Business Advice.....Real Estate

[J-Dogg]

This could be long, sorry.

The end of the story:

I own 5 properties, I bought 2 on land contract from the same lady, they were my first purchases.

I never made any money off them, they cost me about 10k a year to just make the payment. I called the holder of the land contract, explained to her, it's not in my budget to keep the houses, I don't want them, and there is 6k in back property taxes.

I followed through with some evictions for her, filed a quick claim deed so she could take over that week.

The Begining of the story:

I was 22. I was looking to start into real estate, tons and tons of ambition and clueless to how it works.

When i was 12, I worked for a landlord. I made 2 bucks an hour working for her (same lady yes) and spent a lot of time slaving away. When i was 16, I got a raise to 4 bucks an hour cause I could drive. At this time, minimum wadge had been about 6 bucks the entire time. I'd often work over 40 hours a week, and time and a half was certainly not an option.

Either way, I learned some basic skills, painting, raking, mowing grass, simple things. Granted, most of it was taught wrong, and in the manner a slum lord would handle these basic up keeps.

So, When i start to look for houses, I call this lady I had once worked for, I spent years of my life with her, even though she paid bad, she really liked me, always admired my work ethic from a young age. I invited her to lunch, to seek advice about buying apartments.

I had a pretty good job, dependable income. I asked her, how she got started, what her goals were when starting, what she would do different.

I left that meeting with a 4 unit house, she left with a check for 4 grand.

The contract was setup, at 10%, I paid 58k for the house, my payment was 850.00 a month. I paid it in full, on time, for 5 years.

A month later, she sold me a house for 52k, 10% and the payment was 512.00 a month. I put 4k down on the home.

I was paying all the property taxes, insurance, she would have no expense in the houses, just collecting 1362.00 a month and the only expense she could have would be a mortgage if she still had one.

The only way I could cover the expense, was to dump money into these slum homes. I was young, super ambitious, so I put in new sheet rock, new furnaces, new flooring. I spend 2 years remodeling each apartment.

I was still showing a loss.

She wants me to repay her, the cost of the property taxes.

I am bitter about it, I came to her for help, guidance, and I'm 28 now, and more experienced, and it's very clear, she took advantage of me when I trusted her to point me in the right direction. There is no way, 2 houses worth 100k together, I should be paying 1400 for a mortgage.

But I did, for 5 years, and put 8k down on them.

At this point, I don't feel I'm entitled on a moral level, to pay her anything. She made a lot of money off me, and the apartments rent for a lot more now, than then did when I got them.

I now own a very good company, still own other properties which I've obtained WAY cheaper and on WAY better terms. To me, she is a snake, that took advantage of cheap labor as a kid, and my lack of business experience when I was 22.

Had I came to myself now, I would have advised myself to buy wait to buy a very profitable house at first....so you can roll over the profits into other houses. You can carry a break even house, if you have a few more profitable homes, but she knew she was selling me homes I would loose money on, my very first 2 purchases, and at the highest interest rate allowable by the state.

She would always tell me, "I know you and my son were switch at birth" she always called me her "prodigy" but I want to be nothing like her at all. She is a snake, is in her early 60s, single, alone and stuck with 30 houses she can't sell and she can't retire.

Tell her to get fvcked? Or cough up the doe?

[gixxerboy1]

if you signed a contract you owe her. Also im assuming the deeds are still in her name?

i understand you were young but look at it as a learning experience. But you never take advice from someone trying to sell you something, of course she was going to make the deal good for her

[T_Own]

i didn't feel like reading this last night...

if you signed a contract, you're legally bound to it. she could sue you for way more if you try to get out of it. i don't know why you would get 10% on a mortgage, thats TERRIBLE. especially on such cheap houses. maybe go to a bank and refinance? 10% for 30 years is outrageous.

like they say, a friendship started from a business is better than a business started on friendship. and you learned it the hard way.

[vpchill]

Yea, You Have No Wins if you signed a Contract. I just recently lost out on two buildings due to this economy. Banks dont want to lend any money. Things will get worse before they get better I suppose

[spywizard]

What it will come down to is.... what does the contract say?? does it say you are responsible for the taxes?? And it will depend on the state as well, but in the end, you do not have to pay in most cases.. but like i said, it will depend on the state, and the contract..

This could be long, sorry.

The end of the story:

I own 5 properties, I bought 2 on land contract from the same lady, they were my first purchases.

I never made any money off them, they cost me about 10k a year to just make the payment. I called the holder of the land contract, explained to her, it's not in my budget to keep the houses, I don't want them, and there is 6k in back property taxes.

I followed through with some evictions for her, filed a quick claim deed so she could take over that week.

The Begining of the story:

I was 22. I was looking to start into real estate, tons and tons of ambition and clueless to how it works.

When i was 12, I worked for a landlord. I made 2 bucks an hour working for her (same lady yes) and spent a lot of time slaving away. When i was 16, I got a raise to 4 bucks an hour cause I could drive. At this time, minimum wadge had been about 6 bucks the entire time. I'd often work over 40 hours a week, and time and a half was certainly not an option.

Either way, I learned some basic skills, painting, raking, mowing grass, simple things. Granted, most of it was taught wrong, and in the manner a slum lord would handle these basic up keeps.

So, When i start to look for houses, I call this lady I had once worked for, I spent years of my life with her, even though she paid bad, she really liked me, always admired my work ethic from a young age. I invited her to lunch, to seek advice about buying apartments.

I had a pretty good job, dependable income. I asked her, how she got started, what her goals were when starting, what she would do different.

I left that meeting with a 4 unit house, she left with a check for 4 grand.

The contract was setup, at 10%, I paid 58k for the house, my payment was 850.00 a month. I paid it in full, on time, for 5 years.

A month later, she sold me a house for 52k, 10% and the payment was 512.00 a month. I put 4k down on the home.

I was paying all the property taxes, insurance, she would have no expense in the houses, just collecting 1362.00 a month and the only expense she could have would be a mortgage if she still had one.

The only way I could cover the expense, was to dump money into these slum homes. I was young, super ambitious, so I put in new sheet rock, new furnaces, new flooring. I spend 2 years remodeling each apartment.

I was still showing a loss.

She wants me to repay her, the cost of the property taxes.

I am bitter about it, I came to her for help, guidance, and I'm 28 now, and more experienced, and it's very clear, she took advantage of me when I trusted her to point me in the right direction. There is no way, 2 houses worth 100k together, I should be paying 1400 for a mortgage.

But I did, for 5 years, and put 8k down on them.

At this point, I don't feel I'm entitled on a moral level, to pay her anything. She made a lot of money off me, and the apartments rent for a lot more now, than then did when I got them.

I now own a very good company, still own other properties which I've obtained WAY cheaper and on WAY better terms. To me, she is a snake, that took advantage of cheap labor as a kid, and my lack of business experience when I was 22.

Had I came to myself now, I would have advised myself to buy wait to buy a very profitable house at first....so you can roll over the profits into other houses. You can carry a break even house, if you have a few more profitable homes, but she knew she was selling me homes I would loose money on, my very first 2 purchases, and at the highest interest rate allowable by the state.

She would always tell me, "I know you and my son were switch at birth" she always called me her "prodigy" but I want to be nothing like her at all. She is a snake, is in her early 60s, single, alone and stuck with 30 houses she can't sell and she can't retire.

Tell her to get fvcked? Or cough up the doe?

[J-Dogg]

I see your points, but one thing you are all wrong upon, is just because you have a contract, does not mean the person will automatically win.

It's harder than most people think to win in civil court, you have the option of going to jury trial if requested and that would be my route if I choose to go down that path.

From my properties, I take people to court all the time. Just because somthing is in writing....does not mean the judge awards the judgment, and a jury is even less likely too.

I could have a person sign a lease, that says they pay $25 a day, for each day late rent is.....but the judge will NEVER reward that. He decides what's fair, the contract it's self is first, over ridden by common law, and 2nd...comes after his intuition.

I could very easy let her take me to court...I'm the defendant, she has to do all the work and chasing.

The judge will hear, ask if I want to continue, or request a jury trial at that time. I'd request the trial.

Based off the story I've posted originally, I feel I could do a very good job as painting her as a greedy snake that took advantage of my lack of experience when i was only coming to her for advice, and that has already made a lot of money off me, and my mistake of trusting her.

If she wins a judgment, she still has to try to collect it. I'm self employeed, my companies are setup as a LLC. She'd never get the money if I don't want to pay it. She can't garnish my wages, I pay myself.

[gixxerboy1]

I see your points, but one thing you are all wrong upon, is just because you have a contract, does not mean the person will automatically win.

It's harder than most people think to win in civil court, you have the option of going to jury trial if requested and that would be my route if I choose to go down that path.

From my properties, I take people to court all the time. Just because somthing is in writing....does not mean the judge awards the judgment, and a jury is even less likely too.

I could have a person sign a lease, that says they pay $25 a day, for each day late rent is.....but the judge will NEVER reward that. He decides what's fair, the contract it's self is first, over ridden by common law, and 2nd...comes after his intuition.

I could very easy let her take me to court...I'm the defendant, she has to do all the work and chasing.

The judge will hear, ask if I want to continue, or request a jury trial at that time. I'd request the trial.

Based off the story I've posted originally, I feel I could do a very good job as painting her as a greedy snake that took advantage of my lack of experience when i was only coming to her for advice, and that has already made a lot of money off me, and my mistake of trusting her.

If she wins a judgment, she still has to try to collect it. I'm self employeed, my companies are setup as a LLC. She'd never get the money if I don't want to pay it. She can't garnish my wages, I pay myself.

Yes she would have to collect it but you can have a judgement against you and hurt you for a long time,

Yes a contract is only so enforceable. You can legally only charge so much interest or late fees. You aren't at that limit. you will loose.

[CptAmericaX]

You were drunk when you signed it at 22 right... so being inebriated that contract is not valid.....

[J-Dogg]

What do I have to loose though?

I can fight it, if I loose, I have to pay her some claims court cost. I pay them all the time when I take people to court, it's 110.00 in my county.

She has the worse rep in town as a dirty slum lord, put me in front of 12 people, and her, and my story against her contract and I feel people could side with me pretty easy.

Banks are loosing money fist over fist right now from giving people "creative" financing and screwing the home owners. They get the houses back, but most people feel it's the banks, or investors fault for setting the people up for failure.

I feel people, may feel the same with this deal. 1362.00 mortgage for property valued at 110k? I could buy a house worth 4 times that value for that kind of mortgage. I think a jury would see the same, most of them will have $400 mortgages on 150k homes.

[higherdesire]

In texas they cannot come after you for the taxes once it is not in your name though. It can't even go on your credit. So if it is the same there, she foreclosed (or took the property back over) on the property with taxes owed then she owns the arrearage as well.

[gixxerboy1]

What do I have to loose though?

I can fight it, if I loose, I have to pay her some claims court cost. I pay them all the time when I take people to court, it's 110.00 in my county.

She has the worse rep in town as a dirty slum lord, put me in front of 12 people, and her, and my story against her contract and I feel people could side with me pretty easy.

Banks are loosing money fist over fist right now from giving people "creative" financing and screwing the home owners. They get the houses back, but most people feel it's the banks, or investors fault for setting the people up for failure.

I feel people, may feel the same with this deal. 1362.00 mortgage for property valued at 110k? I could buy a house worth 4 times that value for that kind of mortgage. I think a jury would see the same, most of them will have $400 mortgages on 150k homes.

or jurors could look at it as another person who bought a home and is trying to get bailed out of paying for it.

[jfalco]

This sounds crazy. Why aren't the deeds in your name?

You must have some equity after 5 years.

$1362 would pay a mortgage about double the property value, but not 4 times.

How did this tax situation happen? Why havn't you been paying your property taxes? If the taxes are from the time you owned the houses, I can't see how you aren't responsible for them. But is you default on the loan, and she forcloses and takes back the property, the property comes back to her with the tax lean on it and she becomes responsible for it. At least that is how it works in massachusetts. I am a liscenced realator here. Don't know the law where you live. Sounds like a crazy situation, and I would be willing to be that she has broken some laws. My advice is talk to a lawyer. Don't give her a penny. I have a feeling that she probably owes you some money.

You definitely need a lawyer. Sounds like she's trying to screw you.

[jfalco]

In texas they cannot come after you for the taxes once it is not in your name though. It can't even go on your credit. So if it is the same there, she foreclosed (or took the property back over) on the property with taxes owed then she owns the arrearage as well.

Same thing happens in mass. so it is probably fairly universal. the taxes are owed by the property not the person. who ever owns the property owns the tax debt.

[J-Dogg]

You don't hold a deed on a land contract.

I was loosing money on the property every month, and when the property taxes were due, I just gave them back. I lost too much, had enough, so did not pay them and called her, told her I know you won't like it, but I'll file a quick claim deed, so she can take over ownership right away, but I'm not putting another cent into the properties.

One thing I have in my favor, is she is also a Realtor. I forgot about that until you guys stated you are. I know in Michigan, a Realtor can be held liable for some things, and if she is going to sell a house as a Realtor, to a customer, she has to treat them fair, advice for their best interest and I could probably file some paper work to put her license under review or investigated.

Getting an attorney is not a problem either. I replaced my attorney roof last summer and we just traded for labor. So I have about 6 grand in lawyer credit. I'll have him look into it, and send her a letter.

[J-Dogg]

or jurors could look at it as another person who bought a home and is trying to get bailed out of paying for it.

If they do, then I just have to pay the judgment or let it be on my credit history.

Honestly, my credit is not important to me. I have a 200k line of credit with my company, i make enough that I buy everything but houses cash now. I have home equity lines of credit on other homes. I have locked in interest rates lower than most people get mortgages on my lines and my credit score is not even that good now.

I could just pay the snake, or I can let her work for it since I feel she took advantage of me, and I think it's obvious at this point she did. If she wins and I don't want the money judgment on my record, I just write her a check.

[JiGGaMaN]

see a lawyer. you dont want to get ****ed again now do you? it can happen, shes in the business of it, it seems.