Okay, Reality Check on Carleton Sheets - Posted by Frank

Posted by Annette on November 19, 1999 at 15:29:13:

You made a good point! One thing I must say, I did have enough guts to ask for a free manual from a note buying company out in Orlando Florida. Not the Carlton Sheets Program. And yes I did get it for free. The worst they could of said is NO. I had nothing to loose. However, I did not make money off of it but I still use the manual as reference in my realestate business. You can never have too much knowledge.

Okay, Reality Check on Carleton Sheets - Posted by Frank

Posted by Frank on November 05, 1999 at 13:18:36:

I’ve gone through the CS course, learned many things, found it beneficial, however there are some things that stood out to me as being pretty far fetched. Here’s my favorites I like to laugh at…

  1. Ask a bank to show you their list of REOs. Reality check - I tried this and got just the response others on CREonline told me. Banks brush you off - they tell you that all their REOs are listed with realtors so call them instead.

  2. Obtain a piece of vacant land (that a bank can’t sell) for 50% of its value then offer that to a seller at 100% value (plus some cash) in exchange for his apartment building. Reality check - if the bank doesn’t want the vacant land, and I don’t want vacant land as CS states, then what makes me think the seller of the apartment building would want it?

  3. Offer the seller 110% of his asking price and split the 10% premium with him at closing so you walk out with cash in your pocket. Reality check - You’re just borrowing an additional 10% of money from the bank (small loan), splitting that with the seller, and you’ll have to pay it back. See my other post on this.

  4. Call life insurance companies and ask them for someone who has value in a whole life insurance policy then deal with them to buy a property. Reality check - Just for giggles, I called 3 insurance companies and all of them told me that any information regarding their customers or policies are confidential and they cannot divulge this.

Re: Okay, Reality Check on Carleton Sheets - Posted by Kip

Posted by Kip on November 14, 1999 at 24:50:32:

Yep thats happened to me to. But than I got SMART and went to the realtor like the bank said and I bought that first property for 50% below market needed $1500 in repairs.Thats it… Its been my best rental for 3 years. refied and my money back( don’t max out on the refi.)Than went on to buy another property for %50 below.DO YOU THINK YOU CAN DO THIS AND QUIT COMPLANING!

REO just a web site away - Posted by RRSmith

Posted by RRSmith on November 13, 1999 at 14:26:19:

Sometimes you just HAVE to change your tactics, or know where to get help.

www.bankofamerica.com/mortgage/index.cfm?state=&view=PURCHASE&category=
FINDINGAHOME&detail=BANKOWNED

Re: Okay, Reality Check on Carleton Sheets - Posted by eric

Posted by eric on November 09, 1999 at 11:20:04:

Another Sheets “technique” is to have a real estate agent loan or delay payment of their comission so that you can buy the property zero down. If anyone knows of an agent that is willing to do that, give me their name and number, I can use them!!!

THIS IS REALITY!!! - Posted by JohnBoy

Posted by JohnBoy on November 08, 1999 at 24:49:03:

“”“1) Ask a bank to show you their list of REOs. Reality check - I tried this and got just the response others on CREonline told me. Banks brush you off - they tell you that all their REOs are listed with realtors so call them instead.”""

I have one lender that will provide their list of REO’s nationwide. Last time I got it there was about 1800 properties on the list.

“”“3) Offer the seller 110% of his asking price and split the 10% premium with him at closing so you walk out with cash in your pocket. Reality check - You’re just borrowing an additional 10% of money from the bank (small loan), splitting that with the seller, and you’ll have to pay it back. See my other post on this.”""

I’ve done this one but I didn’t split anything with the seller. I got $6k back at closing as a repair allowance. It was money that I was actually borrowing since I was putting a new loan on the property, but I got in with 0 down, $6k cash back, and since the deal still had over $10k equity left and my tenant/buyer’s rent was covering the mortgage plus the $5k option consideration they put down, so what? I got the $6k cash back at close, $5k option consideration from the tenant/buyer with a positive cash flow, and their option price is $16,500 more than I paid for the property! I’ll take deals like that all day! :slight_smile:

“”“2) Obtain a piece of vacant land (that a bank can’t sell) for 50% of its value then offer that to a seller at 100% value (plus some cash) in exchange for his apartment building. Reality check - if the bank doesn’t want the vacant land, and I don’t want vacant land as CS states, then what makes me think the seller of the apartment building would want it?”""

Depends on the sellers motivation. If the seller is “motivated” to get out from under the apartment building and hasn’t had any serious offers worth considering, then this could be a solution to his problem??? He unloads the headache he has in exchange for something he doesn’t have to be a landlord to. It just depends on how bad the seller wants out or the seller might possibly have something he could do with the land that would make him more money with.

I haven’t used this technique to purchase a property by trading raw land, but I’ve used it with a twist on some land I had purchased on contract to refinance and borrow over 100% of it’s equity from a bank. Usually a bank will only loan up to 50% of the lands value when purchasing it. In this case I had already purchased the land on contract about 4 months prior to using it to obtain financing I needed to open another location for my business. Below is an article I wrote on how this came about and to give some ideas on how someone could possibly use this idea to get financing from a bank to purchase real estate without actually having any of their own money into the deal.

A bank doesn’t want any raw land but they sure didn’t mind loaning me more than 100% of it’s value to use as security for a business loan I needed. It amazes me how banks will justify giving a loan to people at times. I think you might enjoy this article and I hope it helps in expanding your creativeness.

USING VACANT LAND AS LEVERAGE (BANKERS WORK IN MYSTERIOUS WAYS!)

If your creative enough, using vacant land can be a great tool to use as leverage with banks to get the funding you need to close that deal you may be working on. Typically, banks will only lend up to 50% of the appraised value on vacant land. What if there was a way to take advantage of using vacant land where the bank would finance you up to 100% of the appraised value, where you could take advantage of the equity you create from the land? Is this possible to do? Would a bank go along with this? You bet they will! The funny thing about this is, I stumbled into using this idea virtually by accident one day while I was right in the middle of trying to secure a loan with the bank.

When I was driving home one day I was thinking about how I would like to expand my business by opening another location. I decided to put a business plan together and try to get approved for an SBA loan from one of our local banks.

Seven months prior to this I had purchased a couple of properties that I wanted to build on in the future. I found a nice 5 acre lot that was overlooking a lake. I decided I would like to buy this property and build my dream home there someday. The seller was willing to sell on contract so we worked out a deal that made the payments affordable for me and still gave the seller a nice monthly income off the property. The seller wanted $37,500 for the 5 acres and we agreed on a selling price of $36,000 with payments amortized over 10 years at 8% interest with a 4 year balloon. About a month later I ran across another property that was an all wooded lot almost an acre and half. The seller had paid $13,500 for it back in the mid seventies. I was able to pick it up for $7,500 on contract amortized over 5 years at 9% interest. I figured I could build a home on this property in a few years to sell for a nice profit. This property was nestled in an area of nice homes built on wooded lots. Other lots around the same size were being listed at $20,000. I figured I couldn’t go wrong at this price and the taxes were only $110 per year.

I went ahead and put my business plan together and decided I would try to get the loan for expanding my business. I only needed to borrow $35,000. It was going to cost me about $15k to set up the business and secure the lease. I added the extra $20k for additional working capital to secure the success of the business until it got off the ground to bring in enough income to support itself. After looking over my application and business plan the banker said he didn’t think there would be a problem with getting me the loan through the SBA. He wanted a couple of days to look everything over and said he would get back to me.

After a couple of days had passed I stopped in to see the banker to get an update on my loan. As we were sitting there, he said everything looked good, but he would like to see about doing the loan directly through the bank and not going through the SBA if possible. (Hey, whatever! I’ll take it anyway I can get it, I thought to myself.) As the banker is sitting there looking over my file, he says, “You know, I would really like to write the loan here, everything looks good. The only problem I’m seeing is, you have a lot of equity here, but your all spread out between everything.” (meaning, a little equity here, a little equity there) So as we were sitting there, I had a idea that hit me. I said, “Mr. Banker, why don’t you just take my two lots I have and refinance my contracts, then give me a 2nd on the property to secure the loan I need?” The banker looks up at me and says, “We could do that! If the appraisals come in high enough that would work!” When I made out my financial statement I listed the 5 acres valued at $50k and the acre and half at $20k. The banker said he could get the appraisals done for $250 from the appraiser the bank uses.

Now since I just purchased these properties several months earlier I was a little worried about the appraisals coming in high enough. So I called the seller on the 5 acre lot and told him what I was wanting to do about getting a loan to expand my business. I told him the bank will only loan me $30k on the 5 acres, and if he would be willing to take $30k for an early pay off I could have his money in about two weeks. He agreed to except the $30k! Next I called the seller on the acre and a half and explained the same thing and told him I could get him $5k in two weeks for an early payoff. He also excepted! Wow! I couldn’t believe it. I just made an extra $8,500 bucks from getting these two guys to take a discount on their contracts!

The banker calls a few days later and says the appraisal on the 5 acres came in at $42,500 and the other property came in at $15,000. Now I got $57,500 in appraisals and owe $35,000 in payoffs that the bank would pay by putting a new first mortgage on both properties combined. They loaned me $36,000 on a new first which covered the payoffs, closing costs, filing fees, and the appraisals. I had $400 left over that I got to keep. Now I have $22,500 in equity left over between the two properties. The $22,500 was more than enough to cover setting up the business, but I wanted $35,000 so I had enough for some working capital to get the business off the ground. Next we structure the deal into three separate loans. $36,000 as a new first, $20,000 secured by a second as a line of credit, and $15,000 secured against the leasehold improvements I would be putting into the business location. The bank said they could use the improvements in the business as additional collateral to justify the loan. So I used the $20,000 line of credit to draw against while I was setting up the business, then after everything was completed the bank would write a new loan for the amount I used amortized over three years and secure that against the leasehold improvements. Then they took the balance left and gave me a line of credit secured as a 2nd against the property. When everything was done and settled, I had three loans from the bank totaling $71,000 secured against the vacant land and leasehold improvements on the new business. And to think I only asked to borrow $35,000 when I walked into the bank to begin with! Go figure! Banks work in mysterious ways!

The original $36,000 first was amortized over ten years with a five year balloon. After the first year and a half I went back to the bank and refinanced the three loans I had into one new five year loan to get rid of the balloon payment I would have coming due in three and a half years. At the same time it cut my payments on all three loans by $300 a month while at the same time eliminating the five year balloon of $22,000 that I would have had to come up with. At the end of the second year, the business in generating $35,000 annual cash flow after all expenses including the loan payment. The best part is the business is all help ran.

To re-cap, I’ve taken two vacant lots that I saved $8,500 from my original purchase price by getting the sellers to discount and opened a new business that is pulling in $35,000 a year in cash flow after all expenses, which is still growing, and done this without using one dime of my own money. All by using dead equity sitting in vacant land!

What are the type of loans that have the most risk involved? Business loans and vacant land! If this bank loaned on vacant land, and for the purpose of opening a new business, what other ways could someone use this idea to get deals funded by banks from using vacant land?

Think about the possibilities here. What about using this to buy income producing properties? Like apartment buildings, retail commercial properties, mobile home parks, businesses, etc…!

What if you found a property that was pulling in a positive cash flow you wanted to buy, but the seller wasn’t willing to carry back any paper and you didn’t have any money to put up for a down payment? What if you could go out and find a nice piece of vacant land for sale where the seller would be willing to sell on contract that you could negotiate for a good price below market value? Then turn around and use the equity in the land as leverage by getting the bank to refinance the property with a new first and secure a new 2nd that you could use as your down payment to buy the income producing property. At the same time you contact the seller of the vacant land and offer to cash him out if he would discount the balance for an early pay off. The bank can wrap the two properties together as added security to justify doing the loan. Since vacant land is usually hard to sell, it shouldn’t be that difficult to find a seller willing to sell on contract and shortly after that, agree to taking a nice discount for a cash pay off.

Let’s use a hypothetical example on a mobile home park that is for sale. Let’s assume the seller has some additional property next to the MHP that he wants to sell with the park that could be used for future expansion. What if you were to sit down with the seller and tell him you would be willing to buy his MHP and cash him out if would be willing to separate the additional property from the park. Have him agree to write up the vacant property to sell you on a contract at a lower value than what it would appraise for. Add the extra value to the MHP price. Put together a business plan on the MHP to present to the bank. When you present your plan to the bank for purchasing the MHP, you tell the bank that you own the property that is next to the MHP. If they would be willing to refinance the land, they can pay off the balance owed to the seller and use the property as additional collateral as security against the MHP. The created equity in the vacant land could be used as your down payment money and by combining the additional land to the MHP would create more value to the deal which would give the bank a lower loan to value and show your putting some of your own money in the deal from the equity in the vacant land.

Would something like this work? I can’t see why it couldn’t. If a bank is willing to do this by using vacant land and loan full market value against it plus additional funds secured against leasehold improvements on a business that is located in a shopping center under a lease where you don’t even own the real estate, why wouldn’t they be willing to do the same on a deal that gave them better security like a MHP Vs. a new business venture? Which would you prefer loaning your money against, a new business venture, or hard assets like a MHP???

If it can work for me on a business loan, then there shouldn’t be any reason this couldn’t work for anyone else if they structure the deal properly when it’s presented to the bank! Banks work in mysterious ways!

JohnBoy

Re: Okay, Reality Check on Carleton Sheets - Posted by Mark Mallen

Posted by Mark Mallen on November 06, 1999 at 13:20:43:

Frank, I just had a list of a local bank’s upcoming foreclosures and REO’s faxed to me this week. I have bought many REO’s at great terms. You have to deal with the right people as well as know different techniques. One good bank contact can make you a lot of money.This bank also gives their property to a realtor unless I get it first.

Answers to your questions - Posted by PBoone

Posted by PBoone on November 06, 1999 at 12:45:13:

None of the techniques mentioned are far fetched. We have used each one mentioned, but the way of evolving into the results was different.
1- look up just about any bank in the usa on the internet. Most are listing thier REO’s
2- Land, or anything the seller is wanting to purchase with thier money from the sale of the property. Find the sellers needs. Most will not go for the idea, unless they are motivated enough. (read joe Kaisers “why I stopped looking for houses”)
3- Agreed! But if you can stay out of the Fraud zone with this technique and use the additional 10% for other / higher yields why not?
4- We work with a trustee of insurance policies for hard money. It can be done and is done but it takes dilligence and a little luck to find them.
Pat

Re: Okay, Reality Check on Carleton Sheets - Posted by Robert

Posted by Robert on November 05, 1999 at 23:46:03:

Stop trying to learn all the goofy tricks that are in those courses. Meet people in your city and find out what works for them. Then model yourself after a reputable and successful investor and do what they do. You can’t go wrong.

More seminar “buzz” techniques . . . - Posted by Joe Kaiser

Posted by Joe Kaiser on November 05, 1999 at 20:26:55:

They sound good on paper, but are pretty much a joke in the real world, as you found out.

We buy plenty of real estate every month without smoke and mirrors, and instead of tricky seminar techniques, we spend our time tracking down sellers who are hot to go.

All our offers are nothing down offers. But that has no bearing on the seller. He gets paid in full. They go like this . . . all cash, at 100% of “as is” value (how we get to that value is the key). That often means we can buy raggedy properties for $30k, spend $20k fixing them up and retail them for full market value of nearly $100k.

And that $50k is borrowed money.

Got it?

Joe

IF YOU WANT TO BE SUCCESSFUL- -KEEP AN OPEN MIND - Posted by AL

Posted by AL on November 05, 1999 at 16:38:08:

FRANK,Ive used the first three methods to buy real estate,I dont know if your just starting out but to become successful in ANTHING (INCLUDING REAL ESTATE)you gotta have an open mind people like you pass by great deals laughing at things,someone like myself will take them!

Yes and no… - Posted by Mark (SDCA)

Posted by Mark (SDCA) on November 05, 1999 at 15:04:56:

2,3,4 are hilarious. I agree there.
#1 is not so far fetched. True, you won’t get far with B of A. But do it with smaller banks, especially ones in trouble. A few years ago, I read a story about NationwideBank (my bank at the time amusingly enough) was losing all kinds of money. How does a bank lose money? REOs!!! So I called and asked for a list. They were happy to mail me one.

Mark

Re: Okay, Reality Check on Carleton Sheets - Posted by eric

Posted by eric on November 16, 1999 at 13:58:36:

Kip,

Good point. However, buying distressed property below market value was not invented by Carleton Sheets. Sending offers to buy property to out-of-state owners of run down property was not invented by Joe Kaiser either. EVERY book I have read on REI talks about such stratigies. Don’t be so hard on Frank, he brings up good points as well. I have the Sheets program and many of the ‘techniques’ he outlines are far fetched. As I mentioned in another post, if you know of a realtor that will loan me their comission so I can buy a property…give me their name and number, we can all USE people like that!
good luck

eric

Re: REO just a web site away - Posted by gary w. davis

Posted by gary w. davis on October 19, 2000 at 01:39:53:

i would like boa 's website more information my personal and business accounts, group private banking ,profolio management or invesment management for business banker . thank you! g.d.

Re: REO just a web site away - Posted by Donna Montemuro

Posted by Donna Montemuro on July 10, 2000 at 08:02:59:

Looking for a reo property

Re: Okay, Reality Check on Carleton Sheets - Posted by Bart Sagar

Posted by Bart Sagar on February 26, 2000 at 17:46:48:

I would not hesitate to ask this. My reason is that you structure it for a win/win. Ie, they “lend” their commission, but recieve payments on a monthly basis. This gives them a monthly income whether they sell something in a given month or not. If they get enough of these, they can smooth out their cash flow. It would be an advantage for an income based on streight commissions.

You just have to… - Posted by Roy_MA

Posted by Roy_MA on November 11, 1999 at 10:44:52:

keep asking. They are out there.

Re: THIS IS REALITY!!! - Posted by tricina cash

Posted by tricina cash on November 12, 1999 at 16:38:47:

nice to see that this course has worked for you. do you know of anyone in pittsburgh that is also benefitting from this course?

Re: Answers to your questions - Posted by bbop

Posted by bbop on November 10, 1999 at 21:02:24:

Banks are listing their properties on-line? Where?

Thanks

Re: Okay, Reality Check on Carleton Sheets - Posted by June

Posted by June on October 22, 2000 at 15:36:07:

Isn’t this the same? I worked for a wealthy real estate investor and he was not willing to share his secrets nor be a mentor. It’s easier said than done. Are you a wealthy investor that would be willing to share some information? Thanks for the response!