Private Lender Appointment/Closings/long term wealth/Workouts

I had another sit down meeting this past weekend with a prospective private lender. They are interested and want me to present my deals to them as they come up. This is GREAT! I'm not 100% sure they will commit to lending but they did not say no. That is fantastic in my book.

Both of the closings for our HUD properties are set for next week. We hit a snag with the same one that fell through last month. Of course this did not make me happy but we're working through it and I'm hoping and praying it closes successfully. I have all my money out again and am really tight financially until these properties close. I do not like being in that predicament. So far so good and you'll be the first to know if it falls through!

I have been analyzing our business again as I look towards making my early departure next year. As you know I have not had an accepted offer on a wholesale property in months which means I would not have a profit in... a while. I cannot let this happen when my sole earnings will be real estate. So as I thought about the properties I'm going after it occurred to me, "hmmm if my exit strategy on this property was a lease/option I would be able to purchase it, make a nice monthly cash flow and get option money". The more I thought about it the more I liked that idea. If I had, say, 10 houses with $300/mo minimum cash flow I would be come close to replacing my income. I would also have the option money and, finally, if and when the options are completed we would have a big pay day in the end. So, it all sounds great EXCEPT I hate, hate, hate being a landlord. I know this is a bit different in the sense that all the responsibility goes to the tenant but... I don't know. I feel like I keep coming back to the lease/option niche and really feel like this is the direction I need to go in order to make my future happen. Of course I would always wholesale properties between L/O's which would also add to our cash flow but I just don't think I can soley count on wholesale deals.

The property I am looking at is a 3/2 Tudor style house in a great neighborhood, near lakes & golf course, close to the IL border, etc. The house is mostly updated (kitchen, flooring, baths), had a new roof in '04. What is needs is a new well drilled, new windows and major landscaping. It also has a stucco exterior which I've read could cause problems. Right now I could get the house for $59k, I want it for $55k if I'm going to L/O and $45 if I am going to wholesaler. Back in '07 it sold for $200k+... amazing, huh?! There have already been some other bids on the property so I'm pretty sure it's not going to sit much longer. At any rate, I could lock up this property, get a new well drilled for $5k, update the landscaping and then L/O for $125k, I think. I love this house, it is really cool. This is all based on an inspection coming back clean, of course. Soooo, I'm thinking of trying it on this house and see how it all goes?

Received my Insanity workout over the weekend. I started it on Monday and have completed 4 workouts. I'm very, very sore and hate getting up at 4am to do the workouts BUT I am committed. My starting weight is 152 and I'll post my progression.

Alrighty then... another roadblock (shocker!)

Monday: So I'm making dinner when my mom calls with some questions regarding financing the real estate deals. She mainly wanted clarification on 2 things:

1. How many properties they can fund/year before getting taxed (I didn't know there was a limit, nor did I know they could get taxed as it could be construed as a business if they did too many).
2. The website states very clearly that ALL profits go back in to the IRA upon sale of the property and she wanted to know how I would be getting money in my pocket. Isn't she sweet thinking of me : )

I tried explaining to her that the note would spell out the terms and conditions regading how much they would earn from each property. So if we agreed that they would make $2k for a short term note and the profit was $10k after we sold the house, I would get $8k at closing. She wasn't understanding because, again, the website was very clear on where the profits went. So I said I would talk to Equity Trust the next day and get it spelled out for her.

Tuesday: I get my representative on the phone and start asking my moms questions. For the record, question #1 is 6-7 properties conservatively but more likely 10-12 purchases per year before a red flag is raised to the IRS. Okay, that sounds good - on to question #2. This is where things turn south. As I'm asking my question about my parents' IRA funding our purchase, how the terms are laid out, etc. he proceeds to tell me that that cannot be done. WHAT?! What do you mean it can't be done? Well, you are a "disqualified person" and your parents' IRA cannot lend to you it is against the IRS rules or some BS like that. I was soooo upset when I got off the phone. My mind would not stop racing on how I was going to get this to work without putting my parents money in jepardy of getting taxed, "A prohibited transaction can bring into question the tax-deferred status of the account, resulting in the disqualification of the self-directed IRA and severe tax and penalties". The first thing I did was send an email to my mentor at private money blueprint program. I'm currently waiting on his response.

In the meantime I started searching the web for an answer. It sounds like we can partner on deals where they put in 50% and I put in 50% (or whatever percentage you agree on) but they cannot fully fund a deal. I want 100% of the property purchased with private money.

So I'm pretty sure, not 100% but pretty damn close, that my parents will not be able to be a part of my program. All their money is in their retirement accounts and if they take any out they have to pay taxes. Not worth it and I completely understand!

Soooo, that's that.

Have not received the Insanity workout yet...

Headed off to listen to Steph's newest Wholesale success story interview. If interested head on over to www.flipthiswholesaler.net. You will get a ton of great content if you listen, I assure you!!

1st Private Money Meeting/New contract/Offers, offers, offers

As you all know I purchased the Private Money Blueprint Program about 6 weeks ago. Over this time I have been going through the program, listening to the modules, updating the presentation and mentioning it to people who ask how the "house thing" is going. Well after talking to my parents, they decided they wanted to learn a little more about investing their hard earned 401k money. This past Monday I sat down with them, presented my program and they were very interested. I'm hoping that in the next few weeks we'll be purchasing a property using their self directed IRA (which needs to be set up and funded, of course). I am also rolling over my 401k from a previous employer in to a SD IRA. The tax benefits are outstanding! From what I'm hearing this is the concern most of my prospects have is paying taxes on the money they would be investing with me. However, if they roll their money in to a SD IRA it is tax free. THEN, when they get their profit upon closing it is directed back in to their SD IRA tax free. Woo Hoo! The only draw back would be if someone wanted their profits in their pocket and not in their IRA acct? I imagine it would be doable but highly taxed. Sooo I told my dad that if he was happy with his return to just mention it to all of his friends that are retired with big 401k's! Hopefully this will start the ball rolling and I'll get more people interested in hearing about the program.

We got a new contract on the property that had the FHA buyer fall through. I emailed the buyer that was super interested when we accepted the other offer and told him the contract fell through. They went to see it 2 days later and put in an offer the next day. It is lower than the first offer but I want the house gone so I can move one! We are scheduled to close at the end of the month (4/30). Fingers and toes are crossed.

Since we are heading in the private money direction I'm putting in offers like crazy. I feel like I have a little more flexibility even though nothing is set in stone regarding the PM. There are a bunch of HUD's and other regular bank owned properties out there that I'm watching. Already this week 2 HUD's have been sold to o/o's and just today I got a multiple offer notice on another property. Urrghh.. frustrating! But it's part of the game we play and I hope we'll get one under contract soon!

Tomorrow we are looking at 2 or 3 properties and Sunday I am going to look at 2 more. There is a HUD that just came on the market today with a phenomonal list price. I cannot bid on it until a week from Monday but that gives me time to go take a look and be sure it has a back wall : )! If it's in good shape I will probably be offering full price. We'll see, I'll probably have an o/o beat me out anyway... I'm starting to get a little frustrated with no properties under contract BUT I just keep submitting them and know that I'll get one soon!

****Non real estate related**** I am making a commitment to do the 60 day insanity workout program as soon as I get it (just ordered today). I have to lose this extra weight, it is really bothering me!! I don't really have a lot to lose, maybe 10-15 lbs but, urgh, I just want it gone. I'll be the first to admit that I suck at sticking with programs, I love junk food, I love to sit around, I love my cocktails, you know all the stuff that's not good for me!! BUT, I need to make a change and I'm committing myself here, today, that I will do the 60 days to the best of my ability!!!

My FHA closing totally blew up!

Yep.... last Thursday night my realtor informed me that there was a little "glitch" with our closing. The buyers lender (a mortgage broker) said FHA changed their rules to reinstate the FHA 90 day non-flipping rule. I called him up an reamed him up and down. Not professional, I know... But remember, I spoke directly to him right when we received my buyers offer and he ASSURED me that the 90 day flipping rule would not be an issue. He also assured me that the profit I would be making from the sale would be a non-issue. Okay fast forward about 40 days to last Thursday. I was absolutely livid when I got the call that he could not proceed to closing. I was also livid that he assured me, the realtors AND the buyer that this would close w/ no issues. I was also confused that FHA would reinstate the 90 day rule after just over a month. So I went on over towww.flippinghomes.com to see if anyone had posted this change. Hmmm, no posts referring to the change. Weird? My first thought is that this guy is lying to us. Why would someone do that? Just to be sure I posted the question of whether this change was actually reinstated. Here is the answer http://www.flippinghomes.com/forum/replies.aspx?tp=1&tr=165244#m184494

Okay, can anyone say I was livid at this point? I call the broker up again and ask him to fax me the change. He then proceeds to tell me that he never said that FHA reinstated their 90 day rule it was just the lender he was using............. If I could have gotten my fist through that phone to connect with his face I would have been one happy camper. Anyhoo, we went back and forth and in the end I basically called him a liar and that I would never work with him in the future, ever.

So the buyer is now out $1,200 for 2 appraisals and a home inspection on a property she cannot buy. Man, would I be pissed if I was her. Now, I could wait the 90 days but I just can't hold on to the property and hope she can close then. I really feel for her. She is trying her damndest to get another loan but it doesn't seem to be working out for her. I told them that they have to go through a local bank for me to even entertain the extension again.

So what are we doing with the property now? Well this buyer still wants it but we are not waiting so we put a bump clause in their contract. This way if we get another buyer they are bumped out of place. I just found out this morning we have another buyer who should be submitting an offer by the end of the week. I got this particular buyer off CL and he wanted to go through it right when we got the FHA offer. Urrgh... should have taken him through. We also have a showing tomorrow night. I think it will work out fine, less profit but still something to pay down our last credit card (WOO HOO credit card debt free!!! Can't wait).

More to share later...

Organizing for Private Money

Hello All! Hope everyone is having a good week.

This week I am trying to focus on getting my power point presentation together in order to present our program to potential private money lenders. This past weekend I opened the PP presentation so I could modify it and found that I only have a PP reader on my home computer... WTF?!?! So, I've been trying to modify it at work but have not been successful at completing it yet. My "due date" is Tuesday so I'm probably going to have to download something at home, not sure yet. However, I am getting excited about the potential I have ahead of me. I have not taken my eyes off my the prize, which is my completion date of August 2011. This week at work has been very slow and I feel like I am wasting my time by sitting around and talking. It's nice to have a break but there is so much I need to do re: REI but cannot do it all at work. I do too much as it is! At any rate, I asked my realtor and one of my buyers to write up a testimonial for my presentation and both said yes. I have to say I was really, really nervous about calling my buyer but I literally said - out loud - "what the hell, just call him" and I did.

No updates on the FHA closing. Seems good to go at this point.

The inspection on the Wind Lake property (HUD #2) showed electrical problems (shocker after the plumbing!). We negotiated and that's taken care of. Now I'm just waiting on the well inspection report and I should get that back tomorrow *crossing fingers*.

I am going to look at a couple other properties this weekend. I picked 3 specifically b/c they were in the county my one bank lends. It has frozen/broken pipes but if the rest of the house is decent, there might be a deal? We'll see. Also looking at a HUD a little further north as it looks like a great deal! I NEED to get another property under contract and keep this momentum going!!

Wish me luck!