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Buying Property at the Courthouse Steps.

By E-man   2013 Feb 25, 2:12am   11 links   3,331 views   16 comments   watch (1)   quote      

@Patrick et. al.

Now I'm almost done with my real estate hoarding. It's time to help some of the buyers here. Say we raise some funds to buy properties at the steps. We give a fixed return to the investors plus whatever excess profit after expenses. We have to follow Reg. D in raising funds so we're not getting in trouble.

Once we acquired a property at the steps, we put it on the market and patnet to sell. Whoever are interested in the property can contact you directly and privately. Your readers will get a first shot at the property. We will give them a discount on the commission. Say we pay the broker 1% and we give your readers 4-5% off the commission. Regardless their final purchase price is 4-5% below their purchase price because of the commission discount.

Your readers will get to see all the offers and make their best offer based on what they see. We're not going to sell it to them if their offer is not the best. We are for profit, and we need to make a profit for the investors.

For those that come to us directly with their own cash, we will help them buy at the steps for a flat fee. Say $10k or 3% of the purchase price, whichever is greater.



Comments 1-16 of 16     Last »

1   David9   1/1 = 100% civil   2013 Feb 25, 3:41am  ↑ like   ↓ dislike   quote    

Not bad, could pan out. I'm sure I have stated before I think all the good deals are at the court house steps.

Why should I buy if it's not a good deal and a good investment ?

2   David9   1/1 = 100% civil   2013 Feb 25, 4:52am  ↑ like   ↓ dislike   quote    

robertoaribas says

ever bought
at auction?

Yes, in 1993, from an auction company, the condo I sold in 2005. Before the earthquake I had 50k equity upon signing.

robertoaribas says

Have you researched any recent sales to compare to comps in the

Someone picked up this little number for 110k at a 'foreclosure auction' And by the way, Fannie Mae has them too, it's right on the Homesteps page.

robertoaribas says

You might notice we don't bother to go to them now.

Ok, good to know. :)

robertoaribas says

You get no inspections, no nothing.

Correct, same with, plus I would have to remove the tenant/squatter, 'buyer assumes responsibility of occupancy'robertoaribas says

So, you're ready go dive in? Have fun!

Maybe, but not at auction myself, I don't have the full amount of cash

3   David9   1/1 = 100% civil   2013 Feb 25, 7:12am  ↑ like   ↓ dislike   quote    

robertoaribas says

They aren't quite the deal HUD homes are, but for a regular buyer, they are one
of the few opportunities around. When it gets out of the first look period,
forget it, the investors will swarm if it is a good deal, and it will go for
much more.

Using the example, I would pay 110k for that unit in Tarzana, but no, not 179k. Redfin does not go into detail just where when how this 'foreclosure auction' happened for that price. It's actually around the corner from me in a very quiet spot.

Not sure if I'm following investors will pay more ? So, you are saying if no street buyer like myself buys this unit for 161k, investors will pay much more than that ? There have been some sales around 200k, generously, but usually investors want more margin than that.

Here is the HomePath investor page I was talking about, financing tab, if you click more info, it's a sign up sheet.
Good luck !

4   lostand confused   223/223 = 100% civil   2013 Feb 25, 1:15pm  ↑ like   ↓ dislike   quote    

David9 says

Someone picked up this little number for 110k at a 'foreclosure auction' And
by the way, Fannie Mae has them too, it's right on the Homesteps page.

Speaking of flips-it appears someone bought this for 450k in Calabasas in Nov 2012 and did some nice upgrades and is listing it for 789k-in barely two months! That is more than 300k in three months-if he/she gets the asking price!!

5   auricluny     2013 Feb 25, 11:13pm  ↑ like (1)   ↓ dislike   quote    

Keep accumulating that c rap. I love it that someone is putting a taxation target on their backs, it takes the load off me. RE is going down and down. Investments that have such high holding costs are a fools dream. There will always be off chances that red comes up in the roulette wheel but you get better odds at Vegas

6   taxee     2013 Feb 26, 12:10am  ↑ like   ↓ dislike   quote    

Inside the cave
"In Plato's fictional dialogue, Socrates begins by describing a scenario in which what people take to be real would in fact be an illusion. He asks Glaucon to imagine a cave inhabited by prisoners who have been chained and held immobile since childhood: not only are their legs (but not arms) held in place, but their necks are also fixed, so they are compelled to gaze at a wall in front of them. Behind the prisoners is an enormous fire, and between the fire and the prisoners is a raised walkway, along which people walk carrying things on their heads "including figures of men and animals made of wood, stone and other materials". The prisoners cannot see the raised walkway or the people walking, but they watch the shadows cast by the men, not knowing they are shadows. There are also echoes off the wall from the noise produced from the walkway.
Socrates suggests the prisoners would take the shadows to be real things and the echoes to be real sounds created by the shadows, not just reflections of reality, since they are all they had ever seen or heard. They would praise as clever, whoever could best guess which shadow would come next, as someone who understood the nature of the world, and the whole of their society would depend on the shadows on the wall.
Socrates then supposes that a prisoner is freed and permitted to stand up. If someone were to show him the things that had cast the shadows, he would not recognize them for what they were and could not name them; he would believe the shadows on the wall to be more real than what he sees.
"Suppose further," Socrates says, "that the man was compelled to look at the fire: wouldn't he be struck blind and try to turn his gaze back toward the shadows, as toward what he can see clearly and hold to be real? What if someone forcibly dragged such a man upward, out of the cave: wouldn't the man be angry at the one doing this to him? And if dragged all the way out into the sunlight, wouldn't he be distressed and unable to see "even one of the things now said to be true" because he was blinded by the light?
After some time on the surface, however, the freed prisoner would acclimate. He would see more and more things around him, until he could look upon the Sun. He would understand that the Sun is the "source of the seasons and the years, and is the steward of all things in the visible place, and is in a certain way the cause of all those things he and his companions had been seeing"
Socrates next asks Glaucon to consider the condition of this man. "Wouldn't he remember his first home, what passed for wisdom there, and his fellow prisoners, and consider himself happy and them pitiable? And wouldn't he disdain whatever honors, praises, and prizes were awarded there to the ones who guessed best which shadows followed which? Moreover, were he to return there, wouldn't he be rather bad at their game, no longer being accustomed to the darkness? Wouldn't it be said of him that he went up and came back with his eyes corrupted, and that it's not even worth trying to go up? And if they were somehow able to get their hands on and kill the man who attempts to release and lead them up, wouldn't they kill him?" The prisoners, ignorant of the world behind them, would see the freed man with his corrupted eyes and be afraid of anything but what they already know. Philosophers analyzing the allegory argue that the prisoners would ironically find the freed man stupid due to the current state of his eyes and temporarily not being able to see the shadows which are the world to the prisoners."

7   taxee     2013 Feb 26, 12:18am  ↑ like (1)   ↓ dislike   quote    

donjumpsuit says

others are trying to navigate through this crazy time in which the real estate market (good bad or evil) is disconnected from reality.

You will see it is not disconnected at all when you follow the money.

8   David9   1/1 = 100% civil   2013 Feb 26, 1:12am  ↑ like (1)   ↓ dislike   quote    

lostand confused says

and is listing it for 789k-in barely two months!

Yes, the volatile nature of the housing market prices is a red flag for me. Then again, this is the nature of any financial 'market' isn't it ? No longer does the local bank screen the buyer and hold the title for 30 years. As far as I know these factors are still in effect:

1.) Mark to Market accounting was changed in 2009 allowing the banks to use the asset price at purchase, not current market value. Thus, as an example, a 500k house purchased in 2005 is still on the banks books to be worth, yes, 500k.

2.) The Quantative easing by the Fed is still buying at least 40 billion in mortgage bonds each month.

3.) The financial institutions, the banks, Fannie Mae, etc., do have a due diligence to the investors and the taxpayer to keep losses at a minimum.

4.) Mortgages are still being bundled and sold as financial securities to investors.

True, some will make money. I'm not a gambler by nature and I would just kick myself if even buying at the low end and 5 years from now some black swan event happens and I'm underwater again.

A new apartment lease for a year at Warner Center with a heated pool, gym, balcony, and closer to work is looking like a sweet option.

9   E-man   5/5 = 100% civil   2013 Feb 26, 12:48pm  ↑ like   ↓ dislike   quote    

The Professor says

robertoaribas says

that's after all, what is for: people who don't have a clue giving advice to the even more naive.


OUCH! That hurts Roberto.

10   E-man   5/5 = 100% civil   2013 Feb 26, 12:59pm  ↑ like   ↓ dislike   quote    

donjumpsuit says

As part of this type of situation, I would find it highly desirable that you "vet" the properties prior to offer/purchase.

True. This is what I have in mind. Every Wednesday, we will email the list of all properties that will come up for bids in the next week to Patnet subscribers. Then the potential buyers will email Patrick the properties that they are interested in buying so we know which properties to focus on.

11   E-man   5/5 = 100% civil   2013 Feb 26, 1:06pm  ↑ like   ↓ dislike   quote    

donjumpsuit says

Typically these purchases are "no-recourse". Meaning that the reason they are such good deals is that you don't really know if it's a meth house, or the foundation is crumbling when you make the purchase.

Well, that's always the risk. If you're not willing to take the risk, trustee sale is definitly not for you.

donjumpsuit says

If you could quickly assess with a high degree of confidence that the property being purchased is no worse for wear than your typical fixer, than it would be a great deal.

High degree of confidence is very subjective. Most of these homes are typically being occupied by an owner or a tenant. Tenant is clueless, most of the time, that the house is being foreclosed. There are signs that you can tell if the property is well kept or not, but it's not always accurate.

12   E-man   5/5 = 100% civil   2013 Feb 26, 1:10pm  ↑ like   ↓ dislike   quote    

donjumpsuit says

It is my understanding that a lot of auctions get canceled at the last minute, so spending time and resources to take a good look at them all, with the knowledge that only a small percentage will actually make it to auction is the value added service.

Well, how valuable is that service? Can you put a dollar amount on that? What if we ended up buying the property, and the buyer decided not to move forward with the purchase? How much do you think the buyer should compensate us for our service?

13   Reality     2013 Feb 26, 1:23pm  ↑ like   ↓ dislike   quote    

robertoaribas says

which brings up a good question: why do our bankrupt government lenders sell homes for less than they could to owner occupants, when they could sell them for more to investors? After all, our tax money is propping them up, don't they have a responsibility to the rest of us to maximize the return? or at least minimize their ongoing losses?

So the home borrower can be in hock to the banksters and get foreclosed again in a few years. Rinse and Repeat. After all, Fannie and Freddie and FHA are just vehicle for funneling taxpayer money to banksters.

14   E-man   5/5 = 100% civil   2013 Feb 26, 2:14pm  ↑ like   ↓ dislike   quote    

donjumpsuit says

There are too strong and emotional sides of the fence in this forum, but it still has it's merits.

True. Value is relative. You might find home prices in the Bay Area are outrageous while others find them affordable. I saw this with my own eyes in the late 90's and early 2000's. The Chinese moved into the "Fortress" neighborhoods from Los Gatos to Hillsborough. They bought older homes on big lots and started demolishing and building new homes. You're talking about paying $1.8M to $2.2M for a decent size lot in Atherton during that times.

I think the ones that find home prices outrageously expensive will eventually move out of here. The ones find it expensive will have to settle in the outskirts and do the crazy commute. Everyone wants a home at an affordable price to them, but there are not enough homes to meet the demand.

We came from another country where we saw this happened there. So for us, it's de ja vu. It's the reason why we are accumulating real estate in the Bay Area. We want to be sure that all the kids and grand kids will have a roof over their head. Everyone wants a piece of the pie, but there's not enough pie to go around. We just want to get our share before prices are getting out of control again.

This real estate game is exactly like the Monopoly game. The 1% will end up owning everything. We're not even close to that point yet.

Just my 2 pennies.

15   E-man   5/5 = 100% civil   2013 Feb 26, 2:55pm  ↑ like   ↓ dislike   quote    

robertoaribas says

which brings up a good question: why do our bankrupt government lenders sell homes for less than they could to owner occupants, when they could sell them for more to investors? After all, our tax money is propping them up, don't they have a responsibility to the rest of us to maximize the return? or at least minimize their ongoing losses?

I agree. I saw some REO agents short changed the lenders on some of these listings. I lost out on two REO offers, where I offered all cash with no contingency, only to later find out that they were sold for less than my offer price to an in-house agent. :)

16   David9   1/1 = 100% civil   2013 Feb 27, 1:18am  ↑ like   ↓ dislike   quote    

E-man says

Like I said above, find a way to get your foot in the door.

Thank you for your replies. I was going to comment on how can I compete alone when you lost out on 2 cash offers to someone on the inside ?

In this market, the only safety is through numbers, i.e., an organized pool of investors.

For me, waiting it out alone, I have pretty much decided I'm going to rent a new apartment. I can still invest, in Real Estate or otherwise. An example is this sad little one bedroom condo in Van Nuys, I did not want to live in it for 100k (don't remember exact price) and seriously, it was on the market for a long long time. Now, someone bought it and is looking for 159k. Guess I really don't think like an investor at this time.

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