October 8th, 2006   5:44 pm

Attracting Credit-Challenged Buyers

Muncy Flyer Updated

That is my new flyer attracting “Credit Challenged” buyers to my Modesto Property

As you can see I decided to shift my marketing focus. I took down the “honest sign” and removed the old “honest flyer“.

Here is the newspaper ad I am using. It cost me $350 for 9 days. Ouch! It better work, because I am down to my last few bucks. And I don’t know where my next paycheck is coming from.

muncy-newspaper-ad

And here is the craiglist ad:

Muncy Craigslist Ad

Why The Change in Marketing Strategy?

My first marketing strategy was targeting investors. Being honest about my trouble and showing all my numbers upfront was good. An investors could glance at the numbers and know exactly if they can help or not. However, the end-user buyer doesn’t really care about if I am facing foreclosure. They just want a nice house to live in - that they can afford.

Also being too honest about facing foreclosure may back-fire with end-users. They may feel uncomfortable dealing with me. They may think I’m desperate and just trying to dump the house. They might think there are problems with the house, or something else is wrong.

Why Credit Challenged buyers?

I heard somewhere that out of all the willing buyers in the market:

  • 30% are A and B buyers with good credit - can qualify for a loan
  • 70% are C and D buyers who have credit issues and cannot qualify for a loan
  • Very few sellers offer owner-financing
  • Very few C and D buyers are savvy enough to ask for owner financing

This 70% crowd is usually the first-time buyers. They have had issues with their credit and have been renting for a while. Now they are trying to fix up the credit, save a little money are looking for a way to buy.

Some of them are second-time buyers. Maybe they lost a house to foreclosure or had to sell due to a divorce or some other bad situation. In fact I will be a “credit challenged” buyer myself, now that my credit has been ruined. So I know how a person feels in this situation.

Credit-challenged buyers are motivated buyers.

They are tired of renting and are ready to buy! They want the “American Dream” too. They just need a little bit of help. Someone needs to show them how they can get financing and get into a home.

These buyers are not too picky about the house or the price. They don’t have the luxury of bank financing like A&B buyers. Even when the real estate market is down, these buyers are eager to buy.

So if it’s true that there are many more credit-challenged buyers, I need to focus on them. That would be my highest bang-for-the-marketing-buck.

I will offer owner financing of some sort. Either All Inclusive Trust Deed like on my Utah property, or Lease Option (Rent to Own) or something else creative.

Traditional financing too…

I will be reviewing each person’s credit score with my mortgage broker. If we can find a way to finance the buyer then we’ll skip all this owner-financing and go straight for a bank loan. It’s better for everyone. I will be cashed-out and the buyers will own the property with no strings attached.

If their credit score is not high enough for 100% financing I may offer to carry back a 10% second. It’s much easier to qualify for 90% loan. I don’t mind collecting payments until they can refinance me out. Whatever works.

I suspect that some of these people don’t have a good mortgage broker and don’t even realize that they can get financed by the bank. That’s where I will help them with my experience. I have done plenty of creative financing this year. Might as well put my connections and knowledge to good use. And do it legally and above-board, of course!

So I’m shooting for a win-win here: I get to sell my house quickly. A credit-challenged family gets their dream of home ownership. Everyone is happy!

Yes or Yes?

86 Comments

  • Now you’re cooking Casey! I think this will yield better results than anything you’ve tried before. Positioning yourself as a helper/expert is much better than being desperate or a victim.

    Good luck! Let us know how it turns out.

    Nigel

  • Help me out here, because I don’t know much about owner financing. I guess that means that the owner of the house (you) is doing the financing. I had a friend do that once and it worked out well. If course, the owner of that house was a 100% owner of the house moving because of retirement. So there was no risk of the owner doing something stupid to put the house at risk, short of failing to pay property tax.

    In this case, as a prospective buyer, aren’t I taking a serious risk? I don’t really own the house even though I am making payments. For all I know, six months of payments down the road, the owner (you) craters finally, the house gets repossessed from him (you) and I am out thousands and thousands of dollars. I am not even sure if you are using my payments to make payments on this house, one of the other houses, or updating your Pocket PC. Owner financing in this case seems risky for me. But not for you, other than your already existing Sword of Damocles (is it making a groove on your skull yet I wonder). Or am I wrong on this?

  • Casey,

    For the first time I can say I’m proud of what you’re doing. Keep it up. If you put enough work into it you can solve almost any problem.

    Advertise in every possible venue, including publications/message boards/etc in other languages (Spanish, SE Asian languages, etc.) If you’re targeting first time buyers, that’s important.

    -Radar

  • Let’s suppose that the bank will only finance $315k for this home, considering recent comps. Are you prepared to leave that 10% on the table? Put another way, will you take out a personal loan for the difference for the PRIVELEGE of walking away?

    You are probably going to have to buy your way out of this mess, but a scenario like this one will keep you out of jail.

  • 5. BelowTheCrowd
    October 8th, 2006 at 9:54 pm

    All I can say is you have no experience in business at all.

    You’re right about your “honest” strategy not working with investors. For one thing, the smart investors are cashing out now, or at worst hanging on to “in the black” income-producing properties that they plan to own for the long haul. They’re not buying much.

    And why would they buy from somebody who’s facing foreclosure, when they know they can buy it for less from the bank in just a few months, and also that there are hundreds of guys out there whose properties will be sold by the banks in a few months.

    As to the idea of owner financing, let me ask you a stupid question: If you provide financing to the buyer, where are you going to get the money to pay off your own debt at closing? Do you think the lender is still going to be happy with you owing them money even though you’ve handed over the collateral to somebody else? Have you actually talked to somebody who knows what he’s doing?

    It seems to me that as I said in a comment to your previous post, you simply have no experience. Thus, you’re going on all sorts of dubious information that you hear from other people who may have never lived through a bad market either. And you’re posting as fact things that you’ve “heard somewhere.”

    This is why working for or with somebody who has lots of experience is virtually essential if you want to eventually succeed on your own. You don’t learn from courses, and you don’t learn from stuff you “heard somewhere.” You learn by making mistakes. For most people, that meansworkign with somebody who’ll let you get far enough into trouble to learn from the experience, but not so far that you’re in over your head.

    It’s why you can rarely be the boss until you’ve been a good apprentice first. Sorry, that’s reality. You seem to be in a fantasyland.

    -btc

  • It’s true that if I owner finance a house via a wrap (All Inclusive Trust Deed), the buyers take a risk on me paying the underlining mortgage.

    But that’s why we’re gonna use a servicing company that will take the buyer’s payment and send it directly to my lender. This way I don’t ever see the money and can’t just pocket it and not pay the lender.

    Also I will be asking the buyer to bring enough of a down payment to catchup my loan.

    We’re going to close at a title company, just like a normal sale. The escrow agent is going to get a reinstatement amount from my lender and will not let a deal go through unless my loan is caught up.

    I went through all of this on the Utah property wrap already and it works pretty nicely. All sides are protected this way.

  • ‘Credit-challenged’ buyers, especially those buying today, way before the market has bottomed out, are poor and misinformed.

    I guess it’s one way of looking for the bigger fool to off-load on, but would you buy a house this way from a seller like yourself?

    And what happens if they can’t keep up the payments, and decide to bail on their negative equity?

  • Casey,

    “Rent to Own” is a great idea. I have used this method in my Reno rental properties and is making a spread. However, I noticed this method is working in the Reno area if so, I might work for the Sac area since it isn’t too far away.

    Good luck! I know you will get out of this mess.

    - Max

  • I read this, and the image of a weasel squirming inside a trap comes to mind ….
    Still looking for a greater fool than you hmm?

  • Thanks for the Monday morning laughs.

    I think this sounds like a lovely idea. Go for it. This entire win-win should work about as good as my perpetual motion machine.

    You might want to read your terms of financing on the debt you used to finance this property before you hastily “sign it over”. Who has the deed? Is it in your lock box?

    The collateralized lender needs the title to the property they are using as collateral. It would only be common sense that they put into all that mumbo jumbo you signed a little statement to the effect of: you cannot sell that collateral without their agreement or paying them off in full.

    Just because you did it in Utah doesn’t mean you did it right. In fact, let’s hope all this blogging alerts that lender that you are now in technical default so they can start foreclosure, and you can get sued by the people you fraudulently “sold” to as a bonus prize! Double bonus if you get their friendly district attorney to go after you for real estate fraud!

    Here, a little more simple translation: YOU CANNOT SELL THAT WHICH YOU DO NOT OWN. The bank owns it, not you. That’s why they have to agree to every little iota of any transaction to sell it off unless it involves them getting payment in full.

  • Git r done Casey. At least you are trying to do something and not just sitting around drinking yourself away. Remember that life is about choices and you learn from all your choices from the past.

  • I can’t figure out if you have anything to gain by not cutting your losses and running (hand over the deeds and BK, not leaving the country) even at this point. Your ship has already pretty much sunk, but maybe you can still gain some knowledge from your last minute deals here? I’ve read the whole blog now and what was interesting before is just a horrorshow now.

    Your above post is still just a big sales spin parroting all the optimistic pitches you have been hearing/reading. BTC has it spot on.

    However, I hope the end of the tale is added here and that you don’t leave me wondering.

    Tack lying under oath to your list of transgressions - if the notaries did their job with the jurats the lenders usually use.

    Trust is the bedrock of business dealings. Misrepresenting your income and intent to occupy have destroyed that. Be committed to restoring it with deeds not words.

  • Casey

    You bought 1910 Muncy for $323K on 03/07/06 for tax purposes. You already said you lied on your mortgage declaring your promise and intent to occupy the house as your primary residence.

    You now claim in your sales advertisement that for an asking price of “only” $349,900 a “buyer” can “own” the house.

    In fact you say, quote: “You get full ownership” (or “Rent to own”…ok we’ll pretend they’re one in the same for the moment.)

    Two questions for you:

    1) Are you willing to defraud your lenders even more, or are you involving them in this transaction? And if so, please do keep blogging about it for those keeping score.

    2) Why would ANYONE buy this house for $349.9K today when they can almost assuredly get it for somewhere between $113K (the 2000 price) and $323 (your price a couple months ago)???? If I’m not mistaken, month-on-month figures for Modesto show a very sharp decline underway at this very moment.

    Note to any buyers:

    “Rent to Own” or any other type of “option” that locks in a price is a very bad thing in a DECLINING market. That’s why dumbass guys like Casey try to pull this crap when they’re losing their asses. Don’t be the Greater Fool. What a distinction: Being a Greater Fool than this Casey Clown.

  • the property is actually worth about 360-370. It will appraise for that much no problem. I bought it for 323 at a discount looking to fix it up and resell it at full value.

    So I’m actually giving the buyers a bit of a discount, AND I am offering easy terms.

    The property values probably will continue to go down… but as we all know the markets are cyclical and they will most likely come back up to the same value and higher in a few years.

    So a credit challenged buyer will buy this house because no other seller is giving them such easy terms. And they will have pride of ownership. And once they ride out the market they will also have a great investment.

    I’m offering a good quality house at a good price and even help with the financing. What’s wrong with that?

  • Randy… also about the “defrauding” the lenders by selling the house without paying off the mortgage.

    The due-on-sale clause is what you’re referring too. As far as I know, there is NO law that says I have to pay off the loan when I sell the house.

    However, the lender CAN exersize the due-on-sale clause and call the loan due. If I dont pay them off they can try to foreclosue.

    Ok, so the house is ALREADY in foreclosure. So, its not like the lender is loosing anymore money on me. I am not making any payments.

    So if I actually sell the house and bring the loan current, isn’t the lender going to be pretty happy? Their loan is now being paid. Who care who owns the house?

    As long as you get your check in the mail, why would you, as a lender, try to foreclose??? You have a perfectly good performing loan on your books. Why go through the expense?

    Correct me if I’m wrong.

  • If you look under the Modesto listings for homes for sale and search “owner financing” 65 listings appear. If you search “foreclosure” 29 listings appear.

    I also see tons of ads everyday offering special financing to “credit challenged” buyers. I don’t think people with bad credit are having a hard time buying homes right now. After all, you bought a whole lot more than you could afford without much difficulty, right?

  • I commend you. Market Market Market. I don’t know why you even bothered to list with an agent. You are doing more market your properties than most of them would ever consider doing. I also think its smart to pick the property that has the best chance of selling and marketing it the hardest. You newpaper ad is pretty good, and should attract some attention. Are you also using craigslist, and other free marketing?

  • SQT… i guess I’m not the only one offering owner financing… it’s still a good offering for someone who needs it. They may not like any of the other homes.

    So we’ll see how far this will take me.

  • Casey,

    There are laws against fraud. And as a civil matter, you have an obligation to abide by the terms of the legal contract you signed with your lender. One of those terms was that you would notify them of a number of things that may occur, one of the most basic being “selling” your home. But, you already committed fraud by tricking the bank into thinking you were buying the house to occupy as a primary residence. They could have called the loan at any time, even before you were late in payments.

    Other people have already told you that you can’t do “wrap around mortgages” in almost all cases. Go ahead, if you really think nothing is wrong with doing this call your bank and ask them about it. I’m not going to hold my breath. You won’t call them. Why? Because you know what you’re doing is illegitimate. If you’re so cocksure, call them or tell us who your lender is so we can call them and ask for you. (Actually, I’m being nice, anyone can already find out who your lender is if they really want to cause you some trouble.)

    Why will a bank “go through the expense” of all this, even if your wrap-around scam brings the payments even??? How about *credibility*. Banks have a vested interest in letting con artists know they can’t get away flipping homes with fraudulent loans while passing on the risk to hapless “rent-to-own” suckers.

    As to doing some kind of favor “discounting” the home to that greater-fool buyer you’re fantasizing about…they can just wait and buy the same home out of foreclosure for probably under $250K or even cheaper in a few months.

    If they can’t get financing, well then they probably can’t for a good reason! They don’t make enough money or they have terrible credit and they have NO BUSINESS trying to PRETEND they own a house.

  • For you doubters out there, lease options and all inclusive wrap around contracts are perfectly legitimate ways to sell and finance a home. Loans can also be assigned under certain circumstances.

    The due on sale clause is certainly something to worry about, but in this value environment, provided the loan is current, I don’t think any lender wants to try and add to their REO inventory.

  • I can only imagine being put in the situation you are in. For all it’s worth you seem to be handling it better than most people would.

    Don’t take this the wrong way but it seems you still don’t quite get it yet.

    You say: “the property is actually worth about 360-370. It will appraise for that much no problem. I bought it for 323 at a discount looking to fix it up and resell it at full value”

    Getting someone to appraise your house and say it’s worth “$360-370″ isn’t a problem. I work in the mortgage industry, I see it all the time. But the TRUE value of your home is only what it sells for. It’s not going to sell at $370 (appraised value)…nor is it selling at $349 (listing). In this market, it might even sell for less than the $323 you bought it for. So whenever your house sells, the value is exactly what it sells for. Not what the appraisal says.

    You’d be amazed at how many times I have to tell and remind customers this.

    It’s too bad you were working with mortgage professionals and other realtors who along the way could’ve told you what you were doing was wrong, but they were too interested in making a quick buck themselves.

    Best of luck.

  • I’ve saved your blog in my favorites. This is like a car accident in which the car has flipped over, all lanes are blocked, and the 5-0 has to bring in the jaws of life. Such good entertainment that you can’t keep your eyes of off.

    The lesson learned here is that with all markets, it’s all about when you catch the wave and your knowledge. The experienced surfers successfully ride the tube and get the money and glory; most everyone else wipes out. You have wiped out and are now getting pounded unmercifully by a series of rouge waves.

  • Casey, I agreed with RentalCashflow. Keep market market market, you gotta get the word out. Don’t listen to Randy H, he is just a hater.

    Banks don’t want to take back the property because it will be look bad in their books end of quarter. Continue to be proactive.

    Good Luck!

    - Max

  • Casey,
    The wrap-around mortgage scenario relies entirely on the bank seeing the mortgage like you do. You and I may see a good deal for the bank where they get all of their money, but the bank is run by bureacracy, procedures and rules. None of which really allow a human element.

    As I’ve mentioned before, the main liability for a bank to allow wrap-around mortgages is that they lose their collateral. When you sell with “owner-financing” you are most likely giving them title, but holding it as collateral on their loan. Since you no longer “own” the title, the bank can’t foreclose on it (unless you first foreclose on the buyers).

    I can’t say if the bank will or won’t accept your proposal for a wrap-around mortgage, but the majority of wrap-around sales advocated at those “seminars” tend to dishonestly hide the sale from the lenders. If you truly want to “do the right thing” you need to be upfront with the bank about your plans.

    To not do so wouldn’t just be dishonest, it’d be fraud.

    As always, good luck.

  • It sounds like this Randy H guy is just mad that he is not smart enough to make money flipping houses. You have to stay flexible if you want to make lots of money flipping. Casey has the flipper attitude and will do fine.

  • Casey wrote:
    the property is actually worth about 360-370. It will appraise for that much no problem. I bought it for 323 at a discount looking to fix it up and resell it at full value.

    The property is worth EXACTLY what a buyer will pay! Not a penny more, not the opinion of an appraiser, not the pretty graphs you see of metro median housing prices. The value of gasoline, corn, eggs, milk, etc. goes up and down the supply fluctuates, and so does the “value” of a house.


    So I’m actually giving the buyers a bit of a discount, AND I am offering easy terms.

    A discount from the hysterical 2004-2005 marketplace, but NOT today. Gas prices are higher, interest rates are higher, and the new media has warned about potential price crashes. All of these add up to making houses LESS desireable and CHEAPER.


    The property values probably will continue to go down… but as we all know the markets are cyclical and they will most likely come back up to the same value and higher in a few years.

    So, if the shoe is on the other foot, would YOU buy right now? Think about this fantasy before writing it!


    So a credit challenged buyer will buy this house because no other seller is giving them such easy terms. And they will have pride of ownership. And once they ride out the market they will also have a great investment.

    Several points:

    1. I have wonderful credit but wouldn’t touch your ‘easy’ terms. I wouldn’t touch an Interest Only or Option mortgage from any lender. These deals are high-risk rentals in disguise.

    2. “Pride of ownership” — well there’s the root issue isn’t it? Some people have this desperate desire to own a home so they’ll pay a financially insane premium to do so. There’s no need to own, there’s no need to have granite countertops, there’s no need to have stainless appliances. All of these are luxuries and wants. Anyone who says different has a ridiculous sense of entitlement. This story worked well for several years because marginal buyers wanted to believe they could afford to buy. They couldn’t afford it then, and like you, when the loans recast they will learn a bitter lesson.

    3. Ownership only counts for so much, particularly since the traditional mortgage payment on $350K is somewhere over $2000 per month. If this house could be rented on the open market for $1200 or $1500 per month then any buyer with half a brain would rent your house for 5 years as the market flattens/declines, then buy it from you for a $350K in 2010. In the meantime the $500 to $1000 per month savings would go toward a serious down payment.


    I’m offering a good quality house at a good price and even help with the financing. What’s wrong with that?

    You are offering a house with an arbitrary fantasy “save me” pricetag.

    Buyers set market prices. Sellers set inventory levels.
    (For a cheaper education on this principle, sign up at amazon.com or half.com as a used book/CD/DVD seller. You can list till the end of time but if you price is $2 above the next guy the inventory won’t move.)

  • How many resumes did you send out today? How many phone calls did you make looking for a job? How many recruiters have you talked to in the last month?

    I think I know the answer…none.

    There is no reason you cannot do what you are doing to sell your houses and find a job at the same time. You sure have enough time to update this blog 5-6 times a day, sounds like you have enough time to get off your a** and earn a paycheck.

    You are in a hole and digging deeper. Any amount of cash in-flow is going to help you, why is it that you refuse to respond to people telling you this? Why is it that you refuse to go find a source of income that does not rely on some hair brained scam to make you $100’s without having to work?

    Getting ahead means starting off with reasonable goals and raising the bar over time. Your goals are pie in the sky statements about earning $100-500K in 6 months doing things that typically pay between $40-70K per year. Your story changes every day.

    I can predict how you will be bemoaning the fact that your “wrap around” financing offer has returned little to no interest next week. You are asking too much for a house in an area with over saturated inventory in a declining market.

    No investor with half a brain cell would seriously consider that offer.

    Stop sucking your own exhaust, file BK and get on with it. Most likely the lenders will just write the bad debt off, foreclose on the houses and you will be able to go on your merry way. Continue living this pipe dream fantasy and you will continue to dig your hole deeper and deeper.

    Your choice, I suggest the first option.

  • Well I think Randy_H was trying to talk Casey into doing the right thing; i.e. no more fraud; but Casey does not get it.

    I have no sympathy what so ever for any fool, naive, or clown that would fall into Casey’s trap. Hope this world will be having less Casey because Caseys will eat each other to survive.

  • Sweet, I’m going to watch this catastrophe all the way to the big explosion.
    “It cost me $350 for 9 days”, hey..wouldn’t that have paid for 10% of your credit card loan? Ah what the hell, might as well go all in at this point.
    Man, if I was someone with credit problems, I would also just wait for you to go into foreclosure then buy the house cheap. I may not qualify for 349k..but I could qualify for 250k..the down payment would be cheaper too. I would also go stright to the bank and bypass you to see if I can work out a deal with them..after all..they REALLY own the house don’t they Casey? All that you are doing is pllaying the middleman and as usua, trying to get something for doing nothing…kinda like your birddogging scam. What value do you add by being the middleman..when investors and banks would rather just bypass the gains that would you get? They don’t care about you Casey, and the banks have more than their last $350 to keep advertising your house until it sells. You should have taken that $350 and parlayed it into 3.5 million At the casino! You know why you and only you could have done that? Because you have the guts and courage to do something that most people wouldn’t do! Even if you lost that last $350, which could have bought food by the way…at least you would have learned a valuable valuable lesson. Can’t put a price on that.

    Hey, but enough doom and gloom. you go CASEY! The sun will come out..tomorrow..bet your bottom dollar that..tomorrow….

  • are you kidding me…this guy is a dill. good luck and get a job.

  • It sounds like this Randy H guy is just mad that he is not smart enough to make money flipping houses. You have to stay flexible if you want to make lots of money flipping. Casey has the flipper attitude and will do fine.

    Well, it’s obvious you’re a realtor. I mean, are you kidding? The “flipper attitude” is what got Casey into this situation in the first place. He’s drank the Kool-aid that Kiyosaki been giving out and now he’s feeling the effects of the poison.

    How long have you been a realtor? Have you worked in a down market? Or are you of the “it only goes up” camp? The central valley is only beginning to get spanked and Casey needs to unload these properties asap. Fortunately he’s young enough to eventually rebound from this and hopefully learn a valuable lesson in not getting in over his head.

    Maybe you should look at this site.
    http://flippersintrouble.blogspot.com/
    It’ll give you an idea of what’s going on in the central valley.

  • 32. thehollowman
    October 9th, 2006 at 6:04 pm

    Casey,

    just a quick question for you. Do you think it is possible that the people you owe money to are watching this blog and getting papers drafted as we speak to prevent you from doing this?

  • 33. Learn Your Lesson
    October 9th, 2006 at 6:21 pm

    Look, guy, just get a fricking job already and learn your fricking lesson.

    I bet your master plan is to go bankrupt and move back in with your parents.

    It’s called an honest dollar — how about you try to earn one?

  • Sac Realtor,

    I can only hope that you’re a parody of a Sacramento realtor and not the real thing. The level of homework you’ve done before commenting on Randy H’s credentials and smarts is hilarious. (hint: click on his name and check out his Bubblizer - that will give you nightmares).

  • Earlier this year, or even late last year, I would have jumped at the chance to buy something out in Sacramento. Chuck it to real estate mania and wanting to jump into the bandwagon along with everyone else. I had friends who did very well buying in Stockton and Modesto. But that was several years ago. And now it’s a new climate. And am biding my time about properties. Maybe in 2 years I will open my wallet.
    I would like to commend you for doing this — just ignore the bashers, they live in negativity. You will come out of this all the wiser and your talents will take you far. You are young and will pick yourself back up, no doubt. My money is on you to do well with yourself!

  • I’ve read much of this blog.

    I have my opinions about all the real estate, financial, and legal issues you’re dealing with, but I’m not an expert in those areas.

    But I am an expert in marketing. And you’re marketing this property all wrong.

    You need to come up with a “why.” You have to be able to say, “This is the house for you because….”

    I’m guessing your target market is what those in financial marketing call “sub-prime.” Many, if not most, of these people can get financing at pricing that’s not great, but not horrible. Maybe they don’t deal with a “bank,” but almost always from an organization that walks and talks like a bank. So they’ve got a selection of houses.

    So your “no banks” messaging actually only communicates effectively with the sub-sub-prime market. I read between the lines and get your drift. I should buy the house because my bad credit is no problem and is probably the best I can get.

    But what if I have decent credit? Your message should be one of good value. I don’t care if a potential buyer is in tip-top financial shape or the lowest of the low, they’re shopping for value.

    Marketing is about positioning, your actual positioning and the perceived positioning you want to communicate. According to Zillow, your actual positioning is that the house is usually large for its neighborhood.

    Your perceived positioning should be, “Hey, I’m realistic. Houses in this neighborhood have sold for 315 to 320 in the past three or four months, but mine is more valuable!”

    I’d cite recent sales:

    “That home at 1932 Mt. Vernon went for $319,000, but mine has 500 more square feet for only $20,000 more. That’s only $40 per foot more for the extra space!”

    “And that home at 2102 Muncy went for $333,000. But mine has almost 700 feet more for only an extra $9,000!”

    Anyone who is considering a home in the area – whether to live in or rent out – should know that they have the option to get a much bigger, more valuable, home for only – what, $150 - $200 more a month even with taxes? I’d flyer the hell out of that neighborhood and get it to any agent who specializes in the area and would be willing to work with you.

    Another problem you have is your photos.

    Maybe all the houses in this neighborhood have garages sticking out in front. Even so, it’s not an asset. A shot of the front door with the nice landscaping and a few of the windows from an angle would be better than your first photo.

    The kitchen shot is dark, dreary, and dull. I know you don’t have the money to stage the house, but borrow some toasters, placemats, and other kitchen stuff and to jazz it up a bit. Add more light. Why is the window closed? Is the view ugly? If not, open it.

    The pool shot is actually pretty good, but the view of the pool from inside the house is way too dark.

    And don’t ask people to drive by first and then call. Ask them to call. You put the address in the ad anyway.

    Free advice, and it’s worth every penny.

  • The average rental on a 3BR house in Modesto is maybe $1300 (as seen on Craigslist).

    You’re trying to get $27K down and $2800 a month for this place? Good luck with that.

  • 38. AngryintheBronx
    October 9th, 2006 at 8:56 pm

    You should really have sent that $350 to your lenders. I can’t imagine that they’ll be too happy to find out you are using what little cash you have left to finance more ’schemes’.

    Those houses will never sell at anything like the price you need BTW.

  • Wow! Everyone is really harsh.

    This is the best blog I’ve ever seen! If everyone keeps being so mean, Casey is going to get discouraged. He’ll stop posting, and we’ll lose the enjoyment of this blog.

    And, what the heck, I’ll throw in my two cents:

    Bankruptcy isn’t that big of a deal, people survive it every day. Start using your time to prepare for that.

    And look into writing a book. This blog is entertaining — I’d buy the book. (Of course, a book deal won’t help with the foreclosures, but it’s time to start focusing on the aftermath.)

  • Maybe you should look at this site.

    I’m sure Casey has. His Larchmont property is #8 on the front page! :)

  • I helped you out. I clicked on all your Google ads. Good luck.

  • It sounds like this Randy H guy is just mad that he is not smart enough to make money flipping houses.

    Right. Your ignorance brings me great humor on multiple levels.

  • To “Get A Job”,

    Let me answer for Casey, “Why people actually use owner financing,” and why, “just because other people use it, [does] mean it’s a legitimate way of doing business”.

    1) As the banks tighten the requirements for getting loans, a growing majority (more than 60 percent the current borrower pool), cannot qualify for ANY loan, for any home.
    2) Roughly 20% of the homes in the market don’t have enough equity in them to pay agent’s and closing fees, and so they are being sold as FSBO’s.
    3) A large number of FSBO’s are over leveraged and are headed back to the bank, unless the owner’s get creative.

    So, “Get A Job”, since 60 percent of buyers can’t get loans, the FSBO’s who are headed for forclosure are making beneficial offers to these credit challenged buyers. Yes, they may be paying over market. And yes, maybe they won’t be able to refinance in 2-5 years with conventional financing. And yes, maybe the house will continue to drop in value.

    BUT, in the meantime, the buyer has been able to enjoy all the tax benefits of home ownership. Their “rent” doesn’t go up. The rent doesn’t go down the toilet. They have a stake in the community. They are no longer “renters”. They will take better care of the home than renters. They will cause the market prices to be higher in the neighbhorhood, because their not renters. They can still choose the school district they wants their kids in. They can still choose to live near their relatives. If they demand a long enough term, and don’t move, they will eventually pay the loan down/off, with payments just a little more than what they would anyway, all while experiencing the benefits of short and long term home ownership.

    In contrast, conventional financiers aren’t interested in helping any of these credit challenged buyers benefit from any of these things. These buyers would be shut out of the american dream.

    In the event that the buyer’s credit improves to the point where he/she can get a loan for their dream house, and/or loses the “incentive” to continue paying for an over-leveraged home — fine.

    In the meantime, some seller offered them the opportunity and benefits of home ownership. That IS legitimate and honorable. The seller can’t force buyer’s to honor a committment. They can only offer the “opportunity”.

    In the event the house cannot be re-sold, refinanced, or owner financed in the future, then the bank has at least made a bunch of money on the house payments for a few years anyway; recovered all their upfront costs; and are pleased a punch that the original owner didn’t just give the house back before they recovered their initial financing costs.

    I’m sorry “GET A JOB”, but you are ignorant, short-sighted and selfish to suggest that participating in seller financing is somehow tantamount to buying the Brooklyn Bridge.

    I’ll go out on a limb here and suggest that you’re not an investor, or worse, are waiting for a better time to put your family into a nice home.

  • Casey. How about it. Did you call your lender and ask them to approve your “wrap around” mortgage scheme? You’re not doing anything wrong, after all, right? I’ll even help. Email me your loan account number and I’ll take care of the rest for you.

    All this talk about “the flipper attitude” and such. You all do realize that is just code for being willing to commit fraud to try to make a quick buck, right? If it were really all that easy, don’t you think everyone would be doing it? Well, it ain’t all that easy. The hidden gotcha is that you flippers are taking an enormous risk. Not the risk of losing money. All legitimate entrepreneurs like me take that risk. But the risk of getting caught cheating the system and then being brought to justice for it.

  • hmm, Casey, you’re still living somewhat in the lala-land of the seminar ‘gurus’ who are really just salesmen and fast talkers who have never implemented any of the ’strategies’ they talk about.

    Some of the tricks only work in a rising market, which has meant the gurus have been coming out of the woodwork in recent years, or the rising market only gives the appearance that the tricks worked.

    Further, the use of the word ‘wholesaling’ in this context is often a giveaway of a green recent seminar attendee, there is no such thing as a ‘wholesale’ used property, only a property somehow bought well under market price. The only way to get a ‘wholesale’ property is to develop it yourself at land, materials and labour cost. Then you can ‘retail’ it as the developer to a purchaser. (And wholesale ordinarily implies buying in bulk. We won’t go there…)

    Good luck with the approach, I guess if someone is willing to come on board under wrap financing at this point in a falling market, that’s their choice. People psychologically hang back from purchasing decisions once they hear in the media that prices are declining though.

    People attracted to wrap financing normally don’t have a 10% or 20% deposit though, the appeal is to offer them a no money down mortgage at a higher rate than bank rates, or for a higher asking price than market price. The sting therefore is to pocket the difference in interest rates, and also get a premium price for the property, and hope that the wrappee can’t meet the payments under these punishing conditions so YOU can foreclose on them, take the house back, and do it to someone else all over again. However, you yourself presently have about 0% equity in the property, so it all seems a little precarious — if a purchaser has a deposit and can make ordinary bank repayments, they should have no trouble getting their own financing without tricks, as others have pointed out. If they have no deposit, and you have no equity, how are you going to arrange the vendor financing? You would therefore be best off trying to sell the house for breakeven or slightly above if you really think you bought it at well below current market prices.

  • Jay P… well said. I was trying to get to the same point but you have a much better way of putting it.

    Randy H… no I haven’t called the bank about the wrap-around mortgage yet. Thank you for volunteering to help me out. Can I send you my SSN by email or post it on the site here. On serious note… maybe I should call the bank! Why not?

    And thanks to VMC and “Free Advice” for the marketing tips.

  • Good point, astrid. No comments yet from Casey on how the other half of these transactions feels about them and I’m guessing she’s just as much in the hole as he is (unless marriage laws are different in California). Doesn’t she have to be involved in the loans and ownerships already?

  • And since everyone’s been talking about Kiyosaki, here’s some useful advice from the man himself:

    http://finance.yahoo.com/colum.....cher/10316

    Note the question from his “rich dad”: “How many condos can you afford that cost you $300 a month?”

    Note how he pays attention to the answer to that (i.e. none).

    Hopefully that answers your question to what he would do in this situation (not get into it in the first place).

  • @Jay P

    You call out everyone else as ignorant and obviously “not investors”. Yet you are clearly oblivious as to how banks, mortgages, MBS/CDO and servicing markets work.

    In reality, the lenders have every incentive to foreclose and turn over the property rather than let payments limp along. This is because that debt is almost always sub-prime — as our Mr. Serin is here — and sub prime debt has been tranched into “toxic waste” and sold off to risk seeking markets like Hedge Funds, foreign hedgers, etc. The risk premium of those defaults is (on balance) priced into the spreads at which that debt tranche sells in the open market.

    So, again I ask, who has an interest in letting this “wrap around” of sub prime with sub-er prime happen? All Casey is trying to do is rob the chain of investors of the appropriate risk premium. That’s why there is a little line in his mortgage agreement that prevents all this hooha.

  • Her good credit standing is VERY important to her - it’s tied to her self-esteem.

    And your self-esteem doesn’t mind a lousy credit rating? Also, if you’re forced to file BK and she’s married to you, I can’t imagine that her credit would remain unscathed.

  • Casey
    Thanks for your “blog”. Frankly, I am learning much from your experience. I hope this was one of the purposes for your blog. I too am an “IT” person that has also gone into RE and I know that we are of like-minds. Dont get discourage. You and I know that many times a programming solution doesnt work so you find another one (I have learned to keep shooting until I hit something). I have “fallen” many times but I get up again and am wiser for it. Nevermind those negative critical people. Most of them only to live within the lines. It’s too scary for them to really take risks. I wish you good fortune and blessing to finding the good people who will help you.

  • “Nevermind those negative critical people. Most of them only to live within the lines. It’s too scary for them to really take risks. I wish you good fortune and blessing to finding the good people who will help you.”

    That sounds like what Ted Bundy said as they were strapping him to the chair….

  • Isn’t community property something that divides assets and not liabilities on divorce, hence the word -property-? So why would ‘community property’ have an effect on this situation?

  • Joe,

    Well, it would mean that Mrs. Casey is obligated to forfeit future earnings to pay off the debts too, unless she can divorce him and claim somehow that she should be removed from liability.

    Otherwise, lots of people would just use marriage as a loophole to defraud lenders. Kind of like Casey is trying to do.

  • hey dude just found your blog.

    you wondered what might happen if you lied on loan applications and bought a bunch of houses.

    well this happens. but i am not down on you. i didn’t lie on anything, but did struggle with a complex real estate sale.

    i’m going to help you where i can. let me just tell you how i finally sold the crocodile house: with an ad that said, “stinky little fixer. smells like money!” the house wasn’t stinky but the agent had made this up for another client once and it worked. and it did work. the people who bought it were young heirs to some restaurant chain and they totally fixed it up for their white SUV pal parties.

    point: with marketing plans, go ahead and try everything. try trying everything *all at once*. it’s kinda fun after a while.

    i can help with technical writing if you need to communicate with banks. i’ve seen your drafts and they’re good but i could help make them more effective. oh well laterz

  • to the Laughass: If people get out of the s*** on their own, everybody wins. The more he can prevent damages, the stronger his defense. Pick up a shovel or just lay off.

  • Randy H,

    Regarding your “tranch” comments…

    Your ignorant generalizations regarding the sub-prime market, doesn’t take into consideration the private mortgage insurance on the mortgages; the fact the first mortgage holder could care less if the mortgage is foreclosed on, or not, because of the aforementioned insurance; and the fact that the sub-prime portfolio buyers already pre-factored the risks for both loans, when they bought them.

    The firsts and seconds may, or may not, in fact be sold again and folded into a group of “D” grade loans to be sold to some investor pool at 20% on the dollar, BUT I didn’t say everyone is ignorant on this blog regarding “wraps”.

    I didn’t even mention “wraps,” but thank you for the opportunity to educate you on private mortgage insurance risk and the subsequent value this adds to the loans.

  • anyone who answers one of your ads

  • Is it just me, or do some of the cheerleaders remind me of Christian Slater’s character in “Very Bad Things”? Specifically, the way they use quick-sales jargon to justify horrible actions.

    А тоже, Алексей, читает Галя твой блог? Мы, дорогие читатели, очень хотим ее мнения, комментарии, и т.д..

    Давайте нам Галю!

    Да здравствует Галя!

  • I really don’t believe there is a credit challenged market like what you claim to be targeting. You make it sound like the 70% of buyers that don’t have good credit and many don’t qualify for a loan will just take what they can get and overpay for your mistake. I’m not proud of it but I filed bankruptcy 10 years ago and was able to purchase a house just 4 years afterwards. From what I found out most legitimate lenders look for negative credit history in the last 2 years and don’t even look at medical bills that may be in collection. The house I purchased had equity when I bought it and is now worth three times the purchase price. There is no way I would have just settled for something because of my credit.

    It’s time you realize there is no way to make quick cash. Wait, have you thought about selling a kidney or other vital organ? Get a job and give up the idea of flipping and making a fortune. You’re obviously no good at it.

  • ha ha ha ha ha what a stupid selfish goober. I’ll be coming back frequently. This is the funniest tie on the web.

  • Keep fighting

    Instead of throwing in the towel and declaring BK, you need to get back in there and fight. People are still buying houses if they are in the right location. Your philosphy now should be “in for a dime, in for a dollar:” buy more houses in prime locations, then use the profits from those sales to pay off monthly loans of the slow-movers. For God’s sake, don’t throw in the towel after the first round when you have only been hit with sucker punches.

  • If you are concerned about the morality of declaring bankruptcy, why were you not concerned about the morality of lying on the loan apps?

  • 64. Mark in chicago
    October 23rd, 2006 at 1:57 pm

    The day that Skilling gets sentenced to 25 years, USA Today runs your story. Coincidental timing? Probably not. One corporate fraud starts to fade, and your story could be the tip of the iceberg for another series of frauds.

    Face it, you’re not going to pull this money together anytime soon. The numbers are way too big, and you have no job.

    My advice file bankruptcy, get a job, and start saving for your criminal attorney. Chin up, you’re young, and in time this will all pass. I’m sure you’ve learned some important lessons from all of this, but I will reiterate one… Don’t lie, it only comes back to haunt you, especially if its a bank loan. That’s the worst place to fib or strecth the truth.

    Best of luck.

  • Maverick Mistakes in Real Estate Investing
    “Lessons I learned at the School of Hard Knocks and the University of Getting the Crap Kicked out of Me!”

    Hi Casey,

    I can relate to your disaster. I’m the same guy that went out in his early 20’s buying houses after reading Kiyosaki and listening to Ron LeGrand & co. I ended up in debt of more than $10,000,000 by age 25 with similar credit card debts. It took 7 years but at the end (or at least today) the blood and the red have turned into black. It was a huge struggle. I’d like to send you a copy of my book that was published in 2005.

    It’s called Maverick Mistakes in Real Estate Investing. It’s the true stories that will make you laugh (some you’ve probably encountered yourself) about how I lost my first MILLION. Real money on the wild west of real estate. Shoot me an email and I’ll drop a copy of the book in the mail pro gratis, consider it my belief in your ability to make your million after these first few rounds with Mike Tyson kicking your teeth in!

    Keep pushing my friend,

    Damion Lupo

  • I just saw Slater in Heathers last night, now that is a classic twisted film!

  • cases we are dealing with a seller who needs to: a sell fast and sell as-is. Only a creative real estate investors can help here. Instead of listing houses we buy houses. Helping Motivated buyers… We help “hungry” buyers as well. These are credit-challenged buyers who may have trouble qualifying for a conventional mortgage but would love to own. They have a dream of home ownership but don’t know how to achieve it. If these credit-challenged buyers have some money to put down and have a stable job we can help

  • Sacramento CA. After going to a few seminars I bought 8 houses in 8 months in 4 states with no money down looking to fix ‘n flip. I made some mistakes and fell flat on my face with millions in debt and facing foreclosure. Trying to avoid foreclosure, sell quickly, repay everyone, and blog my lessons to help others in trouble. Comments welcome! Email CaseyView All Entries

  • Casey, Have you considered shortsales? We are experts in shortsales and we can buy your house even if it does not have equity and even when it is about to be foreclosed by the bank. In one case, we were able to stop the foreclosure in 3 days because we have the cash to buy the house as long as we can buy it at a discount. Check our website at MoneyYoda.com for more details.

  • Sacramento CA. After going to a few seminars I bought 8 houses in 8 months in 4 states with no money down looking to fix ‘n flip. I made some mistakes and fell flat on my face with millions in debt and facing foreclosure. Trying to avoid foreclosure, sell quickly, repay everyone. I’m going to weigh in here and point out a very common misunderstanding when it comes to real estate “investing” as Casey calls it. First and foremost, fix’n'flip is not “investing” it is instead speculating. There’s nothing wrong

  • Sacramento CA. After going to a few seminars I bought 8 houses in 8 months in 4 states with no money down looking to fix ‘n flip. I made some mistakes and fell flat on my face with millions in debt and facing foreclosure. Trying to avoid foreclosure, sell quickly, repay everyone, and blog my lessons to help others in trouble.” What he really did is by questionable means, ( some say fraud), used “liar loans”, 0 % percent & cash back at closing financing, pumped up appraisals, and more dubious methods to

  • Do you know of any course material I can use/purchase to pursue my investments with offering seller financing to credit-challenged buyers. Nothing too expensve.

  • from Sacramento CA. After going to a few seminars I bought 8 houses in 8 months in 4 states with no money down looking to fix ‘n flip. I made some mistakes and am now millions in debt, trying to avoid foreclosure, sell quickly, repay everyone, and share my lessons to help others in trouble. Comments welcome! |View All Entries

  • from Sacramento CA. After going to a few seminars I bought 8 houses in 8 months in 4 states with no money down looking to fix ‘n flip. I made some mistakes and am now millions in debt, trying to avoid foreclosure, sell quickly, repay everyone, and share my lessons to help others in trouble. Comments welcome!” Ca sa intelegeti entuziasmul meu, daca nu v-a cuprins deja, recititi, va rog, articolul meu despre cel care a transformat o agrafa intr-o casa cu ajutorul blogului

  • from Sacramento CA. After going to a few seminars I bought 8 houses in 8 months in 4 states with no money down looking to fix ‘n flip. I made some mistakes and am now millions in debt, trying to avoid foreclosure, sell quickly, repay everyone, and share my lessons to help others in trouble. Comments welcome! via Economist