I was so impressed with the realism and helpfulness of this site that I joined. Many thanks for all of the good information from all of you. I wish that I had found this site long ago. “Lysias”, my user name, was the greatest owner of property in ancient Athens. This expresses my hatred and loathing of flipping! I like to hold.
At the moment, I am in a mess, but much opportunity has arisen from it.
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I was destroyed by a fraudulent mortgage broker (Global) in Dec., 2006, when I bought a prime house on the Central Californian Coast. They stole &80,000 at closing and jackknifed me for another $200,000; my name was forged to documents, and much else. They lost their licence shortly thereafter, and disappeared. No recourse. This nearly destroyed my business as well. I held out till last December (2007), when, at a “crisis summit”, all of my cronies and I decided that it would be better to save my other credit and hope for the best on my $7,500 a month mortgage. Well, default in June. I found an investor, but, in early August, three days before my attorney was going to enter battle with the lender, I received notice that the note had been bought by another company. The investor withdrew, and so I was, partly through my good lawyer, able to effect a settlement with the new noteholder such that I retained rights to profit in the sale of this property, and was handed some cash, tpgether with a fixer at Indianapolis.
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The noteholder would rather that I find an equity partner in the Californian house, which, in this market, is the only thing that makes sense. I paid $1,450,000 for it on an appraisal of $1,699,000, it has fallen to about $1,250,000, but, if - and that is the question - the market recovers, it should, within three years, itself recover and exceed that appraised value. It is a prime property with an magnificent view of the Pacific and seven acres of virgin oaks. I can sweeten the deal by offering to surrender $3,000 a month in equity to continue to live here. Other possibilities include buy and donate to charity. The noteholder will quitclaim the property back to me for $1,100,000. Appraisal still hovers at $1,500,000. Assessed value is $1,319,000 after Proposition 8. I am not attached to the house; it is simply a nuisance to have to relocate at this moment. The quitclaim will maintain the basis - $1,450,000. Exchange is another possibility, subject to approval by noteholder. Open to discussions, but I must leave by the 16th. if no equity partner be found.
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Meanwhile, my credit is massacred. I had a 750 median in December, 2007, which has sunk to 599-ish. My other credit is sterling. I make $12,000 a month and my bank will verify it. I am familiar with the usual methods of correcting credit records, but, because of the fraud perpetrated by Global, I have some recourse. What is for dispute is lates on the mortgage from December, 2007, through July, 2008. A notice of default was filed in June, but there is no 21-day notice of foreclosure, and no foreclosure. There is some oddness in the filing of N. O. D., too, for A. M. C. were the original lender, and the note was not transferred to Citibank until AFTER the N. O. D. and the lates, even though Citibank bought the loan, they say, in August, 2007. Any suggestions helpful.
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Meanwhile, the new noteholder gave me a choice of locations for my fixer, and I chose Indianapolis because I have a lot of business in Indiana, and have already got to know many other midwestern cities well enough to know that, for the time being, I had rather hold rentals at Indianapolis. Easy to keep an eye on. I have a very good friend there who is a property manager, and he says that I shall need about $20,000 in repairs. The house is in a street on which I have found other opportunities. He and I have decided that, as a landlord, I should look for better tenants than the neighbourhood has hitherto supported; this is a good opportunity, since the bad element in the neighbourhood (not by any means the worst neighbourhood) have vacated. So, I have formed my L. L. C., and my purpose is to buy, rehabilitate if necessary, and hold, letting out the buildings to good tenants. I am being offered masses of R. E. O.'s, foreclosures in various states of the process, fixers, and so forth, many with existing, long-term tenants who pay like clockwork; the notes have assignments of rent. So, because I have not had good experience with partners, I should prefer to make borrowing arrangements, but ones favourable to all parties. I will not pay more than one-quarter of the rental revenue in debt service, but I am willing to extend terms, meaning a higher rate and so forth. I want nothing on my personal credit file, but I am willing to allow the rent to be collected and distributed by a trustee approved by both the lender and me. Proceeds will be used for purchase and rehabilitation. As a landlord, I want to improve the community, not rape it.
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Because, whether I remain in my house in California or not, I shall be spending much more time in Indiana, I need my own residence there, too. My business is somewhat connected with timber, and so I have found 23 acres in southern Indiana, with a house on it sufficient for my needs, infrastructure on property for a much lafrger house, and lots of merchantable timber. The property will appraise at $175,000, but I can get it for less. Once in possession, I can select-cut (not clear-cut, which is disastrous) some timber, with which to pay off all or part of the loan. It is zoned residential, agricultural, and timber, all in one. Very handy. So, looking for a lender here, too.
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I am not unsophisticated in real estate, but none of my friends have any extra money at the moment, being tied to their own projects. For purposes of asset protection, I do not want to offer a personal guaranty, and, with my credit being damaged at the moment, a personal guaranty will not help much. By the way, I just found out that Wells Fargo are not making commercial loans any more without a personal guaranty. So, that leaves private lenders.
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I have tons of heavily discounted distressed notes and their residues available to me in many parts of the country, if anybody is interested, especially Southern California, East Chicago, Cleveland, Pennsylvania, and New York (Buffalo, &c.).
Apologies for long post, and many thanks for reading this. I shall tell my friends about this site. I don’t yet know how to do the private messages here, and had rather keep further details private, but please feel free to send a private message if anything here makes sense to you. Many thanks.