Suspicious "Flip"
A friend of mine bought a 2family from a former coworker of her's who now is a "real estate investor". My friend (Sara) said that her former coworker (Tina) will pay her closing costs as well as pay for her mortgage until Tina sells the house in 3 months to "a guy" who will buy it. Sara was told that she will make money about $30,000 at closing because Tina is going to split the profits because she was actually "holding" this property for Tina until she found a buyer "this guy". They are due to close in 2 weeks. Sara has had this house for about 4 months now. ...................It just sounds strange that someone would find a deal and instead of just finding a buyer would put out money for someone else to hold the property(pay the mortgage, all the utilities)
Is is me
It sounds a little strange the way it was explained, though it would help if it were broken down better.
There are a lot of factors to consider, but IF the deal is already done, how has it worked out so far?
Roger
OK, Sara bought a house from Tina. Tina told Sara that all she would have to do is buy the house from her(go thru financing the hold nine yards) and hold on to it for 3 months. Tina found a buyer who will buy it from Sara. Sara is expecting a $30,000 check at closing in two weeks.... So "we" are waiting till then.
Does this sound "Ligit"
If Tina wants to flip, why does she need Sara(my friend). Why not just flip it herself and keep all of the profits.
Can someone be that nice? I mean paying all Sara's expenses until the house is sold...the mortgage, utilities, upkeep.
Thanks for your response
Angie
Maybe the buyer's financing won't be ready until 3 months from now and Tina would've lost the deal unless she closed by a certain date and didn't have the ability to get the mortgage herself. It's a little risky and I would make sure your friend has solid paperwork stating what is to take place and what Tina's back-up plan is in case her buyer falls through.
I'm curious to hear it from the horses mouth. What did Tina say about the details when asked?
It really could go either way (legit or con). It really depends on the numbers in the deal. What's the FMV? Where there repairs to be done? What was it bought for? What is it selling for?, etc.
As boyd said, the contracts and agreements should be spelled out exactly what is to be happening, when and who get's what. If you friend hasn't had these contracts checked out by an attorney, I'd suggest that.
I'm also curious, what does your friend think about the deal so far?
Roger
That's just it, Sarah states"I just can't wait to get my $30,000". She does not seem to know much about the transaction that took place or is taken place on her behalf. Tina seems to be handling everything, as I said she is paying the mortgage.........by the way does anyone think that is strange?.....Sarah bought the house for $300,000, the house looks like it needs some work ( I saw it) but the buyer wants it as is. You might be wondering why am I all concerned and in the mix, well it's because I am learning about REI on all levels and if this is ligit or illigit it's a lesson for me.
Again, I really appreciate all of you responding......I love this site.
Well, to make this a learning experience for you, don't be like Sarah. Don't go into a deal without knowing what exactly is going on with it.
As far as this deal goes, if Tina is keeping up her end of it so far, hard to say that's it's not a legitimate deal. Does Sarah have a backup IF Tina is unable to sell? Is there already a sale agreement in place (to get it out of Sarah's name)?
Again, the numbers that go along with the deal would greatly determine IF it's a good deal or not.
She paid $300K. What is the ARV of the property? If it's $500K w/ only $10K of repairs and Tina can sell it for $400K, then Sarah gets $30K and Tina gets $70K. However, If ARV is only about $300K and Tina "sells" for $350K then something fishy is likely going on. See what I mean?
Roger
I'm curios did Sarah put any money down on this house and what happens if Tina runs away.
I don't know what the ARV is but the houses in the area are selling for aroung $450,000. As I mentioned before the buyer wants the house "as is". Sarah did not put any money down, the only monies she paid was for closing costs about $4500. What happens if Tina decides to spit? Well then my dear friend will be hung out to dry because she can't afford the mortgage and she does not have a plan B.................She believes Tina will come thru and I don't doubt that she will or else why would she be paying Sarah's mortgage on the house until it is sold?................any ideas?
Sounds like Rajwarrior is pretty close. I would say Tina's got someone lined up to buy at $400,000 as is. They think they gota good deal because they're getting it for 50K under retail. Tina's clearing 70k minus holding costs, Sarah get's 30K for holding the loan. The reason for Sarah's involvement is her good credit and Tina's lack of ability to get a loan. I would say Tina's buyer is either waiting on funds from let's say a sale of a property or cleaning up some credit issues. If Tina walks Sarah gets a 450,000 property for $300,000. As long as the deed's in sarah's name, she refi's to carry the payments, quick turn's it for $400,000 and make's the whole $100,000! As you give me more facts, the more sense it makes.
I have read all the postings and at this point in time it looks like Tina was moving something away from her so that the buyer would not know she was involved and perhaps feels that Tina has obtained a really great deal for the Buyer.
Deal Shop again. We call it a John Doer. and the reason is somebody is well known as a wheeler dealer and the Buyers shy away, just too sharp, too much gold jewlery. Had the Statute on his Rolls Gold Plated, runs around with ladies who have not seen their toes since age 12. Given to flashy watches, I mean flashy AudPer that actualy light up. So they insert someone in the middle of the transaction to hold and www.act.They steer the Buyer into the deal and perhaps even pick a small fee out of the air for their participations.
But only time can tell, it is a bit of a classic John Doer. I await the final curtain, not sure who gets the curtain call.
Anticipating Lucius
Would a tax liability be what Tina is trying to avoid?
This is a curious thing. It reminds me of something I read here, about people looking for buyers with good credit. I just read it here in "articles" just yesterday.
Lemme see if I can find it. Be right back.
Ok...there is an article here at TCI that was printed on 11/12/03 entitled:
"Mortgage fraud sweeps Charlotte, NC"
Might not be anything to it....but then again...
[ Edited by makingaliving on Date 11/17/2003 ]
Tina is in bankruptcy and is hiding assets.
Well the curtain is due to fall next week and I am anxious to see how it turns out and I will certainly update you all....I really appreciate everyone's feedback on this. Your responses really pierced my awareness of the various ways to "do a real estate deal".
I've asked Sarah to call me as soon as she leaves the closing table.......In the meantime I have mailed out 50 letters to homeowners facing forclosure.........I am tired of watching, I want to Play.
Play on player!
Why don't you just ask Tina what the h*ll she's up to????????????? Go to the source! Zach
Ok,
Here's my guess. Tina is using a trust (intervivos) for a triple net lease. Tina found this house and knew it was a good deal but didn't have the cash on hand to retire the owner's loan. So Tina gets the owners (with her promise of a 300k selling price) to agree to put the property into trust with her as the beneficiary. In exchange for this Tina agrees to pay all the mortgages payments, taxes and insurance. However under a triple net lease you need a resident buyer. So to satify the terms of the lease she sticks Sarah in there to go closing as her resident buyer. But Tina knows she's got another buyer lined up just not on the right time frame. So Sarah will then remove herself, either willingly or unwillingly, from the trust forfitting her rights as a Resident Benficiary. At that point Tina puts her buyer in there. Tina being the beneficiary of the trust has 100% control of the property and with that control she can decide to sell the property or terminate the trust whenever she likes. By doing so the sellers then get their 300k, Tina gets her 100k, and the new buyer get a 450K home for 400k. The only person who no longer has any rights to any of the perks of this transaction is Sarah. So Sarah has to hope that Tina is good on her word because at this point that is the only thing Sarah can hold her to. Unless, however, Sarah asks for her money up front before she terminates her Resident Benficiary status. But in order to do that Sarah will need to stay current on the payments. As long as Tina holds up her end of the bargin then Sarah just made some easy money. If you ask me Tina is one clever chick!
Please keep us posted on how things turn out!
-Sarah
I met Tina only once and she does not answer her cell phone or returns pages....Sarah often complains about that, and I've tried just today to call her on her cell phone, and have not gotten a call back yet. This along with the unusual way this deal is playing out has me scratching my head. Nevertheless, I will certainly keep you posted on how this one turns out.
Just curious,
How has this thing turned out?
Roger
I called Sara yesterday to find out how things went but have not heard back from her.................Will keep you all posted as to the outcome.
Thanks
Quote:
On 2003-11-17 23:39, Lufos wrote:
, runs around with ladies who have not seen their toes since age 12.
I don't get it?
HAPPY NEW YEAR!!!!
Sarah has not heard a peep from Tina in a month. Everytime she calls Tina on her cell phone there is no response. Sarah has just given up on closing this deal. This was a strange deal from the very beginning, fortunately Sarah did not put out any of her own money.
[addsig]
Being a real cynic*, I'll just add that unless your friend has all this in a clear written contract, she's likely being used and may or may not get anything back....like the others, I'm going to watch while you report back to us just what she DOES get from the deal.
* My cynicism was hard earned, from trusting and being burned by a number of sharp operators on bad deals...if there was a way for me to be taken, when younger and more trusting, then I let it happen.
You could say I attended several very expensive seminars held by real experts, some of whom later went to the pen for some post grad education.
Being a real cynic*, I'll just add that unless your friend has all this in a clear written contract, she's likely being used and may or may not get anything back....like the others, I'm going to watch while you report back to us just what she DOES get from the deal.
* My cynicism was hard earned, from trusting and being burned by a number of sharp operators on bad deals...if there was a way for me to be taken, when younger and more trusting, then I let it happen.
You could say I attended several very expensive seminars held by real experts, some of whom later went to the pen for some post grad education.
Well, How did it turn out???
As I posted earlier, Sarah has not heard from Tina. Unfortunately, it is a deal gone sour. I just hope Tina is OK because it's not like someone who has done business with you to not return your calls.....Nothing, Nada.
We will see.
[addsig]