Celtic_soulja Posted April 28, 2010 Share Posted April 28, 2010 Alright so Magox and DC have been ripping this "ridiculous" idea I have for the working class in the blighted neighborhood of my upbringing...I didn't get into many details about the plan, but I want to post a vague outline to argue some more :0) because I'm irish and we enjoy those kinds of things... Okay, first I have all but secured 2 million dollars in local funding...there are some things I have to do before I get that funding but best case scenario I will get it...worst case scenario I'll only have 100,000 plus what I can drum up with the president of a local fund raiser...sort of like a cheap Acorn knockoff...okay but best case scenario I am starting with 2 million...I plan on purchasing and refurbishing 85 houses with that money...that is scooping up the houses that are boarded up and empty...I will be buying them for under 50k and putting 10k worth of work into them... I only have to pay for materials...I have volunteers that will do the work for free or for a very limited amount of pay...I have a licensed union electrician that will give me a good price on any electrical work I need done (it's nice to have family) and I have another connection that is a store manager at Home Depot for some other material...as long as I get incorporated he can give me a corporate deal that will save alot on materials...I have 15 volunteer workers and I have another 500 or so unemployed "contacts" that will work for fair prices...with ten grand I will be able to update the homes that I am buying...the market prices for these homes are around 120-185k I plan on buying them cash for 30-50k fixing them and selling them to the working class families for market value... Now, DC is saying that I am as bad as the bankers because I'm marking my property up from 60k to 120k...I think the example I gave was a 30k property selling it for 95k, so in some cases I will actually be trippling my money supposedly...however, to purchase these homes I will only charge 500 a month over 20 years for a 120k home...no interest, just the profits I make from getting the cheap run down houses and putting people in them...but my counter argument to me being as bad as any other banker is that I am still selling these properties for what they are worth, 120k meaning if the working class person I "screwed" according to Tom, is that he could turn around and sell the home for EVERYTHING the buyer put into the home...instead of spending 500,000 on a 200,000 dollar house that you would get from a bank...you couldn't turn around and sell the property for 500,000 could you? exactly...so I don't feel like I'm hurting a working class buyer by doing this... This is not even mentioning that the buyer will most likely be a person that couldn't get financing from a bank anyway, if you seen the neighborhood I plan on working with you'd understand...it's a paycheck to paycheck kinda place...most have poor credit and are overspent by the months end...the average rent is 750 a month so buying my houses will save them money per month and they would be able to sell the house for everything they put in...so I feel like it's a no brain situation for them...no interest, no down payment, a low monthly payment, and they get exactly what they pay for... It was brought up that why don't they just finance the 30k and spend even less, but they can't secure financing for the house due to poor credit ratings and a poor debt to income ratio...also, for the properties I'll be buying, banks are not looking to get financed buyers anyway...they need work and they usually won't finance for those types of properties... At any rate, I wanted to know if people would feel screwed if they got such a deal...500/month for 20 years for a home worth 120k... Also I am going to give them financial training....dont' freak out Magox...just simple asset liability management and fiscal responsibility lessons...nothing in depth like "how the market works" we all know i have the market acumen as a muppet :0)... Making 28,000 a year (the average salary of the neighborhood I'm doing this in) you are looking at 2000 a month...500 for house payment, 500 for food, and 800 for monthly bills...you get 200 a month to save...in twenty years, invested correctly, you will have a property worth more than you paid...estimating you're net worth will be over a quarter million dollars...that's never getting a promotion and doing nothing more than working your regular low paying job for the next twenty years, you'll still be able to retire on what you have...a much better deal than what they are being offered currently don't you think?... So c'mon guys, let me have it............................again Link to comment Share on other sites More sharing options...
Beerball Posted April 28, 2010 Share Posted April 28, 2010 Alright so Magox and DC have been ripping this "ridiculous" idea I have for the working class in the blighted neighborhood of my upbringing...I didn't get into many details about the plan, but I want to post a vague outline to argue some more :0) because I'm irish and we enjoy those kinds of things... Okay, first I have all but secured 2 million dollars in local funding...there are some things I have to do before I get that funding but best case scenario I will get it...worst case scenario I'll only have 100,000 plus what I can drum up with the president of a local fund raiser...sort of like a cheap Acorn knockoff...okay but best case scenario I am starting with 2 million...I plan on purchasing and refurbishing 85 houses with that money...that is scooping up the houses that are boarded up and empty...I will be buying them for under 50k and putting 10k worth of work into them... I only have to pay for materials...I have volunteers that will do the work for free or for a very limited amount of pay...I have a licensed union electrician that will give me a good price on any electrical work I need done (it's nice to have family) and I have another connection that is a store manager at Home Depot for some other material...as long as I get incorporated he can give me a corporate deal that will save alot on materials...I have 15 volunteer workers and I have another 500 or so unemployed "contacts" that will work for fair prices...with ten grand I will be able to update the homes that I am buying...the market prices for these homes are around 120-185k I plan on buying them cash for 30-50k fixing them and selling them to the working class families for market value... Now, DC is saying that I am as bad as the bankers because I'm marking my property up from 60k to 120k...I think the example I gave was a 30k property selling it for 95k, so in some cases I will actually be trippling my money supposedly...however, to purchase these homes I will only charge 500 a month over 20 years for a 120k home...no interest, just the profits I make from getting the cheap run down houses and putting people in them...but my counter argument to me being as bad as any other banker is that I am still selling these properties for what they are worth, 120k meaning if the working class person I "screwed" according to Tom, is that he could turn around and sell the home for EVERYTHING the buyer put into the home...instead of spending 500,000 on a 200,000 dollar house that you would get from a bank...you couldn't turn around and sell the property for 500,000 could you? exactly...so I don't feel like I'm hurting a working class buyer by doing this... This is not even mentioning that the buyer will most likely be a person that couldn't get financing from a bank anyway, if you seen the neighborhood I plan on working with you'd understand...it's a paycheck to paycheck kinda place...most have poor credit and are overspent by the months end...the average rent is 750 a month so buying my houses will save them money per month and they would be able to sell the house for everything they put in...so I feel like it's a no brain situation for them...no interest, no down payment, a low monthly payment, and they get exactly what they pay for... It was brought up that why don't they just finance the 30k and spend even less, but they can't secure financing for the house due to poor credit ratings and a poor debt to income ratio...also, for the properties I'll be buying, banks are not looking to get financed buyers anyway...they need work and they usually won't finance for those types of properties... At any rate, I wanted to know if people would feel screwed if they got such a deal...500/month for 20 years for a home worth 120k... Also I am going to give them financial training....dont' freak out Magox...just simple asset liability management and fiscal responsibility lessons...nothing in depth like "how the market works" we all know i have the market acumen as a muppet :0)... Making 28,000 a year (the average salary of the neighborhood I'm doing this in) you are looking at 2000 a month...500 for house payment, 500 for food, and 800 for monthly bills...you get 200 a month to save...in twenty years, invested correctly, you will have a property worth more than you paid...estimating you're net worth will be over a quarter million dollars...that's never getting a promotion and doing nothing more than working your regular low paying job for the next twenty years, you'll still be able to retire on what you have...a much better deal than what they are being offered currently don't you think?... So c'mon guys, let me have it............................again Why is the picture of John Delorean dancing across my brain? Link to comment Share on other sites More sharing options...
Celtic_soulja Posted April 28, 2010 Author Share Posted April 28, 2010 Why is the picture of John Delorean dancing across my brain? That was still a hot ride hehehehehe Link to comment Share on other sites More sharing options...
GG Posted April 28, 2010 Share Posted April 28, 2010 You're either going to get scam artists or deadbeats with your plan. Here's the question - will you fully sell them the house for that $500/mo plan? If you will, then sign me up first. Because, I'll default after the first payment, making you spend another $40k to evict me, while I live there for free for 3 years. Great plan. Link to comment Share on other sites More sharing options...
LeviF Posted April 28, 2010 Share Posted April 28, 2010 You're either going to get scam artists or deadbeats with your plan. This was my first thought upon reading your plan. I can't imagine you'll have any sort of decent "success" rate with this. Link to comment Share on other sites More sharing options...
DrDawkinstein Posted April 28, 2010 Share Posted April 28, 2010 You're either going to get scam artists or deadbeats with your plan. Here's the question - will you fully sell them the house for that $500/mo plan? If you will, then sign me up first. Because, I'll default after the first payment, making you spend another $40k to evict me, while I live there for free for 3 years. Great plan. this is the first kind of thing that popped into my head too. celtic, i think youre better of just taking the $2mil and running away to Mexico. Link to comment Share on other sites More sharing options...
Celtic_soulja Posted April 28, 2010 Author Share Posted April 28, 2010 Who wants to default on a 500/mo deal?...for a house?...I dont' see it...at any rate, that's what I expect to attract anyway, and I'm ready for the headaches...but I think that I will find plenty of working class people that aren't deadbeats...and yes I will sell it to them...and why would they want to default and run away? I don't get that train of thought Link to comment Share on other sites More sharing options...
Celtic_soulja Posted April 28, 2010 Author Share Posted April 28, 2010 You're either going to get scam artists or deadbeats with your plan. Here's the question - will you fully sell them the house for that $500/mo plan? If you will, then sign me up first. Because, I'll default after the first payment, making you spend another $40k to evict me, while I live there for free for 3 years. Great plan. Oh, and this isn't NYC we're talking about...so it wouldn't cost me that much time or money to get them out...it's 200 bucks and a month...but you're close Link to comment Share on other sites More sharing options...
DC Tom Posted April 28, 2010 Share Posted April 28, 2010 What are your cash flow projections for your first fiscal year? And how are you accounting depreciation or goodwill? Link to comment Share on other sites More sharing options...
Cynical Posted April 28, 2010 Share Posted April 28, 2010 You're either going to get scam artists or deadbeats with your plan. Here's the question - will you fully sell them the house for that $500/mo plan? If you will, then sign me up first. Because, I'll default after the first payment, making you spend another $40k to evict me, while I live there for free for 3 years. Great plan. Foreclosure process varies from state to state is greatly impacted by if the state is considered a "power of attorney" state. If the state allows a "power of attorney" clause in the loan agreement, the entire process can skip the court system, and can be finished fairly quickly. IIRC, in Texas, the foreclosure process can last 3 weeks, and in Georgia, 4 weeks. Link to comment Share on other sites More sharing options...
DC Tom Posted April 28, 2010 Share Posted April 28, 2010 Foreclosure process varies from state to state is greatly impacted by if the state is considered a "power of attorney" state. If the state allows a "power of attorney" clause in the loan agreement, the entire process can skip the court system, and can be finished fairly quickly. IIRC, in Texas, the foreclosure process can last 3 weeks, and in Georgia, 4 weeks. Of course, celtic is talking "rent to own", not lending money (nor truly renting, for that matter). But I'm sure evicting a renter who has a demonstrated vested ownership interest in the property itself is a piece of cake under any eviction law. Celtic, what are your estimated legal fees for FY 1? Double them. At least. Link to comment Share on other sites More sharing options...
GG Posted April 28, 2010 Share Posted April 28, 2010 Foreclosure process varies from state to state is greatly impacted by if the state is considered a "power of attorney" state. If the state allows a "power of attorney" clause in the loan agreement, the entire process can skip the court system, and can be finished fairly quickly. IIRC, in Texas, the foreclosure process can last 3 weeks, and in Georgia, 4 weeks. But before you start a foreclosure you have to demonstrate that the borrower is seriously delinquent on the mortgage, right? Link to comment Share on other sites More sharing options...
DC Tom Posted April 28, 2010 Share Posted April 28, 2010 But before you start a foreclosure you have to demonstrate that the borrower is seriously delinquent on the mortgage, right? Celtic's not talking about giving anyone a mortgage. That would make him a banker, hence evil. Link to comment Share on other sites More sharing options...
GG Posted April 28, 2010 Share Posted April 28, 2010 Celtic's not talking about giving anyone a mortgage. That would make him a banker, hence evil. Hence my first question - who retains the title? Of course, if he doesn't sell, he's a slum lord. Link to comment Share on other sites More sharing options...
DC Tom Posted April 28, 2010 Share Posted April 28, 2010 Hence my first question - who retains the title? Of course, if he doesn't sell, he's a slum lord. He would. Though I imagine there'd be some sort of paperwork - a contract, letter of intent, etc. - stating the details of the arrangement, otherwise he wouldn't be protecting the very people he's claiming to protect. But of course, that paperwork would demonstrate ownership interest on the part of the "rent-to-owners"...making it that much more difficult to evict them as renters ("He can't evict me! I don't rent! I'm part-owner of this property, which conveys a right to live there, according to this contract!") The only way that's easy is if his "rent-to-own" base is legally unsophisticated - likely - and in which case he's taking advantage of them as badly as those evil bankers he complains about. Celtic, have you ever seen a real estate contract? Better triple your legal costs. Your "rent-to-own" contracts are going to be a B word to write properly. Link to comment Share on other sites More sharing options...
Cynical Posted April 28, 2010 Share Posted April 28, 2010 But before you start a foreclosure you have to demonstrate that the borrower is seriously delinquent on the mortgage, right? In Georgia, bank can demand payment in full at any give time (the same in other states?). So technically, they can start at any time. IIRC, there is no "standard" regarding length of time. Unless the length is written into a contract, the courts generally consider 3 payment periods behind "delinquent". Mortgage companies will generally send out the nasty foreclosure letter 45 - 60 days past due. That way, by the third month, the house is already being advertised for auction in the local paper. So at the most you might get 3-4 months free living. *payment periods can be daily, weekly, bi-weekly, etc ... Link to comment Share on other sites More sharing options...
Celtic_soulja Posted April 28, 2010 Author Share Posted April 28, 2010 FY 1...income generated 1.28 M ...repairs - 170,000 ...taxes - 130,000 ...Legal Fees -0 I will represent myself for cripes sake...most low budget property owners do so...so legal fees will be less than 8000 even if I evict half the people I put into the homes double everything and I'm still looking at about 700,000 in income...46,000 from state CDC funding...and another 1.7 from local government...and I can double my houses the next year... okay, for title...the CDC retains the title until the property is paid off...I am financing them technically..but because I am both the owner they are buying from, and the "lender" the terms will be written up by my team...eviction will be covered in the agreement...it holds up in court, I've beaten it myself against a rent to own company before...they tried to evict me after being late three days...but in thier own agreement it stated that they don't start eviction until ten days...I beat them, but the judge told them if they had stated that in the rent to own agreement that they started eviction three days it would have held up... Also in the agreement will be costs accrued for damages will be paid by them...for anything in excess of 2,000 per year...and I won't be a slumlord considering I'm rebuilding the damn house to code before it goes on the market...it's up to them to keep up the property just like they were any other homeowners... This is not some off the wall thing that hasn't been done before either...check out http://portal.hud.gov/portal/page/portal/H...UDNo.2010-03-24 it's not the exact same thing I'm doing...but it's not way out there...there is also a complex done up like that in Tampa that people making less than 25,000 a year are allowed to rent to own and "magically" the responsibility of ownership works...those projects are kept nice by the renter/owners because they have a vested interest in the property... Link to comment Share on other sites More sharing options...
KD in CA Posted April 28, 2010 Share Posted April 28, 2010 At any rate, I wanted to know if people would feel screwed if they got such a deal...500/month for 20 years for a home worth 120k... I must have skimmed over a step. What makes you think the house is worth $120k? You said you were buying them for less than $50k. Link to comment Share on other sites More sharing options...
Celtic_soulja Posted April 28, 2010 Author Share Posted April 28, 2010 I must have skimmed over a step. What makes you think the house is worth $120k? You said you were buying them for less than $50k. Average Appraisal...and I'm getting them cheap because it's cash upfront for foreclosed houses that nobody wants...after estimated damages are repaired (none more than 10,000) on thier listed estimated costs...the market value is the appraised value of the home... Link to comment Share on other sites More sharing options...
Celtic_soulja Posted April 28, 2010 Author Share Posted April 28, 2010 Oh, and 1:37 read it and know I'm going to change that... Link to comment Share on other sites More sharing options...
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