Archive for the ‘creative real estate’ Category

Traded a Mercedes Benz for some cash and a computer

January 15, 2011

Today was the beginning of a wonderful trading adventure.   I traded a mercedes benz for some cash and a computer

Now I need to trade the compter for something of value to me.   Have you done anything creative this year.    The proceeds of the sale fo the car are going to charity and if I can get something of value for the computer it will go to charity as well.   Got anything for trade?   I am a taker with a computer and I can add some real estate.   I have two separate houses for trade one with about 75K in equity and another with about 55K in equity.   See my other posts about rosenberry and coldsprings for sale.   Do I have any takers?

Advertisements

7910 Rosenberry for sale $175,000 or trade or something creative!

January 12, 2011

What can a real estate trade look like.    I purposed a trade for a 4-plex on a street where I own several other properties.

The house shown above is for sale or trade.    What is a real estate trade?   Most people can only think in terms of cash from a lender to a seller for real estate transactions but in fact Trading something of value for real estate happens all the time just not as frequent as a cash sale does.   There are lots of things that would stop a trade from happening.   Like realtors who want some cash and can only think of one way to get it.   From the seller’s proceeds!     Most banks want to turn over there money and write new mortgages so they like to get paid off when sellers sale property especially if thrcan loan that money out at higher rages of interest.   Most sellers like to get loans out of thier names when they sell a property and dont want the hassel of keeping up with a property or potentially taking it back from a buyers who did not pay the mortgage or having to catch up on the mortgage when a seller fell behind.    These are just a few of the things that need to be addressed when you trade a property but nevertheless trades still happen.   Why?

Sometimes there are things more important then cash!   Like what you say?   Getting out of ownership of a property.   Out of ownership of a property is just that no longer wanting to own a property.   There are not property problems just ownership problems.   There are times when not owning a property is better then owning it.   Divorse, death, cash short falls, balloon payments comming due, increases in interest rates and payments, etc etc etc.

A trade is not for everyone there are some people with no equity who need to just get a cash sell and be done.   And there is always a cash price that every property will sell for.   The sellers may not always like that cash price but there is a price nevertheless.   When I first purposed my trade the sellers did not like the idea!    In fact they rejected the ideal all together.   However after they took time to analyze the market and the property in particular they realized that maybe just maybe a trade may be in thier best interest in the long run today.   

If the mortgage market continues to deny access to real estate investors with more than 10 properties then there will always be a market for trades.   If we see a double dip in property prices and another increase in the supply of available properties there will be a market for trading properties.  

Does a trade require an appraisal?  NO, only two people need to agree on the properties value; the seller and the buyer.   Does the property need to have outside consultants evaluate or approve of the condition, marketability, or use of the property.  NO only the seller and the buyer.   In some ways trading a property can be easier than a cash sell and faster.   

Lastly, lots of people are familiar with the 1031 exchange rules.   A trade is an exchange and may qualify for a 1031 exchange depending upon the particulars of the trade.   the 1031 exchange rules are modeled off of concept of the trade.

The 4-plex shown above is similar to one that I would like to trade the house for.

Buy from pessimists and sell to optimists

December 3, 2010

Ron’s sayings and things # 2,857 to make you a better real estate investor.

This is one of the fundamental real estate investment concepts that most people seem to misunderstand or to miss apply to themselves.   Buy low and sell high plays a part in this concept.    It sounds easy enough but the application of this wisdom contained in the instructions is a complex concept.    To do this you must understand market fundamentals and take your time to study who the pessimists are and who the optimists are.    When the market is ugly and no one wants to be a real estate investor, foreclosures are everywhere, and everyone who has something to sell and there are no buyers or very few who want to buy real estate because of the general state of the economy.    In this market the pessimists are ruling.   The trick is to buy something that you can fix or that is in need of the specific skills that you can easily provide.  

 When the market is great and everyone is making money and going to become the next Donald Trump, the economy is booming and money is easy to get.   TV producers create shows profiling regular people making tons of money being real estate investors.   This is a market dominated by optimists.    In 2007 I owned several older houses in a changing neighborhood.    There were investors tearing down houses and building newer bigger houses on these lots.  I was beginning to get excited about the possibility of either rehabbing these houses for big dollars or tearing them down and building something new and big and beautiful.   Then I began to do my research on the costs, risks, and benefits.   After much analysis I determined that it was not in my best interests to pursue these opportunities.   So I decided to sell the houses to some optimists!

 One of the houses had 2 houses on 1 lot.   I sold it for $125,000.    My analysis looked like this: To turn these houses into something beautiful I would need to probably spend something like 100K each and in turn I could probably sell the houses as a package for between 325-350K.   Those are big sells numbers and appeared to be very enticing.   The problems were that I am not a builder!   I am an investor who specializes in buying problems and solving those problems for a profit.    To me it appeared to be wisdom to not do thing that I am not trained or experienced in doing.   Additionally taking on 200K in debt to work this transformation was also a problem for my cash flow.   The 200K would need to be serviced and I don’t like paying on debts without a tenant’s money to do so.   My cost for these houses was about 25K total and I have pulled out another 50K in cash in the form of a mortgage on the properties.   So here is what the math looked like

200K rehab costs + 25K original costs   = 225K

(Not including cost overruns and mortgage interest expense while holding the property for sale)

Profit from the sale:

325K sales price – 25K commissions and closing costs = 300K

Leaving a 75K profit from this little adventure (300-225K= 75K), this excludes any existing loans on the property.

If I just sold the properties for 125K minus commissions and closing costs 10K leaving me of 115K minus the 25K original cost or 90K profit.   This 90K profit was made be not doing anything except thinking and using discipline to not do things that I do not know how to do.   There was not additional leverage applied to get the 90K profit, no risks associated with building, no headaches with contractors, no nothing just sell the property!   So that is what I opted to do.   I listed the property and an optimist came and found me!

The optimist tore down the houses and began the process of building on the lots.   Unfortunately things did not work out as they had planned and they could not find a lender to loan funds to build and now they have torn down the houses that produced income, have a note on the land then needs to be serviced and are searching for an investor who can borrow enough funds to build or who has the cash to do so.   Finally after many months of paying on the vacant lots the optimist lost the property to foreclosure.   It turns out that the market turned before they could build and now a new investor owns the lots and is waiting for another optimist to come along so that they can do the process again.

Do you need an analysis done on your property or portfolio?   Not sure whether you are an optimist or a pessimist?   Do you need guidance on what path to take in the real estate business?   If you think any of these questions apply to you then you should call me at 512-689-6742 or email me.

Extend and Pretend is still in full effect…..

July 28, 2010

The wall street journal recently published an article about the banks policies concerning loans for commercial properties that have come due and now cannot be refinanced.   The title of the article is….

To Fix Sour Property Deals, Lenders ‘Extend and Pretend’

You can find a link to the article by clicking the following link. 

 http://online.wsj.com/article/SB10001424052748704764404575286882690834088.html?mod=WSJ_Commercial_LEFTTopNews

What does this mean for real estate in this country?   We are in for a long haul of real estate being a drag on the economy and on banks balance sheets.   After all if banks have too many bad loans how can they make new loans?   With less capital to make new loans those businesses who need credit to grow or expand will find it harder to do so.   No expansion or growth means no new hires….

How do we solve this problem?    What has history told us to do in times like these?   Do you have any new ideas on how to navigate thru this mess?

Owner Financing in Texas

July 5, 2010

From the Texas Association of Realtors:

“Many of us have been very concerned about the implementation of federal legislation known as the SAFE Act that would severely limit an individual’s ability to seller finance their property in Texas.

We are working on numerous regulatory and legislative solutions to this affront to private-property owners, and have some good news to report. At our urging, the chief regulator over the SAFE Act in Texas, the commissioner of the Texas Department of Savings and Mortgage Lending, has taken significant steps to allow Texas property owners to continue to seller finance up to five transactions in a 12-month period.

More specifically, the commissioner has delayed the implementation of the SAFE Act requirement for licensure in seller-financed transactions in Texas until August 31. This will give us time to implement regulatory and legislative changes during the coming months. For now it is important for you to know that the long-standing law of allowing a Texas seller to finance up to five transactions in a consecutive 12-month period is still in effect and the Texas Association of REALTORS® will continue to work at the federal and state level to see that this is a permanent solution.

Finally, this action would not have happened if not for the thousands of Texas REALTORS® who participated in our grassroots efforts to correct this abuse to private-property owners in Texas.”

 

Thank God in Texas we are still free to sell our homes anyway we choose ((at least 5 per year))

An example of a multi-leg real estate exchange

March 2, 2010

Please see the file entitled multi-leg real estate exchange. This is courtesy of The Society of Exchange Counselors (SEC). You can find thier website at http://www.secounselors.com

Here is the link http://www.slideshare.net/ronseay/multi-leg-transaction-formulas or click the follwing link:

What is a multi leg real estate exchange?

March 2, 2010

What is a mulit-leg real estate exchange? It is a series of exchanges that allow you to take your real estate from where you are to where you want to go. How do you make something like that happen? With lots of flexibility and patience. You need to be able to move into assets that may not exactly fit your needs at this current time. They may not be the best fit for your long term financial plan. They may not even be in this country! They are simply a way to go from where you are to where you want to be. You need to be able to answer the question, “What else can it look like?” Have you heard the story about 1 red paper clip? http://oneredpaperclip.com/ That is a multi-leg exchange taken to the extreme because the exchange started with 1 red paper clip. What he needed was a taker? Are you a taker? What is a taker? It is someone who will take what someone else has and maybe exchange what they have. Do you have a hard to move property? Be a taker and it will soon go away. Do you want to know more? Call me at 512-689-6742 and we can discuss your real estate problem.

Multiple real estate solutions…

February 17, 2010

Real Estate Investing is just like this blog by Dan Miller about finding multiple solutions to problems.

1. Can you find the solution here… by Dan Miller of 48 Days at http://48daysblog.wordpress.com/
Many years ago in an Indian village, a farmer had the misfortune of owing a large sum of money to the village moneylender. The old and ugly moneylender fancied the farmer’s beautiful daughter, so he proposed a bargain. He would forgive the farmer’s debt if he could marry his daughter. Both the farmer and his daughter were horrified by the proposal, but the cunning moneylender suggested that they let providence decide the matter. He told them that he would put a black pebble and a white pebble into an empty money bag. The girl would have to reach in and pick one pebble from the bag. If she picked the black pebble, she would become his wife and her father’s debt would be forgiven. If she picked the white pebble, she need not marry him and her father’s debt would still be forgiven. If she refused to pick a pebble, her father would be thrown into jail until the debt was paid.

They were standing on a pebble-strewn path in the farmer’s field. As they talked, the moneylender bent over to pick up two pebbles. The sharp-eyed girl noticed that he had picked up two black pebbles and put them into the bag. He then asked the girl to pick a pebble. Now, imagine that you were the girl standing in the field. What would you have done? If you had to advise her, what would you have told her?

Careful analysis would produce three possibilities: (1) The girl could refuse to take a pebble—but her father would then be thrown in jail. (2) The girl could pick a black pebble and sacrifice herself in order to save her father from debt and imprisonment. Or (3) The girl could pull out both black pebbles in the bag, expose the moneylender as a cheat, and likely incite his immediate revenge.

Take a moment to think through this story. I’ve used it with the hope that it will help you see alternate solutions beyond the obvious ones. The girl’s dilemma cannot be solved with traditional logical thinking.

You may be in a similar situation. You may be in a job you hate—but the pay is great. You think you have two choices: (1) You can stay in a job you hate. (2) You can leave the job but will then give up the great pay. Are these really all the options? Or you may not have a job right now. So you think either you must “find a job” or continue with no income? Could there maybe be other options?

Here is what the girl did. She put her hand into the money bag and drew out a pebble. Without looking at it, she fumbled and let it fall onto the pebble strewn path, where it immediately became lost among all the other pebbles. “Oh, how clumsy of me,” she said. “But never mind, if you look into the bag for the one that is left, you will be able to tell which pebble I picked.” Since the remaining pebble was black, it would have to be assumed that she had picked the white one. And since the moneylender dared not admit his dishonesty, the girl would have changed what seemed an impossible situation into an extremely advantageous one.

Now, how could you see more creative solutions for your situation? A couple of years ago I coached a very successful media executive who came to me with a dilemma. Because he was so respected, he had been given increasing responsibilities over the years. His current position had squeezed out all his family and community commitments. He was working seventy to eighty hours a week, but he had also become used to the $180,000 in annual pay. He was considering whether to just accept his lot in life or to quit his job, give up his salary, and seek a more balanced life.

I proposed another choice. Since he was valued, why not approach his superiors with a new solution? Delegate much of his workload to allow him to contribute in his strongest areas of competence. They readily agreed. He was able to go back to a forty-hour workweek with no decrease in compensation. He began playing the cello professionally again, volunteering in his son’s school, playing in occasional golf tournaments, and managing his church bookstore. Simply by asking for a less than obvious solution, he was able to move into a new season of true success.

Moral of the story: Most complex problems have multiple solutions, if only we attempt to think beyond the obvious choices. Practice coming up with 4 or 5 possibilities for any situation you’re facing and you will begin experiencing success that few people discover.

*******************************************
This story and others are found in No More Mondays – with lots of new solutions to work issues. Use this coupon – NMMSPECIAL — for a $10.00 discount right now – we’ll send you the hardback book and also give you an immediate electronic copy. ($13 total)

By the way do you need a thinker working with you on your real estate problems if so call me at 512-689-6742.

What is a dirty ugly?

February 7, 2010

it is a property that is dirty and ugly.   Need an example see below.

Why would someone own this????

The End of a good thing

January 12, 2010

Today an investment fund that I manage is scheduled to recieve the last payment on an owner financed house that was sold a couple of years ago.    The deal was a good short term deal and it paid for the most part like clockwork!   I hate to see it go, but alas the end is the end or so it seems.

The house was an older manufactured home that was purchased for $7,000 and was sold  for $15,000 with a 9.24% interest rate.   The return on investment is what will be missed the most.   A whopping 43% per year!!   That is 43% with no leverage (debt to make payments on).   If only we could create a hundred of these!   Whoa!   Just imagine the return that can be generated by doing volume  in these types of investments.     Ok now I know you are saying yea yea yea but that does not exist!   Have you ever seen a Manufactured Home community (MHC) with 75 to 200 spaces?   With a MHC you could reasonable do the kind of volume that will allow you to retire very quickly!!!   With just a meager return on the land involved in the MHC you  get an opportunity to earn 40%+ annual returns on the homes that will occupy those lots.   Do you know what the downside is?   If not call me at 512-689-6742 and I will share it with you.


%d bloggers like this: