House Flipping

Speaking of house flipping, did you hear the one about the 10 people indicted on Friday for bilking mortgage lenders out of over $20 million? These 10 people devised a scheme where they not only put in loan applications for people that didn’t exist, but they kept flipping the same house(s) to inflate the price thus being able to borrow more money.  The Feds are looking at them for bank, mail and wire fraud, plus money laundering. I guess it was good while it lasted. LOL.

Maybe you heard the one about the unregistered sex offender (ex-firefighter) and his partner that were contacting owners of homes before they went to foreclosure sale. They would get the homeowner to relinquish the property and then “flip” it to a new buyer. The buyer would put down a down payment or a mortgage payment, and these two gentlemen would use it for what ever they chose instead of getting the house out of foreclosure. Their scheme involved about 10 houses and they were headed to California presumably to do the same.

Maybe you heard about the sale “rigging” going on on the courthouse steps? A group of investors get together and pay people not to bid on particular properties so as to not inflate the price. What this would mean to you if you were a homeowner whose home has gone to sale, is if your home might have sold for more than you owed the bank, you may have received “proceeds” from the sale. If investors are paying to keep the bids down, there isn’t much of a chance of that happening.

Even builders are getting in on the act. A builder in Ohio built high-end luxury homes. He would then sell it to a “straw buyer” and submit false loan applications and contracts stating he received down payments he never received. The builder then got to walk away from approx.  $3.5 million in mortgage debt, and gained about $500,000 in seller proceeds. They have so many counts against this guy, he’ll be lucky if he ever sees the light of day again.

The hits just keep on coming! Speaking of “house flipping” did you hear the one about…?

Hey, I’ve just recently met Benjamin from Zion Engineering. If you have any demolition needs or remodeling, live in the San Francisco area, this guy and his team are a wonder. Visit their website and then give them a call. Tell him “Lauri” sent you.

Only it’s not the end. In a simultaneous escrow the investor has already “flipped” your house to another buyer for a hefty profit. You don’t know anything about this transaction. Wouldn’t you be upset if you found out? Wouldn’t you feel rather dumb that you didn’t get the price for the house that the investor was able to? Wouldn’t you feel taken advantage of?

This is basically what the real estate “gurus” are teaching when you hear about one of them putting on a seminar or a workshop. As a Realtor, we are not allowed to do this type of investing without full disclosure to all of the parties. It just seems to me if everything is above-board, that’s the way it should be.

"Before Tim Larkin"

When you, as a real estate investor sells to a sociopath, this is what all the investor teaching gurus don’t tell you.

Not every “vanilla” real estate deal comes out “sweet”.

Five yrs. ago I sold my mobile home on an installment contract to a man named Timothy M Larkin. Due to the mobile needing some work, I sold it “as-is” at a discounted price. Mr. Larkin had just split with his family and wanted to stay close enough to spend a lot of time with his daughter, but could not get financing due to an IRS lien. His lawyer wrote me a letter stating that the lien would be cleared up with in the next year, and other than that Timothy M Larkin had a pretty good credit report.

I thought this would be a “win-win” for both of us. I agreed to carry the paper with 10% down at the current market rate, amortized over 30 yrs. due in 5. This kept the payments affordable for Mr. Larkin and would provide a monthly paycheck for me. That’s one of the things the real estate gurus preach. “Buy a bunch of houses with a positive cash-flow and build your wealth.”

At one point about a year and a half into the contract, he paid me $35000.00 of what was owing, and I gave him credit for over $47000.00. Once again, a win-win. Supposedly during this time he had also remodeled.

In the meantime, he harassed the lady across the street from him so much, he finally got her removed from the park. She was a little crazy, but not dealing drugs as he had claimed every time he called the police out there. He had also encroached on the next door neighbors lot so much that she couldn’t even use her driveway. She put her mobile up for sale. The people directly across from him who had had that mobile for years, he harassed them so bad about painting the outside of the mobile, they painted, and then put up a for sale sign in their window. He demanded the owner of the park remove another mobile across from him, and when the owner had it all set up to move it, Mr. Larkin declared it was a health hazard, and stopped the whole thing! Through all of these things I should have gotten a clue as to what type of person Timothy M Larkin was, but nothing prepared me for what came next.

First he had a lawyer write me a letter trying to claim fraud when I sold him the mobile home and I should give Mr. Larkin the mobile home and all of his money back. Luckily I am a very good Realtor, trained by two ladies that dotted every “i” and crossed every “t”, so needless to say that letter didn’t lead to anything. I had offered to sell him his note for a discounted price, and instead of negotiating, he just quit paying. I had to file a Notice of Default to get the back payments. After that it was as if I had to file a NOD to get almost every payment.

The park is now in flux. The owner wants to convert the mobile home park to condos. He’s been fighting for a while now, but has lost each fight as the park fills the City’s need for low income and senior housing. If you live in the park full time, it is rent controlled and the space rent is quite low.

The contract was going to be up this Feb. 2011. I really thought that he would renegotiate for longer time or try to buy out the contract at a discount. Instead, with a balance of over $88000.00 owing, all he offered was $10,000.00 and instead chose to go through the foreclosure sale. I haven’t been able to get inside yet, but he’s out and I did get some pictures from the outside. Timothy M Larkin chose to totally gut the place of everything that was in it leaving me with the shell. While I half expected as such, my boyfriend when he saw it was just devastated. He just kept saying “How could somebody with any kind of conscience do something like this? This man’s an animal!”

This is what happens when you as a real estate investor meets a sociopath. This doesn’t even touch on all of the time taken to do paperwork, etc. because he had no integrity and didn’t keep his end of the bargain.

"After Timothy M Larkin"

Disclaimer: I don’t for a fact know that Mr. Larkin has ever been diagnosed as a sociopath. I only know he appears to have no conscience for his actions toward other people.

Capitola Mobile home 4 sale

Due to a default by Tim Larkin, the man who was purchasing my mobile home, I will be auctioning/selling to the highest bidder for all cash, cashier’s check drawn on a local bank, or other terms acceptable to me, a 2 bedroom, 1 bath mobile home located in the Surf and Sand Mobile Home Park in Capitola, CA.

The actual address of the mobile home for sale is 750 47th Ave., Space #12, Capitola, CA. 95010. The sale shall take place in the Surf and Sand Mobile Home Park parking lot, in front of the park clubhouse. The sale shall be held at 10:00 AM.

The amount currently owing is $88,717.00, the sale to be made in “As-Is” condition, but without covenant or warrant, express or implied, regarding title, possession or encumbrances. It is possible that the opening bid at the time of the sale may be less than the amount due.

If for any reason clear title cannot be conveyed, the successful bidder’s sole and only recourse shall be a return of monies paid to Lienholder (me) with no further recourse.

What I personally know about this mobile home and the Surf and Sand Mobile Home Park

This mobile home park is within walking distance of Capitola Village, located near the intersection of 47th Ave. and Cliff Dr. It’s a very beautiful area and a very desired location. The mobile home residents and the City of Capitola have been battling the current park owner to avoid a conversion of the park.  It is currently rent controlled by the City for residents that are living there full time, from what I understand. Here is a link to the latest article published in the newspaper that I could find that tells of the latest battle.

I have not been inside the mobile home since selling it to Mr. Larkin almost 5 yrs. ago. While he said he has remodeled the mobile home, I have no way or knowing what condition it is currently in, or will be in when he leaves it.

If you have any questions you may contact me, Lauri Beamish at 408-313-3270 or email me at lauribeamish@gmail.com

If you’re really asking “Have we hit the bottom of the California housing crash?”, I would have to say I don’t think so, not yet. Millions of homes are still being foreclosed on, and despite what everyone says, banks are still not truly working with their customers. While working on loan modifications on one hand, the banks are taking the homes to the courthouse steps with the other.

If you’re asking “Should I sell my home now before it loses any more value?” I would say that this is the slow time of year to sell even in a good market. It’s true, your home may lose more value if you hold on to it going into 2011. As I said, I personally don’t believe we’ve hit market bottom yet. Right now rates are at an all time low, which allows more buyers to buy, giving the seller a larger market. Historically, around the middle to end of February rates start to rise knocking people out of the affordability circle. You also widen your market if you are willing to do a little ‘creative financing’ such as carrying back a note for part of the money you receive and having the buyer pay on an installment contract.

Last but not least, if you’re asking “Is this the time to buy a house?” I would say it’s a great time to buy if you’re planning on being in it for awhile. Unless you’re buying a fixer upper way below market and doing the work yourself, the days of flipping it right back out and making a huge profit are a little slower these days. If you buy a home planning to raise a family, or stay located in that spot for the next 5 to 10 yrs., opportunities abound.

You have the advantage of the lower rates, and this time of year most sellers who have their home on the market are sincere about really wanting to sell. The inventory may not be as large, but neither is the competition for the same house. Sellers tend to be a  little more negotiable when there aren’t any offers coming in.

If you’re just curious about what’s happening in your neighborhood because you’re trying to keep track of where you are financially, equity wise, I would be happy to give you a full report of the activity in your neighborhood for free. No obligation. Just remember, I only deal with the Santa Clara County, California area. I can be reached at 408-313-3270 or at LauriBeamish@gmail.com

Mark has a series of courses named “Simpleology“. I started with his very first in the series Simpleology 101, 102, & 103. Since then he’s gone on to do many more great and informative courses. Recently he has offered to give his “Simpleology: The Science of Money” away for free in exchange for some publicity and feedback on the course. I just got it myself yesterday and can’t wait to dive into it based on what I have learned from him so far.

I would suggest if you are interested in learning a few secrets about the “Science of Money“, especially if you could use some really good instruction, head over there now and sign up before he takes the offer away.  Just go to

https://czsecure.com/delavo/funnels/130/

and pick up your copy. Wouldn’t it be great if we all learned the money game and never had to worry about bills and debt again?

Investing in Foreclosures

Investing in real estate in Silicon Valley is a real possibility right now but there is not much of a margin for error. As prices have fallen and rates are low, it is possible to buy a “rental” property for specifically that reason, to rent it out. This is an opportunity for investors we haven’t seen for many years and they are coming out of the woodwork like crazy. I must get at least 5 e-mails a week from somebody with a new “system” for buying up property. Unfortunately, they’re not “new” and most of them are totally illegal for a licensed real estate professional here in California.

I’m sure most of you have heard that the FDIC is going broke. That FHA is in trouble. Fannie Mae and Freddie Mac have been in trouble. Besides what’s on the market (the MLS) these institutions are dumping properties as well.  It’s amazing some of the bargains you can pick up, although you do have to be careful and do your own due diligence. Make sure you crunch all the numbers. A condo that looks attractive numbers-wise when you figure the mortgage payment, may not be so attractive if you add in a hefty Homeowner’s Association Fee, along with insurance on the unit itself. Remember, the Homeowner’s Association only insures the outside of the unit, nothing inside the 4 walls.

What is amazing to me is that for as much as everyone is saying credit has dried up, etc. many of the same loans that got us where we are today are still out there. Oh sure, for now your credit score has to be a little higher than it used to be, but I’m not sure how long that’s going to last since now even people with A+ credit are going into foreclosure. FHA has laxed a lot of their standards so that their loans are more usable. Not only that but they have a loan program that will help you buy the property and give you “fix up” costs. It’s almost as if they will pay you to fix up your new property. VA still has a no money down adjustable rate mortgage. Some of the conventional lenders are willing to bend criteria a bit to get properties off their books.

The one thing FHA has tightened up on is “flipping”. They have a “no flipping rule” that says if you buy a property using an FHA loan, you may not sell it for at least 90 days. Now to me, if you move into a property you’ve bought, fix it up while you live in it, which is not at all unusual for investors, and you’re flipping houses every 91 days, you can still do quite well. You have to pay to live somewhere anyway. Why not the property you’re buying to fix up and sell? Not only that, but the lenders look much more kindly on properties that are going to be owner occupied.

I realize it’s pretty much a feeding frenzy out there, but if you’re going to invest, invest smart. The “gurus” of real estate don’t talk about the properties they get stuck with, or the holding costs, or the bad tenants. They talk about the upside without the downside. I’m all for investing in real estate to build your wealth, but be prepared. It’s not all the bed of money it’s cracked up to be. And if you think you can go negative cash flow on a house because it’s only $50 or so, think about how much that turns into per month if you do 10 of them, or 100.

If I can help you with any of your real estate needs, whether looking for a bargain on your first home, looking to invest in a rental property, or selling your home for the best price in a down market, feel free to contact me or leave a comment below.

I’m listening to an attorney talking about renegotiating loans. That’s a good thing, but statistics show most loan modifications are not sustainable, meaning it’s a temporary state that is not going to last for the long term. He’s talking about renegotiating the loan and then still taking your house. I have a hard time with that. Most people renegotiate so they can stay in their home.

If you’re in trouble people, there are a number of resources open to you. Make sure you are getting all the information concerning what all of your options truly are.  If I can help you figure out what your options are, please feel free to call me anytime. If you don’t call me, just make sure you take some kind of action now.  Sitting on it is not going to help you. Time is not on your side.

Feel free to comment below. What situation are you in right now? Is your family safe?

Just a quick update: The attorney I’m listening to says his techniques won’t work with states that have anti-investor laws. Big red flag here in California!

I am always ready to learn new things that I can use to help my clients where ever they come from, be they a renter wanting to buy their first home, an investor buying several homes, or a seller needing to get out of a bad mortgage in a hurry. I thought this would be a prime time to learn a little from the expert, Mr. Trump, even if it wasn’t him but one of his students doing the seminar. I thought there would be some really new innovative techniques for this market that I hadn’t heard yet or that I could incorporate. I’m so sorry to say that wasn’t the case.

Granted I did not learn everything they have to teach in a 90 minute seminar, which is why they have a 3 day workshop for $1495., but I did here enough to know 1) it was the same information I had learned 25 yrs. ago when I started out in real estate as a buyer and watched the late night infomercials on TV 2) that many of the techniques I as a Realtor cannot use as they are illegal when you are licensed in California 3) If anyone practiced what this gentleman did teach in the order he said to use it, they are looking at a possible lawsuit also.

I’m sure he just got the order of a couple things wrong due to trying to pack so much information into a 90 minute seminar, but… how much wrong information do they pack into 3 days?

This is a fabulous market if you’re just starting out and buying your first home or you’re an investor buying homes for your portfolio, but please people, be sure what you are learning or who you are learning it from is telling you things that pertain to your particular state and their laws. Also make sure  they are telling you all the downside that can go with what you’re doing, as well as dangling all the cash you can make before your eyes.

If you have any questions about different types of transactions, or something you’re about to do, please feel free to leave a comment below or email me direct. I’d be happy to help.