Author Archive
Back To Back Closings: How do they Work?
Posted on June 27, 2013 byA lot of people ask me a lot of questions about Back to Back closings and so I thought I would share some of what I have seen over the past 15 years or so on them. A lot of lawyers will tell you that they are flat out illegal, and this is generally untrue. I will explain how to do a Back to Back closing and make it work for you.
The first question is whether to do a Back to Back closing or an Assignment Closing. In an Assignment Closing there is only one closing fee, so you save about $1000 on your lawyer fees. The main reason to avoid an assignment closing is that the Buyer and the Seller both will see exactly how much you are making on the closing and either side may freak out and kill the deal if they know you are making more money than they think you should. It can be worth that $1000 to have a smoother transaction where no one gets their feather’s ruffled over your fees. Read More→
Beware of the Perils of Short Sales
Posted on May 1, 2013 byI see a lot of people going into Short Sales these days and it really surprises me. A lot of these deals always seem to be more trouble than they are worth. But with decreasing inventory as we work through the last of the foreclosures from the 2008 recession, a lot of people are looking for the next niche to make their money on. I am going to go through some of the thoughts on this.
A lot of attorneys are wary to take on short sales. They require a lot of up front work (title, preparing prelim HUDs) for a deal that may not even get approved by the Bank. Do not be surprised if the attorney asks for money up front to cover their work in case the deal does not actually go through. Also many attorneys charge a “short sale fee” at closing that can be as much as their original attorney fee. So when you go into a short sale expect your costs to be higher, and likely to be required up front.
One you get approved, you would think yourself in the clear, but don’t be so sure. Banks have taken a beating on these short sales and they have learned that some people are lowballing the offer to the bank and turning around and wholesaling it to another investor for significantly more than the short sale offer. Banks feel they are entitled to your wholesale price as a payoff and so they have made arrangements to try to get that money. Read More→
Is Flipping Illegal?
Posted on March 26, 2013 byI regularly get phone calls asking me “Do you do Flips?” and my response is always the same: If done correctly I am willing to do a Flip. While many people, even some lawyers will tell you that any Flip is illegal, in fact there are legal ways to do Flips in Georgia.
The simplest way is when everyone in the transaction is using cash. If the A to B closing is cash and the B to C closing is also cash, then a Flip transaction is not illegal. Even if you used the funds from the B to C closing to fund the A to B closing, you are all right in an all cash transaction. Disclosure is still generally a good idea. A lot of buyers are having their own attorneys review the title exams or a title commitment. They then will freak out when they see that the B seller is not on title. Let your C buyer know “I will be buying this property on the same day,” and you will save yourself a lot of trouble in the long run. You are not required to disclose your purchase price. I will suggest as a rule of thumb making more than 10% may cause hard feelings. Remember that your customer today may buy more houses from you if you deal with them openly and directly. Read More→
Agreements for Deed in the State of GA
Posted on March 29, 2011 by
A lot of investors have come to me asking about agreement for deeds. Apparently they have been to seminars or heard from fellow investors that they are a great way to transfer property while still holding title. In Florida, this is certainly the case. Florida Courts specifically recognize Agreements for Deed and has legal procedures that make the use of that document smooth. In addition, Florida is a Judicial Foreclosure state and Agreements for Deed allow you to avoid the lengthy foreclosure process in Florida and simply evict the prospective owners for non-payment just as you would evict a tenant here in Georgia. However, here in Georgia, such documents are not given official legal recognition and we have a Non-Judicial Foreclosure process. These two reasons make Agreements for Deed impractical in our state. Read More→
The Georgia SAFE Act and What It Means to Investors Using Owner Financing
Posted on September 24, 2010 by
Congress has reacted to the financial meltdown in the housing sector in a number of interesting ways. Very few of them, I feel, are likely to actually deal with the root issues of why the bubble grew so much in the first place. In 2008, the US Congress passed the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (Also called SAFE Mortgage Licensing Act or simply the SAFE Act). The main purpose of the act was to restrict the ability to make mortgages to those that are licensed by the state. Georgia incorporated the SAFE act into law in 2010 with an update to the Georgia Residential Mortgage Act (Called GRMA) that can be found in O.C.G.A. 7-1-1000 and following to about 7-1-1018. The changes to the law have significant impact on investors who buy real property in Georgia and sell it using owner financing.
The first and easiest thing to note is that there are no changes when the purchaser is an investor. The law does not attempt to restrict buyers who are also investors. If you are an investor-to-investor seller of property, you need read no further and be glad that this is the case. Read More→
