Transaction 17 of 52 in 2011: I "Broker" a Loan

More transactions! More deals! More fun!

I help Shawn Watkins of Investors Workshops find some short-term money when a buyer was delayed coming in with funds. So I called a financial friend who had never lent money short-term and asked him if he was interested.

His first reaction was "no," not interested at all.

Second reaction was, "maybe depending on the numbers, please send them to me."

Third reaction was, "this sounds good. I'll probably do it after I review the numbers."

The numbers looked good. $20,000 short-term that would come from an equity line at a low-interest cost to the lender secured by a second dead of trust against the subject property.

The money came in two days later. Shawn closed the transaction. Funds paid back as promised. Our financial friend is ready to do the next one.

Utah vs. Bank of America: Round 2

As far as government goes, the State of Utah has a good one! They are fighting for the rights of its citizens to have a local office to work with if they are facing foreclosure!

I posted last week that Bank of America is IGNORING a court order to STOP using out of state foreclosure services! When I posted this on Facebook I said "Maybe Utah should SHUT DOWN all Bank of America foreclosures!"

Well, someone must have read my blog because now the attorney general is suing Bank of America to stop using out of state foreclosure processors.

Click here to read the original Salt Lake Tribune article.

Well, don't you love it? A small state sticking up to a GIANT bank to defend it's citizens!

Social Outbreak- The New Tool to Grow Your Social Network & Real Estate Business

Clear Day Capital just signed up for Social Outbreak, the Facebook application designed to help Fan Pages look good and grow a Fan Base.

Since the tool is new (it is still in Beta Testing) I decided to start a blog to talk about my experience with the application and the company. Check out my new blog:

The Social Outbreak Experience

Let me know what you think!

Bank of America to the State of Utah: You Can Take Your Laws and ...!

The State of Utah passed a law requiring foreclosures to be done by a local business entity or attorney. Bank of America does not have offices inside the state and they don't work with local attorneys.

So, did B of A stop foreclosures or did they open a local office or did they hire local legal representation? Of course not. They are deemed "too big to fail."

Apparently now they feel that they are "too big" to comply with state laws.

BofA to keep foreclosures despite new Utah law | The Salt Lake Tribune

How Long Will Deep Discounts Last?

I am often asked, "How long can we keep buying deeply discounted properties?" My best guess: At least three years.

Why?

1. A large current inventory. That should last a year or so!

2. A large number of foreclosures are already in process and they are taking up to two years to process. That means new bank-owned inventory coming on the market for at least two more years. (Take a look at this article and keep reading- things are not getting better, the banks are just slowing down.)

Pace of foreclosure filings slows in Utah, U.S. | The Salt Lake Tribune

3. We are still in a period of high unemployment so we can expect ongoing high foreclosure rates for at least another year.

Add it all up and we are talking 3-4 years of high levels of bank-owned inventory.

Is it a good time to invest in real estate today? Yes.

Will it be a good time to invest in a year? Yes.

Will it be a good time to invest 2, 3, 4, 5...10 years from now? Yes, yes, yes, yes... YES!

Want to invest in Northern Utah but don't know where to begin? Contact me!

Already investing in real estate and want to work with another experienced investor? Contact me!

In a home search? These websites can help | The Salt Lake Tribune

People ask us "How do we find bargain houses in Utah?" The answer: We have multiple sources.

Are you looking for multiple sources to find a home or investment property? Check out this Salt Lake Tribune article:

In a home search? These websites can help

Peter Fortunato Training- June 11 + 12, 2011

We use the concepts we learn at Peter Fortunato's classes almost every time we teach real estate concepts at the Northern Utah Real Estate Ivestor's Alliance (NUREIA) or talk to new investors. I'm always asked about when and where his next class will be, so I decided to post his next class information.

Here is a link to his web site: Real Estate Acquisitions Techniques

I've been to the class it it is more than worth the price of admission.

By the way, I don't get any benefit for you to go except a better prepared real estate investor to do more business with.

Transaction #2 of 52 in 2011: We Do a Simple Loan, With a Surprise Ending

Clear Day Capital started business in 2006 as a lender to real estate investors. As the investment real estate environment changed, so did Clear Day Capital's business. Over the last two years we significantly increased the qualifications of our borrowers.

When a repeat borrower called in early January and told us he needed a loan for $20,000 that could be leaned in first position against three separate single family homes, we said yes. He was reliable, the properties needed repairs but he had a plan for rehab, and the land for one property alone was worth the total amount of the loan.

THE FIRST SURPRISE

The borrower contact us a couple of weeks later. The contractor who was scheduled to bring in the fix-up funds and do the work was no where to be found. Did we have additional funds to loan?

Sometimes we say "yes" to lending more money. In this case, there were several challenges that made us think twice about about lending more money. First, these houses are in locations where we wouldn't normally invest. Second, the two of the three houses where in much worse shape than we normally rehabilitate. Last, the quality of the houses were much lower than we normally invest in (less than three bedrooms, and really small lots.)

So... the answer was "no" to fix-up funds.

THE SECOND SURPRISE

About a week later, the investor came back to us with an update: All three houses were scheduled for destruction by Ogden City. They had been vacant for over four years and destruction was imminent. Without new funds, the best we could hope for was three vacant lots with liens from the city to pay for destruction and scrap removal. Our money would be stuck. Lots aren't selling. Lot's don't bring in rent. Lot's cost money. The liens would be equal to the value of the lots. Lots of problems with lots!

THE SURPRISE ENDING

We decided to take the properties back from the client. We did it as a purchase, without paying cash to the borrower. We took over the note and added additional cash.

To stop the destruction of the properties, Mayor Matthew Godfrey of Ogden Cityrequired us to put funds into an escrow account for each property. We then pulled permits and went to work with our general contractor, Bryan Kawa.

Do you want to read what happened to the properties? Check out my blog posts on Transactions #12-13.