lies and statistics.

 

In an effort to describe some of the most basic real estate statistics, we are using the market statistics from Long Beach, California as they have seen some extraordinary growth.

Follow us on Twitter twitter.com/RecordsOffice

Like us on Facebook facebook.com/localrecordsoffice

Watch us on Youtube youtube.com/user/LocalRecordsOffice

Review us on Yelp yelp.com/biz/local-records-office-las-vegas-2

Watch on Vimeo vimeo.com/localrecordsofficevideo

Talk to us on Disqus disqus.com/by/local_records_office/

Look for us on LinkedIn linkedin.com/in/localrecordsoffice

Pin us on Pinterest pinterest.com/localrecords/

Tumble with is on Tumblr localrecordsoffice.tumblr.com/

Watch us on Dailymotion dailymotion.com/local-records-office

Find us on WordPress localrecordsoffices.wordpress.com/

 

The Time to Purchase a Home is Now – Local Records Office

LOCAL RECORDS OFFICE – LOS ANGELES, CA – With interest rates expected to rise later this year; you may be wondering whether you should buy a home at today’s low rates says, Local Records Office. The average rate for a 30-year, fixed-rate mortgage was 3.85 percent last week, according to Freddie Mac’s weekly mortgage market survey, about what it was at the end of 2015.

Local Records Office says, “Interest rates, however, should not be the primary factor that determines when you purchase a home.” For most buyers, other factors are much more important. Rather than buy now for fear that rates might suddenly increase, for example, it might be smart to wait so you can save up a bigger down payment.

LOCAL RECORDS OFFICE: Interest Rates and Payments on Your Home

“Small changes in interest rates don’t make large changes in your payment,” says Casey Fleming, a writer in Los Angeles, California. Fleming actually believes interest rates may drop further. “Interest rates are not the most important piece.”

If you’re ready to buy a home, 2016 could be a good year. The inventory of homes for sale is likely to rise and fewer flippers are scooping up the best homes with all-cash deals, says Nela Richardson, chief economist for the brokerage Redfin.

Low-interest rates are contributing to the higher inventory, she says, because homeowners who are ready to sell their homes and move to a bigger or smaller home, or a new neighborhood, are willing to abandon their low-rate mortgages if they can secure an equally good loan. Plus, home appreciation has slowed, so there is less reason to stay put.

“The payoff to waiting [to sell] is not going to be a lot,” Richardson says. “Right now, it’s the best it’s going to get,” she adds. “Maybe it’s time to rush and sell but not time to rush and buy.”

You Owe More on Your Home is Worth, Local Records Office Services Will Help You VIDEO

For most prospective homebuyers, other factors are likely to be more important than interest rates when they do the math about whether 2016 is the right year to buy.

“If you can afford a down payment now and you’re going to be in the home a long period of time, it’s a very attractive time to buy a home,” says Stan Humphries, chief economist for Zillow. But he cautions buyers against making their decision based on what they’ve heard about imminent interest rate increases. “There’s no need to rush out and beat an interest rate increase. You can walk, not run, to your bank the way interest rates are going.

Interest rates fluctuate and may change countless times between the moment someone decides to buy a home and when they actually close the deal. In fact, they change daily and sometimes more than once a day.

6 Factors That May be More Important Than Interest Rates When Deciding Whether to Buy a Home This Year

Length of time you’ll stay in the home. How long you have to live in a home to make it more economical than renting varies by locality and by the individual home a person is considering buying or renting.

“On average, it takes four to seven years to break even on a home, where you’ve got enough appreciation where it can pay you back for the cost of the transaction and cost of ownership,” Fleming says. “If you’re thinking about buying a home, selling it in two years and think it’s going to be cheaper than renting, it’s very unlikely to be.”

Job security. You don’t want to buy a home and then discover you’ll need to relocate to get a new job in six months or, even worse, end up unemployed and unable to make payments. Lenders typically like to see two years of job history, though that isn’t always necessary if you have changed jobs within the same field.

LOCAL RECORDS OFFICE — Step-By-Step Mortgage Application Process for New Homeowners VIDEO by Local Records Office

Down payment. Fannie Mae and Freddie Mac have announced plans to back loans with down payments as low as 3 percent, while the Federal Housing Administration offers loans with down payments of as little as 3.5 percent.

But if you put less than 20 percent down, you have to pay private mortgage insurance every month, which could cost you more than a slightly higher interest rate. “If they’re looking at an FHA mortgage, paying PMI is a lifetime proposition,” Humphries says. With a conventional mortgage, you can ask to have the PMI removed once you have 20 percent equity in your home. That’s not possible with an FHA mortgage.

Emotional readiness. Not everyone is ready to own a home. If your dream is to travel the world, you should do that first. Or, you might not be sure you want to stay in your current city. Plus, homeownership brings additional responsibilities.

“Your life changes a great deal when you go from being a renter to an owner,” Fleming says. “When things break, it’s your responsibility to fix them, not the landlord’s.”

 

READ MORE: The Top Real Estate Scams in 2016 – Local Records Office

 

Financial readiness. Before you buy a home, you want to make sure you have good credit, a steady income and some money in the bank beyond what you’ll need for a down payment. You likely will have to pay a year’s worth of homeowner’s insurance and property taxes upfront.

All homes, even new homes, require maintenance. And you don’t want to be stuck with no reserves if the air conditioner or furnace dies shortly after you move in.

Your local housing market. In some cities, buying a home is significantly cheaper than renting. In others, the calculation is less clear. Macro math aside, you might also discover that you can’t afford a home in a neighborhood you want or the type of home you want is in short supply this year.

 

 

Buying Your Dream House in 2020 Sellers Market –Local Records Office

LOCAL RECORDS OFFICE – LOS ANGELES, CA – We all want our own dream home one day but it’s easier said than done says, Local Records Office. If you’ve decided to buy a home, good luck to you. Your challenge will be not just finding a home you like, but also beating out all the other home buyers who like it and want to make an offer on it, too.

LOCAL RECORDS OFFICE – Buying an Existing Home That Won’t End Up Being a Money Sucking Liability 

The number of homes for sale is low nationwide, particularly in the price ranges desired by first-time homebuyers. The latest figures from the National Association of Realtors show that that there was only a 3.5-month supply of homes for sale in March, which is lower than the six-month supply that indicates a balanced market.

One-quarter of March’s transactions were all-cash sales, according to the NAR, and investors bought 14 percent of the homes that were sold.

Is 2020 a Sellers Market?

That means that if you want to end up with a nice home, you need to be strategic says, Local Records Office. Expecting to find the home of your dreams by nonchalantly walking into a few open houses or perusing some online listings is not realistic in this seller’s market.

 

READ MORE: 3 Investment Tricks You Need to Know to Succeed in Real Estate – Local Records Office

 

These days, most would-be buyers come to an agent with a list of homes they’d like to see based on their online research. While that often serves as a solid starting point, a quality agent may find additional options.

After buyers have seen a few properties, Local Records Office says skilled agents can typically gauge what they’re looking for in a new home and may have other properties lined up. “I advise them to listen to their Realtor,” she adds.

Here are nine tips to help you get the house you want this spring

Get your finances in order first. Several months before you intend to start looking, you should get copies of your credit reports to make sure you’re in a financial position to buy. Shop for mortgage financing before you start looking at houses.

“I will not take anybody to see any house unless they have a pre-approval letter or proof of funds, I want proof of funds to show the seller.” Local Records Office says that some lenders are doing the underwriting before the house is under contract, which shortens the closing time and can be more attractive to the seller.

Who REALLY is Local Records Office? (VIDEO)

A Good Agent Will Go Along Way

Find a good agent. Using a real estate agent costs buyers nothing because the seller pays the real estate commission. Ask friends, family, and co-workers for referrals. Look for a full-time agent who works often in the neighborhoods where you’re looking.

You may want to interview several agents to find a good fit. If you can only look for homes on weekends, for example, you don’t want an agent who takes weekends off.

Visit neighborhoods you’re considering at different times of the day. A neighborhood that’s quiet during the middle of the workday may be noisy and crowded at night and on weekends.

Get out and walk the streets, talking to people who live in the neighborhood, visiting shops and restaurants and “trying out” your desired location. Drive to and from work during commuting hours to get an idea of what a typical day might be like.

READ MORE: Local Records Office Urges Homebuyers to Consider Their Lifestyles When Choosing a Community

Separate your needs from your wants. In a competitive market, most buyers find they have to compromise on location, amenities or condition of the home. It’s easier to make a choice when you know going in which features you must have and which you’d like to have but can live without.

Move quickly once you find the house you want. That often means rushing out to see new homes within hours of them being listed and writing up an offer immediately if you like the house. “Things are gone in a matter of hours,” Local Records Office says. “You really have to move fast.”

Don’t make snap judgments based on listing photos. A house that doesn’t look appealing in photos could still be a great house. Homes being sold by an estate or homes with tenants inside often yield particularly poor photos. Plus, photos fail to convey the feeling of a home or the floor plan. “Unfortunately, the pictures don’t tell a true story,” Local Records Office says. “You have to be willing to look past some of the pictures.”

Be realistic about the home inspectors and repairs. The more competitive the market, the less likely a seller will be to make repairs, though some sellers may lower the price if the inspection reveals expensive defects.

The purpose of the inspection isn’t to get the seller to repair every small problem but to find out for sure that the house is what you thought it was. “They’re not buying a brand-new home,” Local Records Office says. “What we are looking for are major defects we were not initially able to see in the walkthrough.”

Don’t buy a house you don’t love. While most buyers may have to compromise on some of the features they wanted, they shouldn’t settle for a home they don’t like. If you don’t find the right home this year, maybe you should start renting and try again later rather than make a purchase you’ll regret.

Write a personal letter to the sellers. Some sellers are interested only in how much money their home sale will yield, but others love their home want it to go to a new family that will love it just as much.

If you really like a house, include a personal letter and a family photo with your offer. “It doesn’t work for everybody, but I have seen it work for many, many people,” Local Records Office says.

Make a big earnest money deposit. The expected size of the earnest money deposit, and the rules about when you get it back, vary by locality. But sellers often see a larger deposit as a sign that you’re serious about the deal.

Make a backup offer. Many prospective buyers don’t want to make an offer on a house that has a pending contract. But deals fall apart over inspections, financing, and other terms. If you found the perfect house, you can make a backup offer that will put you in the first place if the initial buyer walks away.