I’ve gotten several good responses to the Yes, I lied on My Loans entry and elsewhere.

I asked a question “What can I do to make it right?”. The responses were typically: 1) Get a job 2) File bankruptcy and start again, or 3) Run away to another country, change your name and lay low for a while.

My gut tells me the RIGHT thing to do is to pay it all back.

Moral Reason: In my own mind, I would feel best if I repaid every single dirty penny I borrowed. That’s a respectable thing to do. I’ve never NOT repaid a loan in my life. I don’t want to just weasel out of it via a short sale and bankruptcy.

Legal Reason: My real estate attorney is also telling me that if the lenders don’t loose any money, they will NOT have any reasons to go after me. They get their money, they are happy. At that point, HOW I got the money doesn’t matter to them as much.

So, even though I lied on my loans, if I pay them back, that demonstrates personal responsibility and also avoids legal trouble.

Am I crazy?

Yes, I know, it sounds very idealistic and maybe it’s wishful thinking. Many people said that it’s IMPOSSIBLE considering how I am 2M in mortgages and 140K in credit cards right now. A very deep hole to climb out of.

But still. Imagine with me for a bit.

I was creative in getting myself into this thing (with good intentions but bad tactics). Now I will have to be ten times as creative and resourceful to:

1) Pay off all my “dirty” debt – lender will not loose a penny on me.

2) Do it 100% legally and above-board.

3) Avoid foreclosure and bankruptcy.

Even though I am working on some short sales right now, I can always choose to reject them when it’s time to sign the documents. If I can come up with a solution quickly I can avoid asking the lender to take a loss.

Worst case scenario – I may have to volunteer to sign a promissory note to pay the lenders back after they loose money via short sale. We’ll see.

Not a job but a Creative Money Making Plan!

Here is the thing… a job, even a very GOOD job is not going to get me out of this mess. I used tremendous leverage to get into this mess. I will have to use even bigger/better leverage to get out.

Time is ticking… Most of my lenders are getting ready to (or already have) file a Notice of Default. That means the foreclosure timeline is about to start. In California I will have roughly 4 months before the house goes up for auction. My credit card / credit line lenders are also getting anxious – I have missed 1-2 payments already. I don’t exactly know how much time I have there.

Here is one idea…

Wholesale A few Sacramento Deals Really Quick. Wholesaling is like “bird dogging” for other investors. The steps:

1. I find a great undervalued deal (fixer upper or motivated seller who want out, etc)
2. Make an offer on the property and tie it up with a contract
3. Assign the contract to the investor / rehabber who will actually close on it
4. In exchange I collect an assignment fee of $5-20K or more depending on the deal
5. I never actually buy the property, just put it under contract and sell the contract

A good deal has must be 30-50% below retail (After Repair Value). That way an investor can close quickly with a hard money loan which normally only goes upto 70% Loan-To-ARV. The goal is to have the hard money loan cover both the acquisition and the repair money. A nice No-Money-Down wholesale deal. So I must pick something up at about 1/3 to 1/2 of retail, depending on the repairs required.

I interviewed an experienced investor who made money in the last down market. He says you can still make money flipping houses as long as you are dealing with bread-and-butter “starter” homes. But you must fix them up really nice and sell it a bit below retail.

The family buying the house must have the best quality house for the cheapest price in that neighborhood. Otherwise they move on. But I don’t need to explain this too much. If bring the right inventory to an experience investor / rehabber they will know what to do.

Can you help?

Do you have a property you want to sell quickly? Do you know somebody who does? Let me know and I can move it for you.

Are you an investor looking for a great wholesale deal? Email me and be added to my list. I already have a list of Sacramento area investors, but I need a lot more.

Any other ideas?

Do you like my wholesaling idea? Or do you have something else I can do quickly? Again, it has to be 100% legit. No shady business!

My goal – come up with 100K-500K in the next 3-6 months. That will allow me to float my houses until they sell – or bring money to the closing table to sell the over-leveraged ones. Also I will be able to pay off my unsecured debt.

Give me your best ideas… crazy or not.