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Willy @ The Real Estate Project

Making Real Estate Happen

Buy Land For As Little As $100 ??????

Can you really be able to buy land for as little as $100?  YES. 
You may ask, How is that possible! Where here are the details:

  • You need to be able to have access to search parcel numbers and look up the owners of those properties. 
  • Someway to be able to get the parcel numbers of the properties that you are looking at. 
  • You need to be able to go online to the county assessors office to cross search for tax delinquent properties. 


What I do is I pick an area that I have an interest in. Being in real estate, I have access  
via a title company to be able to search land parcels that will get me the parcel number and the owners name and address. There are some companies where you can get paid access to this information. Search online, there may even be ways to get the same information for free. This whole process takes work. Now you're going to be bouncing back and forth between the parcel number information and the county tax information. You're going to want to be looking for land that is 3 to 4 years in arrears in taxes and where the owners live out of area or out of state. Look at the dollar amount that the owners are behind in. You don't really want something  that is several thousands of dollars delinquent. Unless it is a property that has a high value and you know that you can get a buyer for it quickly. Use one of the online sources like Zillow, Realtor or public MLS access to see what sales have been for similar properties. I prefer that you use the public MLS access over the other two. You'll get more accurate sales information. Now before you go rushing off and mailing letters making offers to buy the land, you need to start doing the numbers.
 


Here is a hypothetical example:

5 acres in a rural area outside of the city limits. No utilities or anything. Just raw land accessible by dirt road. Amount owed in back taxes is $1,200. You see that in the last 12 months similar parcels have been selling between $5,000 to $8,000. I always recommend driving out to the property. Walk the property. Look for things that could be a problem getting the property sold. Look for natural washes that run down the middle of the property or too many Joshua Trees on the property. Check and make sure that the area is not in a protected plant or animal area that could hinder a sale. If everything checks out OK, mail off that letter offering $100 or $200 or $300 to take over the property and take care of the delinquent property taxes.
The owners have accepted your offer. Now what? There are a couple of different ways that you can take title. You can have the owners sign over the Grant Deed or Quit Claim Deed it to you. No need to get a title and escrow companies involved. That's just unnecessary 
money that you don't need to be spending. Head over to your County Recorders Office and have the transfer recorded. Now that you own this land, now what? 

It's time to get your new property sold. Let's just say that you ended up paying the owners $300 for the property. So you're $1,500 into the property now. And now you're saying, "but Willy, how am I going to make any money?" Well, you already know that similar properties have been selling between $5,000 to $8,000. Here's where the creative financing comes to play. $100 x 60 payments = $6,000.  $150 x 36 payments = $5,400 or $150 x 60 payments = $9,000. $200 x 36 payments = $7,200. Keep the payment schedule between 3 years (36 payments) or 5 years (60 payments). And if you can, get the buyer to put a down payment that will cover the delinquent taxes and adjust the payments accordingly. Otherwise just go the flay monthly payment. Use Craigslist to advertise your property for sale. Search online for other sites to advertised for free. ZERO DOWN $100 Per Month. (or $150 per m. or $200 per m.) 
You may get the call, like I get sometimes, from someone saying that they can buy a similar property for $3,600. You know what I tell them, "Why are you calling me then? Go buy that property! I'm dealing with buyers who don't have $3,600 in cash, but that can pay $100 or $200 or whatever a month". 

"But Willy, I have a Buyer now! Now what do I do?" Now it's time to draft your Contract for Deed. I use Rocket Lawyer, but there are others online that you can use like Nolo. I like Rocket Lawyer because of it's ease of use. Get the Contract for Deed recorded also. Set up an online back account like GoBank or PayPal where people can go online and make their payments. Make sure that they use the parcel number in the notes. That way it makes it easy to keep track of who has made their payments. I'm a big Google user and like to use Google Docs to create a spreadsheet to keep track of the accounts and payments. You can use Office or OpenSource or any other program that allows you to be able to create a spreadsheet. The main thing is that you want to have some sort of spreadsheet to keep track of payments, especially is you have payments from several properties coming in. The reason why I like to use the Contract for Deed is because if a Buyer should ever default (stop) making the payments, you can take the property back without having to go through the whole foreclosure process. Turn around and put the property back up for sale again and do the whole thing over again. As the Buyer pays off the property, you just sign over the deed just like when bought the property and make sure that you get the transaction recorded also. 

** This type of transaction can be done in the State of California and in a few other States that I know of. I know other investors have said that a Contract for Deed can be used in every State. Please verify that your State does allow the usage of a Contract for Deed when privately selling real estate.       

Is There A Future For Real Estate Agents

     Real estate has been going through some massive changes in the last 12 months. So the question that has been brought up, "what is the future for real estate agents?" More people have been getting into real estate thinking that it is a way for "easy money". As a result the real estate market is flooded with agents. In time a few will drop out once they realize that the "easy money" is not so easy to obtain. I personally know 3 that have already dropped out of real estate. The sad thing is this one agent tried so hard to make real estate work that he lost his home to foreclosure. One agent had a cleaning business prior to getting their license and has since gone back to running their cleaning business. And the last agent is a teacher who thought that working as an agent would be great for additional income when students were out of school for Summer break. This Summer that agent is now teaching summer school.

 
     So what are some of the changes that I have seen recently: 

  • There are many more of these so called 100% Brokerages.
  • There are a growing number of  "real estate companies" where the business model is not as a "brokerage" and agents are employees and may not always need to be licensed or be a part of a local REALTOR Association. Their business model is similar to that of commercial real estate and business brokerages.  
  • There is a grass roots push to end all local REALTOR Associations and operate only under one Statewide Association. In California that would be California Association of Realtors.
  • It was announced within the last couple of months by Gary Keller that Keller Williams would be restructuring how they do business. They intend to change their business model to that that would give a client that "one stop shopping" experience and thereby be able to provide services at a reduced cost. Saving clients possibly thousands of dollars when buying or selling a home. 

          

                 

Is There A Real Estate Bubble Brewing?

There are a lot of indications that there could be very well another real estate bubble pop on the horizon. As an agent who does Broker Price Opinions (BPO's) for several major lenders, I have had an increase in the number of BPO orders starting from back in September. Every month the number of orders that I get weekly has been increasing. I have also been tracking foreclosure activity. That has been increasing also. It's known that real estate goes in 7 to 10 cycles. Following that information, we are due for a down swing. The thing is in many areas there is a low available inventory of homes for sale and market values keep increasing. I'm also seeing a lot of new residential construction going on. Interest rates are still low also, but lending qualifications are stricter. And as a result not as many people can qualify for a home loan these days. Only time will tell where real estate will go.    

What Does The Future Hold In Real Estate Investing?

     I'm asked this question all the time by investors. I even ask myself it. No one knows for sure what is around the corner. Real estate is a constantly changing environment. Market values can increase and decrease within 30 days. Seasonal changes will also affect real estate.   
     From my experience, real estate goes in 7 to 10 year up and down cycles. Other influences like Presidential elections and local elections can affect real estate. Uninformed voters have voted in taxes thinking that they were doing the right thing or having been mis-lead into thinking that they were voting for something that was going to benefit them. Case in point, the recent increase in sale tax in Los Angeles County. This is something that the "people of Los Angeles" voted for. As a result some cities in LA County now have a sales tax that is over 10%. Other cities are not far off from that. And then you have the politicians in some cities and at the State level who recently approved to add a real estate transfer tax to all real estate transaction. This was done in the name of reducing and providing homes for the homeless and those who are considered "low income" aka "Section 8" recipients. 
     The new real estate tax that will be added to all real estate transactions is surely to affect real estate here in California. And as a result will affect those who invest in real estate. This added tax will also have an affect on market values. I'm not sure which way the values will go except maybe upward as sellers will attempt to cover this new expense that they will have to pay for. I'm sure many sellers will try to shift the costs to buyers. And as a result this may push buyers to request increased assistance with closing costs from sellers. Anyways, when it comes to investors, they will surely increase their asking prices and also look to doing business in other states.    

Open House or Broker Open that is the question.

When listing your home for sale, is the agent going to hold some Open Houses or a Brokers Open?

 

Here are a few things to think about if your Realtor is going to have an Open House.

  • 1. Will your agent be the one holding the Open House? In many real estate offices there are agents who primarily work in getting listings while there are agents who only work with buyers. Those who host Open Houses are usually there to build their buyers database. Many times it is a new agent to either the real estate business or to the area. It's a known fact that very few of those who go to Open Houses actually buy that house.
  • 2. Open Houses opens your home to total strangers. Do you want total strangers walking around throughout your home? Your neighbors may show up wanting to have a look inside your home. They have no interest in buying your home. They just want to see how you live and what type of furniture you have.
  • 3. Safety and security. Open Houses allows potential criminals into your home. While they are touring your home they are also looking at if there is anything worth while to come back for. They'll be checking out to see if you have a dog and or an alarm system. There are also safety concerns for the agent who may be holding the Open House. Many real estate offices have started implementing that 2 or more agent be working together. In the last few years there have been agents who have been robbed, sexually assulted and killed while holding an open house. 

 

A Brokers Open.

  • 1. Brokers Opens use to be primarily for exclusive luxury homes. That has all changed. More and more listings are being shown by a Brokers Open.
  • 2. A Brokers Open is a controled and safer way to get your home seen by area Brokers/Agents. These agents will be able go back to their offices and contact any of their clients who are looking for a home that has the same things that they are looking for in your home. Your home will be seen by pre-qualified buyers who for one thing can afford to purchase your home if they really love it.

 

So, once again, Open House or Brokers Open. I'm all for a Brokers Open and I hope you think so to. 

Should I Invest Or Not?

Things to think about when considering real estate investing In Land:

 

  1. Why Land ?  Land is not going anywhere anytime soon.
  2. What To Look Out For. When looking at land there are a few things to look out for. Like access to the property. Is access via a dirt road or a paved road. If access by a dirt road, is it a maintained road by the County or by other owners in the area. Walk the property and look for any corner markers. Look for anything like a wash that goes through the property that could  make the property only partially usable. Look where the utilities are if there are any. Bringing power in to a property can be quite expensive. All these things can affect price and desirability later on when it comes time to either sell or build on a property.
  3. Do Research On The Property.  Always check with either a title company or with the County on the land use ability. Sometimes the zoning may only allow a specific usage. Title companies can also provide you with an easement map that will show where the utility right of ways are and any other easements that may be on the property like set backs for a road.
  4. A long Term Investment. When you buy a large parcel of land or even a smaller city lot, your investment is typically a long term investment. Land does not sell quickly and usually requires extensive marketing.
  5. When You Want To Buy. Depending on the price and size of the property that you are thinking of buying should determine whether or not you should use a title company and escrow for the transaction. You always want to make sure that the person selling the property has clear title. Meaning that there is no cloud on title.  And what I mean by "cloud on title" is that there are no liens on the property or that the person selling the property is the only person on the title and no one else. I have seen instances where there were several people who had a percentage ownership interest in the property. To become the full owner you would need to get all the other people to acknowledge on the purchase contract that they are giving up their each and own percentage ownership in the sale. The more complicated the deal, the higher the price, the larger the land and any question as to ownership should entice you to use a title company and escrow in your purchase. Now with all that said, it is possible to buy a parcel of land for a couple of thousand dollars or less and have the Seller deed the title over to you and you go down the County clerks office and record the new ownership.
  6. When You Want To Sell. If you didn't do it when you first bought the property, get a file started. Know where the Deed to the property is and have it in that file. Determine an asking price. To help you with that ask a Realtor or look on Zillow for recently sold properties that are like yours. Always use Sold properties as your comparables for determining an asking price. I've seen far too many people going by what other people were listing their properties for only to sell far less than what they were asking for. The price at what market values are are what people will pay for a property similar to yours in your area. If you price too high, you will never get any interest in your property. Be open to Seller Financing. I have sold more properties with Seller Financing than any other way. Your Seller Financing can be short term (3 to 5 years) or long term (10 to 20 years). Use low down payments and low monthly payments and balloon payments. Market your property for sale everywhere you can think of. Craigslist is a good source for buyers. Just know that you don't have to list your property with a Realtor, but offer a commission incentive to a Realtor to bring you a buyer. There are many online sources where you can market your property for free.  

The Underground Real Estate Market

It's been known for some time that there are pocket listings and "off market" listings. In the last couple of years, following the real estate collapse, this "grey" market has really taken off. Especially when it comes to commercial real estate, is now including residential properties.

 

A short fact: Realtors are required to list their listings on the MLS within 3 days. But there is a clause in the listing contract that allows an agent to keep a new listing off the MLS if the Seller chooses so. The key word though is "Seller". An agent can not do it him or herself without the Sellers knowledge. 

 

As Realtors (agents and brokers) get listings, many of those listing do not get sold and expire. This is where the "underworld" can kick in. There are those Realtors who will contact the owners of properties that had their listing expire and try to get them to relist with them.  Savvy agents will either contact a Seller right away and offer to market the owners home for a price or commission amount if they bring the owner a buyer or wait a few days to a few months and then contact an owner and pitch them the offer of bring a buyer but not asking for a listing. The reasoning behind this is that many owners/sellers get frustrated with their prior agents/brokers lack of bringing a buyer or one of several other reasons. This opens up the "hidden market" or "off market" real estate.

 

This then opens the question of, "are there bargains to be found in this Off Market or Hidden Market". The answer is mixed with yes and no. Sellers are not tied any one brokerage and they negotiate the terms and selling price. The other thing is that buyers have time on their side to pick up deals as sellers wait longer and longer when trying to sell their properties themselves.

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