Forum Replies Created
January 14, 2011 at 10:41 pm #33350
Homeowner now Settlor: 0% interest in the trust. Oh but Scott, doesn’t the Settlor need to remain “A” beneficiary of the trust? Really? Why? Think about it for a minute. Perhaps they may, but it may no longer be required. Does it make you wanna say… hmmmmm!
im still confused with this. settlor should have at least 10% minimum and be a beneficiary of the trust.January 14, 2011 at 10:37 pm #33349
what if the property is already in the process of short sale negotiation?
what if the trustee sale is 1 week away? would it be a lost cause?
what if the property is already under a listing agreement?January 14, 2011 at 9:58 pm #33348
i just read the LFC document on HOPESExplained-preview and watched your video
very interesting dave! i was never really interested with short sales, LFC, UMR, etc. just something i didnt want to learn. but this equity sharing via EHT/HOPES caught my attention and im already familiar with the EHT and getting NEO’s signed.
what’s even better for me is that i dont have to look for RB’s!!!!
my father in law has a rental property thats behind in payments in las vegas and he came to me questioning about short sale and an attorney filing suit (attorney charging him $2500 for this).
maybe this HOPE can be a solution prior to my father in law going through this attorney. attorney is offering to purchase the property at 80% below FMV. father in law keeps the property with a new lower loan provided by the attorney’s company.
im getting my taxes done next month with Carol Kempner and was wondering if they will be doing the legal review and accounting for HOPES/RealTrust.November 17, 2010 at 4:38 pm #33054
@Dave Salcido wrote:
I did, however, buy a house, but now looking back, even that may have been a mistake. My favorite economist, Sal Khan is probably shaking his head in frustration at my decision making inefficiency. Consider some mathematical logic in favor of renting: http://www.youtube.com/watch?v=YL10H_EcB-E.
i watched part 1 and 2 of sal’s presentation and majority of the comments were educational and some were funny because some arguments weren’t covered.
here’s one comment that stood out by REALSLATER
i “bought” a beautiful home in se MI in 2000, i was 20yrs old. i was a roofing contractor. i “bought” the home for $180k with 10k down. i made my payments and improved the home with close to 100k and 4 yrs later the home appraised for 450k! 1 yr later i couldn’t sell the home for the 180k i still owed so we had to??? pack what we could and leave. 5yrs later i’m a happy renter and will never assume that kind of debt again. you’ll see exactly what you “own” when you can’t make the payments! great vidJune 29, 2010 at 8:10 pm #32375
you can do it as a MLS lease listing this way they wont expect to get 3% as a commission.
i know that a leasing agent would get 6-10% of the monthly gross as commission
also if there’s two leasing agents involved, i would think they would split the security deposit up front for bringing in a tenant.June 26, 2010 at 6:26 am #32357
i just had a longer conversation about his intentions and i did mention just doing a cash transaction with the private money investor and then do the EHT right afterwards with the original owner. its cleaner. he liked this idea. but since the property would be free and clear with no underlying mortgage, wouldn’t we have to create a mortgage note to allow an RB to access mortgage interest deductions?
i got more clarification on this original scenario with the intent of doing a leaseback to the original owner. original owner creates a trust retaining 100% of the beneficial interest. EHC as trustee is holding title. cash investor pays off the short sale via cash and wants to keep the land trust intact along with EHC holding title. cash investor “wants” 100% of the beneficial interest transferred from original owner to investor. also what business does the underlying lender have against the investor receiving 100% of the beneficial interest after a short sale payoff? can this be done? i would think the underlying lender would only deal with the deed of trust and mortgage note – NOT the conveyance of 100% beneficial interest. for educational purposes, what happens to the trust, title and the deed of trust after a “cash” investor pays off the short sale?
i dont think the property needs to be taken out of the trust since there’s no conventional lender involved on the buying side.
if the property has to be taken out of the trust even on a “cash sale”, then it would be as simple as terminating the first EHT. cash investor would then get clear title to be transferred to EHC and retain 100% beneficial interest. and then vest the real property back to new EHT and have the original owner as an RB.
am i on the right track?
ive search in the archives for sale leasebacks using the EHT but could only find limited information. my friend really wants to make it work by keeping the owner in place via EHT after he buys out the short sale using private money. he also wants to keep the defaulting owners in place via EHT on property that have equity after he cures any back payments. of course if the owners cant afford it, we’d use RB’s.
how does bill structure his foreclosure bailouts or sale leasebacks via EHT?
1)he would have to keep $1200 in escrow which is used to make the monthly payment $100 less for 1 year.
2) if the property has equity, the SB would receive all of it after the property is sold or refinanced
3) if there’s no equity in the property the original owner wouldnt get anything out of it.
4) if the property has equity, the investor would only profit on any future appreciation
5) investor wouldnt be able to cashflow
6) if original owner defaults, theyre evicted but still retain 10% beneficial interest and still entitled to their equity contribution. just have to find an RB afterwards
even if we’re able to structure leasebacks to the owner using the EHT, what are the reasons why you dont recommend them?
im sure amnesia is one of the main things. but what else are the risks?
sorry ive been on the sidelines for a few months and i forgot a couple of things.
i honestly do not know what 3ARC is about nor the LFC programs. ive just been ignoring them since i wanted to stick with the EHT.
is there a 3ARC website to get more information?
thanks scottApril 13, 2010 at 4:14 pm #31789
ahhhh this side of the forum seems more refreshing. too much clutter on the main thread for NON-EHT stuff.March 13, 2010 at 12:25 am #31633
found some good discussions
What’s the difference between a “Shortsale” and a “Junior Bene Buyout”? Does one negotiate differently regarding them?
1) What are the indirect and subtle differences when purchasing from a homeowner with a junior bene buyout versus puchasing from a homeowner and asking the junior bene to accept a short sale? I understand that the junior bene buyout (JBB) is a purchase of the note and trust deed at a discount and a short sale is a loan satisfaction of the note and reconveyance of the TD for less than the remaining principle (i.e., the loan is transferred vs. loan is satisfied).
2) Aside from the logistics of working with the lender, are the purchase strategies and profit different (i.e., when do you try for one vs. the other)?
3) When does a junior beneficiary accept a buyout versus a satisfaction? Is it driven by market or other conditions?
I’ve seen comments on these boards that short sales can be difficult, because the holder of the first refuses to discount at all… and expects the holder of a junior note (and the home owner) to not get anything. It creates a lot of time-consuming haggling and coaxing all around.
At least with the JBB you are negotiating primarily with the holder of the 2nd. Then you can quietly bring the first current, and make the payments on it.
The biggest advantage to buying out a junior note, is that it gives you multiple ways to make money.
You can reinstate the senior, and keep the existing financing in place. That’s usually easier than going through a traditional lender’s approval process later, if you buy a foreclosure at an auction.
You can sell the house for a profit, or keep it as a rental (since you have the financing already set up.)
You can also buy the 2nd as a “hedge”. Suppose a house is going to sale at 70 cents on the dollar. That’s about what most investors will pay, but you want to be sure to get it– (and not overpay, in case some newbie investor shows up.) You can buy the second on the cheap, then bid as high as you need to at the sale. The overbid after paying off the senior loan will simply end up in your pocket.
It’s possible to make money without even taking title to the house. If there’s enough equity in the property, foreclosure speculators at the courthouse may bid high enough at the auction for you to recover your purchase of the 2nd, and yield a profit to boot. There’s even the possibility the debtors get their finances back in order. They’ll make payments on the second again, and you can dish it off to another investor (note buyer).
But all of this comes with some risks. You’re going to be making payments on the senior loan for as long as you hold the house, so you’ve got to be sure your cash flow can handle unexpected delays in your plans. And you have to make up all the arrears on that senior, which could be more than you think. Debtors can sometimes fight a foreclosure for a year or more, and the arrears in principal, late fees, and interest can be substantial.March 12, 2010 at 11:31 pm #31632
first attempt is to get the 1st lender to put the arrearages on top of the loan
if they dont, then ask the 1st lender to put half of the arrearages and you pay half up front
if the top two dont work then reinstate it completely with your funds or private money
if none of these work, then short both the 1st and 2ndMarch 12, 2010 at 7:28 pm #31630
do you think real estate agents are responsive to this type of hybrid method of shorting the 2nd only with our intent to do a lease to own?March 3, 2010 at 8:18 pm #31561
it makes no sense to short sale a property that is CURRENT.
also you wouldnt want to purposely tell the seller to go behind on their payments just to do a short sale. that has to be their call.
i agree this property wont cash flow but it has a chance to break even if they did a tax lease and get some money up front for that benefit.March 3, 2010 at 7:27 pm #31556
do a tax lease where the RB doesn’t have the right to purchase or resell.
this way you dont even have to worry about the negative equity.February 23, 2010 at 5:50 pm #31411
i say yes.
dont forget, if you’re ready to go with both RB and SB, then the Trust Purchase Offer/Appendix 1 is purchasing beneficial interest right away without the NEED for the NEO
if you’re dealing with a listing agent via the EHT, the agent will want to write it up with CAR forms if they were to put it on the MLS while the investor has the unrecorded NEO with the seller. the listing agent and investor both have to be on the same page though. ive had a few agents that were interested and i just told them that they’d have to cancel their listing once when a qualified RB comes into play. this was taught by Pasquini long time ago. they’ll still get paid in escrow but they’d have to cancel the listing. id say that it goes same with other real estate options where you can cancel or withdraw the option first and then proceed with the EHT transaction.February 22, 2010 at 10:12 pm #31410
Your offer should “TELL” them what you are going to do, NOT ASK or EXPLAIN to them what you are going to do.
“Mr/Mrs Seller, were going to place your property in an escrow or trust in your name. You are going to make us a beneficiary of the trust to protect our interest along with yours. When the lien on your property is released we will agree to sell the property and split any of the proceeds 51/49, Fair Enough?”
I’ve done that numerous times where I tell them this is what I’m going to do. They will always come back with a boat load of questions and that’s where I have to explain to them what it means in a 3rd grade language.
Explaining is the same thing as answering questions and objections about what we are going to do. I tell them to highlight any part of our preliminary documentation (terms of proposal, NEO, purchase offer), and I will write back to them in writing. This is explaining the EHT is it not?
I’ve used your cover letter and they have questions about trusts and beneficiaries. I have to explain in order to get them to sign.
I do get NEO’s signed but I just think using the one page agreement is faster.
I will test this and post how many signatures I can get from sellers who are willing to do a lease to own.February 22, 2010 at 10:06 pm #31409
when the sellers ask those questions about land trusts, options, trust purchase offer, beneficiaries, trustees, cover letters, etc., that’s my Q&A session that i have to explain to them. isnt that the EHT process of getting a NEO signed?
that’s one of my point using the flex option. i dont have to explain the EHT or having the long Q&A session up front.
id rather shoot now and answer questions later.
i get my own RB, and then tell the seller and RB im going to use the EHT to close. there might be times where i dont even have to talk about the EHT until i secure my own RB. that will save me a lot more time. if the seller doesnt want to close with the EHT, too bad, we move the RB somewhere else
scott, my goal is to use the EHT, no doubt about it, but without the 5 page NEO. i can get the same end result of a 90 day non exclusive option agreement all on one flex option page and without having to do Q&A on land trusts.
the only times where i dont have to explain or do a Q&A on EHT or land trusts, are fellow NARS members since they already know what we do. ive never come across a seller who’s NOT a NARS member who signed my NEO without asking questions.