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Most?
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Disregard. Just testing the waters on HX . Got info I needed from friends to possibly position myself to get into a foreclosure if opportunity arises. Thanks anyways
https://youtu.be/H1s2weYYR40
Rates are gonna maintain low for the time being and may even dip under 3% in 2021. Sales of properties are still ok but the values probably will dip a bit. Depending if and when the eventual “reopening” of industries happen will have a factor on when it will get kickstarted. This is a different animal than the 2007-08 housing disaster. The industry was moving solid until this happened. Foreclosures are “on pause” for now per the government directive but it’s been a fluid situation with Mnuchin Sec of Treasury and Calabria who oversees the government backed securities Fannie Mae and Freddie Mac. As April is coming to a close and now we are at 24-26 million unemployed vs 9-10 million that was in the “Great Recession” years it’s definitely gonna be a challenge. Banks and some non banks are leveraging their liquidity as best as they seem fit for their balance sheets. Stay tuned for May and see if there will be a slow start up in some regions of the country.
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Foreclosures are off the table right now, so there's that.
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Great question...
What I can say from experience is that California markets have defied the odds in times like these. Could you find a deal ?... i bet you can if you have the money and patience.
I put in an offer on my first home with $5k down on Sept o, 2001. Two days later was an eventful day above average. On the 12th I was walking though inspection.
I dont know how I managed to go through with that purchase when in my mind I was thinking the market would plunge and I should hold out.
The market leveled off for a year or so then continued towards a peak In 2005.
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Sept 9th, 2001
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So far, appraisals are coming in at appropriate levels and not impacting purchases/refinances negatively.
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Look for repo high end vehicles first. If those hit the market, properties cant be far behind.
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Not much demand but not much supply. As such, home prices should remain relatively stable for now
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agreed with sentiment that less demand (less qualified applicants due to loss of jo in addition to less inventory and everything mostly stays the same. I already got pre qualified to buy more properties and have started looking in the southbay and lb/lakewood/bellflower area and so far 1000sq ft home in not so good neighborhood still listed forn500k+
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^CH +1... looking for another property closer to the beach.
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There are so many house flippers from here to the east that can buy up houses at auction very fast.
Kinda like storage wars, when there is the big guys, and then some new people try to buy a locker and they dont spend as much, hence lose the locker.
I think California real estate is allot different than prolly the whole US
Looking at real estate myself in the mid-west allot of homes are allready in foreclosure, they are older, and in the middle of some times middle of no where.
but its also a sign, that there is no robust economy, or jobs- or so many homes in a area would not be at a loss.
in 2008 we had allot of foreclosures because that was when prime interest rates increased and peoples APR and Interest rates stepped up and there payments were pretty out of control (predatory lending)
I also have been researching different states and taxes. Some states have no state income tax, but tax sales tax, or have higher property tax etc.
CA property tax I believe is 1.7% however against six figures or a million that is a higher number then 4% out of CA against a 250k home.
There are allot of variables.
Also during this pandemic, we will see people want to cash out of their house and sell so they have money in the bank. Allot of old money is here, and allot of people bought their house 15 plus years ago, and its worth 2,3,4 times the amount then originally paid.
Most people that are out of work currently, may be home owners, and essentially a lender cannot initiate foreclsure for at least 90 days of default, and in those instances it takes allot of legal filing and notices to be publically published so lenders can move forward.
If someone stopped paying there home today, and never called their lender and didnt care.. I wouldnt see a sale date auction for at least 6 months before the sheriff is knocking on the door and the home is repossed.
Often times people need to look on their loan docs to see who the TRUSTEE is, who olds the note.
Just because your loan is with Wells Fargo, they may not hold the note. They are just the servicers. And those Trustee on the note are the ones you have to worry about when it comes to foreclosure. Some Real Estate Trust companies are nicers than others.
And so ill sum it up.
I worked in Real Estate Law during 2008 and saved homes from foreclosure and got loan modifications for over 100 homes in america over the course of a few years.
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Property tax is County driven. Not state driven. And 1.7 is not near correct for most counties.
OC is 1.07, if there is no Mello Roos. Or additional local supplements.
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And cash outs are up slightly. Not as high as you think.
And HELOC lenders are ceasing offering stand alone lines of credit. Piggybacks are okay if within 90 days of closing a purchase or refinance.
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^ I was reading bout taxes in different state I knew somewhere in CA there was a 1 and a 7  not 1.7 but 1.07 like u mentioned 
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I think people need to get on the up and up about the
Opportunities Zones......... My friend is opening up a distillery in one in NM and its suppose to be the biggest this side of the Mississippi... Anyhow he was able to pitch investors cause of the capital gains taxes and stuff that dont go on for years when they invest their money. Im not going to speak on it, cause I dont recall all the details etc.. but I even went to the SBA.gov and there are allot of these zones going on even here in CA.
Of course I think this is for commercial properties and such....... but yea.........
I actually took my RE classes, I just need to take the test.. but CA is currently not testing for obviously reasons. and I took the classes 2 years ago..... so I def need a crash course. If any1 has an referrals PM me.. Ive heard of a few places that are good, and to avoid!
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As someone who is a real estate investor on the side, and know a lot of other investors, most of us are taking at least 90 - 100 day moratorium on looking for new properties.
I have properties in both California and Austin Texas, both residential and commercial. The uncertainty is real but I expect there to be a ton of opportunity in 6 months to a year. I expect a higher foreclosure rate as well as the usual suspects, and I expect housing prices to fall a little bit. Auctions are a good place to find a deal if you have the cash but the competition is fierce and your buying sight unseen so it's more of a risk. Although I have picked up a few good deals at auctions.
Atticus Finch
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I Appreciate Everyone's informative input. It is very helpful as i continue to look around and refresh my memory on Real estate. I grew up helping my Grandma with her Real estate investments and always been intrigued even though the industry and times are different then those times. I made some decent money in the early 2000's as a Mortgage Loan Officer and know I can get into a Real estate deal, it's just that monthly note of course. If you are a Real estate Agent, Loan Officer, Investor, or any other job in the Industry feel free to send me your info for future business as i am building my Professional Network back up.Once again i appreciate everyone sharing their knowledge.
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@Atticus_Finch
That is exactly what I wanted to hear. I think the same thing. We will see. I am going to keep your contact info. Thank you
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I agree with Guido on the property tax rates. I would tend to use an estimated rate of around 1.25% for LA and Orange Counties. That rate would include the typical add on fees that you pay on your property bills but would not include major assessments for improvements or any Mello Roos type fees.
In Clark County in Nevada you are probably at roughly a 1% all in property tax rate. In addition some areas have Mello Roos type fees.
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Correct. We default to 1.25 for qualifying until we receive the tax roll from title. Cause some cities/counties are scandalous.
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2008 all over again. The prople that got hurt last time im sure learned a lession.
the kids that were in high school in 208 are now married and have kids so going to be in trouble this time.
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Initiating Foreclosures in CA are off the table thru end of May by executive order.
There's been practically nothing at OC tax auctions for a while.
Standard foreclosure auctions have had very thin margins for years now but there's an occasional diamond in the rough. But, competition is fierce and you better have access to Title info, property tax owed, remediation services, etc. or you'll likely come up a loser. Oh, and it's cashier check only if you're the winning bidder.
It sounds easy but its not.
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Gina,
I think Opportunity Zones are created for serious, experienced developers and rehabbers. I’m not sure many inexperienced rehabbers or developers will take advantage unless they partner w a good developer.
Nevertheless, I think it’s one of Trump’s most genius tools he’s created to lure wealthy high equity property owners to dump and pump money into an impoverished city or (often distressed and crime ridden/high unemployment) neighborhood to spur redevelopment or significant rehabbing of dilapidated buildings or land that would stimulate economic activities and jobs in that designated Opportunity Zone area.
Normally, a person who has owned an investment property in a nice area for a long time would probably sell it and swap it (1031 exchange to avoid paying taxes) for something that’s bigger and cash flows better, but not something as risky as a vacant dilapidated building in an impoverished city/neighborhood. For example, if you bought a duplex for $200k 20 years ago and sold it today for $600k, you’d have to dump all of your profit into buying another rental property of $600k or more in order to avoid capital gains/profit tax. However, this does very little for the local economy other than for real estate related professionals. The 1031 exchange used to be the only real estate capital gain avoidance/deferral strategy investors had. In this example, the capital gains/profit tax would have been about 20% or $80k to IRS if seller didn’t do 1031 exchange.
Alternatively, Trump’s Opportunity Zone option now lets sellers of investment properties to buy a cheaper dilapidated building to rehab or redevelop so long as all of the profit from the original sale gets used up on the rehabbing or redeveloping of that property. Additionally, after holding the redeveloped property 7-10 years, the seller no longer owes any (or owes very little) capital gains tax on the original sale’s profit. (I don’t know if there a provision that also waived future appreciation’s taxes ??)
In my earlier example of buying a $200k duplex 20 years ago and selling it for $600k today, thru this new tax sheltering investment vehicle, it would entice the seller to pour his/her profit of $400k into the local economy of a poor area via the spending of the capital gains/sales profit to rehab or redevelop this blighted property. Not only does it create direct local construction jobs, but also stimulates local indirect local jobs via construction workers patronizing local businesses. Lastly, the hope is that rehabbing or redeveloping these once vacant properties or land will be leased out to new businesses, which creates local jobs and generates new taxes for city. For example, your friend who is investing in NM to build a distillery is a perfect example by pouring money to local contractors and home improvement supply stores, and ultimately creating new distillery jobs and taxes once it’s done.
Although I know this new Opportunity Zone tax sheltering vehicle is a bit self-serving by Trump as he and his family are real estate developers and benefit most from this new tax law, it’s still a win-win novel idea for poor blighted cities and investors. Otherwise, I don’t know how you’d entice an investor in Irvine to risk his/her money in a city like Stockton w high crime, high commercial vacancies, and high unemployment?
It’s a no brainer that soon after Opportunity Zones were created, I read that Jared Kushner invested in a large swath of land along the coast of Atlantic City that was designated an Opportunity Zone that he plans to develop into lots of residential units. I’m sure Trump/Kushner can sell one of their many NY rental buildings and use the proceeds to develop new properties in Atlantic City and 10 years from now, they won’t owe any or very little capital gains taxes if they sell it.
Anyhow, I could be wrong. I’m still studying Opp Zone and am gearing up to try it if the right project comes along. I’m no tax head so perhaps a tax head can correct me if I’m wrong about how Opp Zones work from a tax perspective.
Below is a link to the state’s opp zone map. Many cities have some sort of opp zone but I’m sure the popular cities in LA and OC are probably all snatched up.
Good luck on the real estate exam. I think there was another blog a month ago from another gal who was asking for RE test prep suggestions and several guys suggested the same prep course.
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"in 2008 we had allot of foreclosures because that was when prime interest rates increased and peoples APR and Interest rates stepped up and there payments were pretty out of control (predatory lending)"
None of that is true at all, lol
Rent "The Big Short". Great movie, good cast, well written explains most of what happened.
Bottom line is the Feds decided to artificially increase homeownership by placing quotas on FNMA, etc. Certain banks and non-bank lenders were forced to increase lending. Others that were more predatory realized that the government would buy all the loans they could originate, ka-ching.
George Bush testified to Congress that there would be hell to pay if we didn't mend our ways. Representative Barney Frank, and others, said don't worry, be happy. People were pyramiding homes on thin capital using liar loans, then the recession hit. Others used their home equity like an ATM machine. Vacation? Hit the HELOC. Need a motor home? Hit the HELOC. College? Hit the HELOC.
What do you mean I just lost my job, don't you know I got a HELOC payment coming due?
That's how it went down.
It was the golden era for foreclosures, probably never to be seen again in our lifetimes.
And a lot of fun.
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I bought NCLH and HMC stock. I'll probably see a profit in about twenty years.
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GoBallsDeep: "Bottom line is the Feds decided to artificially increase homeownership by placing quotas on FNMA, etc. Certain banks and non-bank lenders were forced to increase lending. Others that were more predatory realized that the government would buy all the loans they could originate, ka-ching."
You are absolutely correct. The thinking, and the pitch to people who weren't as educated on the real estate market, was that property values would continue to go up, so any purchase was a safe investment. I remember barney frank demanding that lending restrictions loosen a bit so that more people could achieve "the American dream". He was also one of the loudest to bitch about it later.
Many people who really didn't have the means to buy a house, or a house as expensive, ended up qualifying for loans that they really shouldn't have qualified for. I had a friend who was a mortgage lender during that time and he told me that when they were trying to qualify a lender the underwriters would tell him "tell me that they make $120k peryear", and my friend would say "no, they don't", but the underwriter would just come back and say "just tell me that they do, and we'll get this done". What a mess.
I worked with a lot of real estate and mortgage firms. I remember mortgage brokers pitching "equity re-allocation" to their clients. I laughed my ass off when one of them tried pitching that to me. Those that were pitching that hard ended up going bust.
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Barney Frank should be in prison as one of the main defenders of what FNMA was doing. The other one is Maxine Waters. Ultimately FNMA went BK and the blame lands on Bill Clinton and some key politicians in Congress at the time.
There were like 5 - 10 huge high risk lenders here in Orange County that all went BK. BofA almost went under after purchasing Countrywide and taking on their portfolio.
I also recall landscapers and day laborers making $120k (wink wink), lol.
The Feds created the playing field and it's not surprising that there were some who took advantage of it, made a bunch of coin, then moved on. The poster child was Angelo Mozilo at Countrywide.
Nobody here recalls the S&L crisis either, 100% created by the Feds/States trying to create an artificial housing market then changing the rules after the fact.
Keep in mind that politicians are ALWAYS trying to give away somebody else's money in order to get re-elected. When it blows up in their faces, they have no choice but to blame it on the usual suspects and know that most people are too stupid to know the difference.
"Nuff Said"
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Go Balls Deep - There is a strategy that I and other investors use that allows us to gain control of a property for $20 - 50$,000.00. I've used it quite a few times and it helps out people between a financial rock and a hard place, and me of course. It's called 'Subject to' i.e. Subject to Mortgage.
Essentially - If someone is behind on their payments and can't bring the loan current, and so going into foreclosure, I can buy the house by paying them an agreed amount, say $10 - $15,000.00, to take over their current loan. I then bring their loan current and make the payments. The loan stays in the owners name so that as far as their credit report shows they're the ones who've brought their loan back to life so there's no foreclosure on their record and they're record shows them making payments. It saves their credit rating, allows me to take control of the property for less than $25-$50,000.00 and then when I'm done remodeling the house I can refy the house with a new loan in my company's name or I can just sell it out right. As I've said I've done this quite a few times and it's NEVER triggered the 'Do On' clause. In fact the first few times I did use it I was afraid it would trigger the clause and CALLED the mortgage holder and told them what I was doing and all they said was to make sure the payments got there on time - All they care about is getting their $$$.
It's a win - win for the owner and investor as the owner no longer has to worry about a foreclosure ruining their credit record so they'll still be able to get a credit card, buy a new car etc., buy another house in a couple of years, rather than waiting the 7 years for the foreclosure to go off their record and their record will reflect that they've been making payments on time all along except for the 'small hiccup' they went through.
Helps the investor as he doesn't have to make a huge outlay of cash, the payments are less than if they went to a 'hard money' lender so there's less of a total investment in the property and so a chance for a higher profit or better rental.
You have to do A LOT of extra research to see what other liens the property may have but it's well worth it.
NO it's not illegal!!! Although many real estate agents think it is, most have NEVER worked with investors or know anything about investing. In fact it's in every real estate contract as - Subject To, that I've ever used or looked at from California to Texas to Hawaii to Washington, Oregon, Idaho etc. The only state that I know that Sub-To is illegal in is Ohio. But even there there are ways to get around it.
I also expect a lot of short sales to be coming up in the next 6 - 12 months.
Atticus Finch
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sounds interesting but i have found it rare that most mortgage companies will let you refi in a company name. usually they require you to deed it into an individual's name AND you are not actually on the deed as an owner.....so not saying it's not possible as you say that you've done it. But, my experience is that it's more difficult.
sounds interesting though
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Rare is an understatement. I have done thousands of loans. Never closed one in the name of a company. Escrow/title may allow you to deed it back to a company, but, the lender will typically not allow the loan to close that way. In a trust yes. But not a company name.
Hard money loans are different. They don't typically care. Just got a refi today. 6 month hard money loan to be paid off. 12% interest. Balloon payment due. Title/note held in an LLC. But when we refinance, it will not be in the LLC.
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gotgoals, I used to own a mortgage company and then switched to real estate investing. I am an active real estate broker. I can answer questions. But it will not write an essay...
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SSL
CA LLC's are registered with the State so easily researched for ownership.
Recommend you do a Land Trust or RE Trust with LLC as Trustee, LLC can be in the name of your attorney, then contractual arrangement with attorney.
Complicated, costs money but famous people CA spend to hide their ownership.
Out of state LLC can be used also.
This is only if you truly want to hide, not worth it otherwise.
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When you do a sub to deal, you or your company, buy the property and they are listed on the deed. The only difference is that the loan stays in place.
The question I imagine is why would anyone sell their property this way?
1) They are in foreclosure and are going to lose not only the property but also see their credit get nuked.
2) By doing essentially an assumption they get $10-$15,000.00 cash. The loan is brought current by the buyer who then continues to make the payments.
3) As far as the credit bureaus are concerned the sellers have brought the loan current and are making the payments so their credit is back to where it was before the foreclosure.
4) All the banks care about is that they get their $$$. As I said I've never had the do on clause triggered.
5) When buying a property this way you still fill out the real estate contract that's required in your state and the property goes through escrow for the time period you choose, I usually do a 14 day escrow. The only difference is that you fill out the 'Subject to Mortgage' section of that contract - which, as I said before, is in the Texas & Calif., real estate contracts.
I ALWAYS give limited access of the bank account that's making the payments to the sellers so they can go online and see that the payments are being made. Too because the loan is still in place the sellers are essentially the 'bank'. If payments are not made the sellers can foreclose on the buyer - they get the property back not only with all the improvements made but also with the loan current.
When doing a deal like this, and not all foreclosures make a good sub to deal, it's vitally important to: 1) run a title search BEFORE entering into a contract to find out if there are any other liens on the property. If there are and they're not to much you can begin negotiations with the lien holders. I've negotiated $5 - $10,000.00 liens down to $500 - $1000, by pointing out that at least they're getting something rather then getting nothing. 2) Get a 3rd party release so you can call the bank and find out directly from them how much the loan is in arrears, what the actual payoff is etc. You'd be surprised at how many people facing foreclosure don't tell you the truth about how far behind they are in payments or how much the loan is for.
It's something most savvy real estate investors know about but 9.9/10 real estate agents don't nor do they understand it. And the general population has never even heard about it.
Atticus Finch
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BTW, when you contact the bank/mortgage holder inform them that a deal to sell the property is taking place and to stop the foreclosure. I've stopped a couple of foreclosures that were set to go to auction in a couple of days. It was nerve wracking but it worked out.
Atticus Finch
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The reality is that their credit got nuked when they missed the payment and their mortgage went Notice of Default (NOD), then further nuked if they go Notice of Sale (NOS). It doesn't have to get to the actual auction sale for their credit to be fucked. So, your deal is NOT saving their credit scores. it would only accomplish that if they do the deal BEFORE they miss payments and go NOD.
It also means that not only do you take over payments but any fees, penalties, and interest accrued by the NOD & NOS.
Unfortunately, you can't assume loans anymore, so basically you're taking the risk that the lender doesn't find out or care that you're making payments for the mortgagee. My experience is that as long as they are getting paid, they don't care who's doing it but the loan is at risk of call and possible foreclosure.
The other issue you may have is since ownership hasn't actually changed on Title, the seller COULD declare BK at any time and include the home as an asset of the BK, thereby tying you up for longer than you'd like or the property could be seized to pay creditors net of the mortgage balance.
The other option for the seller is that they do a short sale which is subject to lender approval. The seller would potentially get more money if they have equity than your deal provides although your deal gets them some equity sooner than a short sale.
Sounds like you've had some deals work out and that's great, just gotta understand the risks.
lender requires full payoff
seller BK
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That's not really true.
Once the loan has been brought back to current their credit is marked as late payments and that they HAD a notice of default. But since loan is brought back to current and payments are again being made on time their credit rating is, maybe not brought back to where it was, but it doesn't fall off the cliff like it normally would. And as long as I have the property and am making the payments it's showing that they're making the payments. If I decide to sell the property after I've remodeled it then the loan gets paid off and their credit record reflects that as well. Or if I decide to hold on to the property as a rental then I'll refy it, pay off the other loan and it still reflects that they paid off the loan.
In fact when I've been out and about I've met people a year or 2 later whose property I've bought this way and several of them have said that they'd bought a new house and that I saved them a lot of heart ache. Which is the goal: Win - win or no deal!
'Unfortunately, you can't assume loans anymore, so basically you're taking the risk that the lender doesn't find out or care that you're making payments for the mortgagee'
No. YOU can't assume a loan anymore. Investors who know about 'Subject to Mortgage' can and do ... A LOT. Too, for the first 5 or 6 that I did I notified the banks that I WAS taking over, or assuming, the loans via a sub to deal and if they didn't want me to continue with the deal then let me know and I'll cancel the sale. The only responses I got from the bank/mortgage companies, if I got one at all, was 'Make the payments on time'. In reality the only thing a bank or mortgage company cares about is getting their money. Their not much interested in where it's coming from.
Actually I do have a title and my companies name is the buyer/owner of record. As I said the process is pretty much the same as buying a property retail. I fill out the contract with my companies name BUT fill out the 'Subject to Mortgage' section as well. Put the contract into escrow for 10-14 days and when it closes I get title but the loan remains intact.
Too in the 15-20 sub to deals I've done, not one has triggered the 'do on' clause. Other investors I know who do and have done 100's have never triggered the clause either.
Is there a risk? Absolutely. But investors are pretty hip to sub to deals and the risk is very minimal.
If I could I'd do nothing but sub to deals. I get the property for a very cheap price. I save the owners credit, put money in their pocket, the deal takes less than 20 days to complete so the owners stress level is gone quickly and they can move on with their lives and their credit intact.
As I said it's a win all the way around.
Short sale and sub to deals are completely different. In fact you can't do a sub to deal on a short sale. Too, most short sales, all that I've seen, the property is either underwater or has very little equity in them. If an owner is facing foreclosure then he's got to either sell the property quickly or lose it. If they sell they're going to get a haircut regardless, especially if the property isn't in that great of condition. On several of my sub to deals I specifically asked them how much they put down and came within $5 - $10k of that.
Attached is a link that'll explain it better than I can. Believe it or don't but I've made quite a bit of money doing sub to deals and I know a lot of other investor that have gotten quite rich either by selling or holding on to their deals. Like I said savvy investors know about it and use it as much as they can.
Atticus Finch
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