Real Estate Investing – Don’t Just GET THE DEED – The Infamous "Kitchen Table Closing"

Here is a question from one of my Clients about purchasing a house using a kitchen table closing. My quick answer… Beware!

Q: Hi Lou, I have a property under contract that I want to resell/flip as-is to a rehabber/renovator, but I may have to purchase it quickly and simply record the Quit Claim Deed, without using a closing attorney or waiting for a title exam. I need your advice.

The seller just called me and left a message on my voice mail stating she did not want to sell to me because she received a better offer. Now I do have it under contract, with a signed purchase and sales agreement from her, and I had her sign a Quit Claim deed, too. I did that because she was fighting with her sister over ownership of this property, which was given to her by her mom who passed away 2 years ago. The deed is in her name alone, not the sister’s, mom’s or anyone else. I did see the deed and made a copy of it.

I thought I should get the Quit Claim Deed (QCD), just in case I needed to record it because of the family issues. The Seller agreed as well. She said she just wanted to get rid of this property. I also filed at the courthouse an Affidavit for the property showing I had it under contract, as you recommend. I’m in the process of getting a title check done by my title company.

Now what do you recommend I do? Should I go back to the courthouse and record the QCD or wait until the title search is complete to record the deed; or should I walk away, or should I choose to wait and schedule an attorney to do the closing?

Thank you, G.

A: Hi G., what you’re describing is a little risky, yet it’s done fairly often as is commonly referred to as a “kitchen table closing” since they are literally often closed right in the Seller’s kitchen. It’s a VERY good idea to get title exam run first, before doing a “kitchen table closing” especially if you are giving any money to the Seller.

Normally I wouldn’t recommend you do your own closing, but since you’re rushing your purchase so you can “preserve” your deal before the other Buyer moves in and buys it, and/or before the sister does anything rash… just be sure that the transaction has been up front, and that you truly intend to move forward as you agreed. I think that I would go ahead and file/record the QCD. I don’t see that you have anything to lose, and a lot to gain.

I would then inform the seller that she can not sell to anyone else because she already has a binding agreement to sell to you, and that you already “technically” own the house (since you recorded the QCD). Let her know that your plan is to review title, and as long as everything is in order, you’ll proceed with a regular closing at which time she will receive any proceeds due her.

If there are any title issues preventing the sale of the house, then you will simply deed the property back to her after which she is free to sell to whomever she likes.

It was great that you already recorded your “Affidavit of Contract”, putting yourself on record as having a valid Purchase & Sales Agreement (PSA). If the Seller attempts to sell to another buyer before you record the QCD, the Affidavit you recorded will protect your interests, and allow you to still purchase the house in the future.

By filing the QCD you become the official owner of the property. No one can take the deal away from you. Since you’re buying it “subject-to” any loans, you will need to start making the payments on any loans (call the lenders to get a “statement of account” to make sure there are no surprise back payments or penalties you’re “inheriting”). I’m assuming you gave her no/low equity/cash at this point, so you don’t have any funds invested, or at risk with the seller. Now you’ve got time to evaluate all the financials and make an informed decision. If in the end, you do not want it, you can always Quit Claim the property back to the current owner, as you told her earlier.

**Note to all my fellow investors: you don’t want to even play this “kitchen table closing” game, unless you have a strong indication that this is a good deal and you’re 90% sure you’re going to go all the way with this deal. Taking ownership via a quick recording of a QCD, and then bouncing ownership back to the original seller with another QCD later when you’ve “had a chance” to do your due diligence – is not a practice you should engage in regularly. We’re only walking through it in this example, because the investor is trying to rush to protect his good deal from being “sold again” fraudulently, by the seller to another buyer.

You should always use a reputable attorney or title company to close your deals even when purchasing “subject to” the mortgage to ensure that there are no additional liens on that property of which you are not aware. By closing with a proper closing agent, you’ll also be able to purchase title insurance to protect your investment in the property.

If a title issue arose with NO title insurance policy in place, you would be financially responsible for the cost to pay off any additional liens and/or all the legal fees to resolve the issue before you could re-sell the property. Unless you are willing to gamble with literally what may be tens or hundreds of thousands of dollars, close with a reputable closing agent and not attempt a kitchen table closing.

How to Become a Loan Shark – Investing Wisely

There are many people, some right next door to you, who need money but cannot get a traditional loan. And, you, may have just what they need – money. If you are one of the few people who have learned how to manage your money and have saved throughout your life. You might be a good candidate to learn how to become a loan shark. This is a person or even a group of people who allow individuals to acquire high interest rate loans. Loan sharks tend to have a bad connotation. However, if you are fair and do not threat or blackmail your customers, then you are more than likely going to be very successful as a lending shark.

When learning how to become this type of lender, you will need to know a bit about marketing. This is because people will not know you have money unless you get the word out there that you do and that you want to make it useful. While you are getting out the word that you have money to loan do not disclose the interest rate. This piece of information could potentially scare off future clients as well as prevent them from even seeing the services that you are willing to offer.

As the current economy is declining, it is not easy for many people to receive traditional loans due to bad credit. Many times people need money for emergencies. This is the reason you need to be fully aware when learning how to become this type of lender. You want to know how to correctly read people and find if their need is real or not. Of course, if they are deeply in debt to other lenders, you will more than likely never seen your money again and you have not made a good deal.

There are successful lenders out there who can help you learn how to become a loan shark. However, every situation is different and you need to determine who the right borrower for your money is. This is because you worked hard for the money that you have and would not like to lose it to a scam. This can be a great investment and can truly bring you a hefty return if you do it right. As a lender you can truly make a difference in someone’s life that may have to help you sometime in the future.For more information on investing in investment opportunities usually or normally not found in the marketplace, click here!

Investing in Stocks: Turn $5,000 into $1,000,000

First of all, I want to point out the long term historical return of the stock market is a little bit higher than 10% per year. Very few long term investments can make this claim. Some would argue that real estate is a better investment, and it may be in some instances, but I would rather put my money in investments that require no maintenance, renters, property taxes, or other “drawbacks” as I would refer to them. Of course, your own house, that you live in, is another story.

Now you are probably thinking, “That is great and everything, but how does this help me with making a million dollars in the stock market?” I am glad you asked. One of the most important lessons about investing in stocks that anyone can give you is patience. If you think you are going to make a fortune in the stock market overnight or even in a couple years, then I wish you good luck, but unfortunately you are more likely to lose money than gain money by trying to beat the market. However, if you are willing to find some good companies to invest in and are patient, you are very likely to earn a nice return in the stock market. In fact, even stocks that have performed very poorly, can earn you some decent money off your investment as demonstrated by the Stock Performance Guide at the 1stock1 website.

Another very important investment lesson is time in the market. Over time most established companies continue to grow and, as a result, their stock price also grows. In the short term, stocks can be very volatile and their prices can go up and down daily. However, as you extend your time frame, a solid stock performs in a much more predictable manner. This doesn’t mean your investment will always make money, but time does put the odds in your favor.

The third lesson I will give you about stock investing is discipline. Determine why you are investing and what you want to accomplish through investing. Once you decide your reasons for investing, come up with a plan and stick to it. Don’t allow yourself to get lured into the next “sure thing” in the stock market. For every one that works out, several more will fail. If it was a sure thing, investors would know this and bid the stock price up accordingly. If you know information that the rest of the stock market doesn’t, then your looking at insider trading charges. It is very easy to be tempted to earn the “quick buck” and much more difficult to be disciplined with an investment plan. As expected, the road that requires the most work yields the best results.

Finally, I would like to stress the importance of diversification. Probably the biggest mistake you can make in investing is putting all your money in one stock. This strategy is not only risky, but also less likely to earn as a high of return as a diversified portfolio. Having your money invested in several stocks helps minimize the risk while still increasing overall return.

New Book Offers Practical and Easy Tips for Saving and Investing Wisely

In Spending Your Way to Wealth: Setting Your Compass Course to Steer in the Direction of True Wealth, Paul Heys separates myths and untruisms about investing from facts and practical strategies that will help you learn how to save, spend, and invest wisely. Not since the Great Depression has such knowledge been so necessary as we continue to face the financial turmoil caused by the recent coronavirus pandemic.

Heys served as a vice president at Smith Barney, where he accumulated a wealth of insights about investing. He has also been a flight instructor who learned how to teach others how to do complicated, sometimes tedious things, in a thoughtful and calm manner. That background has paid off in making Spending Your Way to Wealth an easy-to-follow guide any would-be investor can benefit from. Learning how to invest properly takes some thought and, as Heys reveals in these pages, a strong ability to remain calm when the markets may not be doing what you wish.

Heys begins by meeting readers where they are. He explains that the actions people are likely to want to take when investing are normal, and he explores the psychology behind why we make those decisions. As he shows, nothing is wrong with being normal, but we want to get to “normal plus” by learning to restrain ourselves to prevent the consequences normal behavior could cause. He uses the metaphor of Ulysses and the Sirens to describe our own need for restraint. Ulysses had his men tie him to the ship’s mast when they sailed past the Sirens so he could hear their beautiful music but resist the temptation to join them, which would have resulted in his destruction. Similarly, we must tie ourselves to the mast when we invest by restraining ourselves from knee-jerk, short-term decisions that will be detrimental to our long-term goals.

Before discussing investing, Heys asks us to look at how we spend our money and how it reflects that we are normal. I particularly appreciated his introduction of the concept of “spilling.” Spilling is when we spend money beyond what we need to spend. For example, the generic brand of spaghetti sauce may meet our needs. The expensive name brand is more than we need. The difference between the price of the generic brand and the name brand is money we spill-money spent that didn’t need to be spent and that could have been saved and invested. However, because it is normal for us to think the name brand is better, we are willing to spill money on it. We also tend to do things like assume a more expensive bottle of wine is superior to a less expensive one, although Heys reveals that studies show people, when not told the price, may find that they get more enjoyment from the less expensive wine.

One of the biggest ways we spill money is with our credit cards, which allow us to buy things we don’t need or can’t afford. Heys offers tips for how to handle our credit cards, and we definitely need help because only 35 percent of people pay off their credit cards each month. The rest spill their money by only making minimal payments and thereby paying high interest rates that can make even buying the generic brand of spaghetti sauce, when charged to a credit card, multiple times more expensive than if we bought the name brand. Heys goes on to discuss the difference between price and value and how understanding it can teach us to avoid spilling. He also advocates for keeping a monthly journal to become aware of how much spilling we are doing. Most importantly, he makes us aware of how a little spilling can be detrimental to our future. For example, if we leave a light on for twenty-four hours that doesn’t need to be on, it will cost us 14 cents. Over time, that will add up-to $77,680 in a lifetime, and if that money were invested over forty years, to $367,895. Who couldn’t use an extra third of a million or so dollars? So why do we throw it away by leaving lights on? Turning off that light may mean the difference between living in the style we’re accustomed to in retirement and watching every penny.

Heys then goes on to give investing advice. It’s more detailed than I can cover here, but he explores investment behavior vs. investor behavior, he demystifies risk, and he looks at untruisms such as “Don’t invest more than you can afford to lose.” He advocates for investing long-term in an index fund-advice directly from Warren Buffett. He also reminds us how everything is relative so we should not let others determine the value of an investment-it isn’t about the price but its ability to meet our current and future needs. We don’t have to chase after an investment with high risk that could provide us with 25% returns if a lower risk investment that will provide 10% returns will meet our retirement needs. I find this advice comforting.

Most of all, I appreciated in these later chapters about investing the return to the idea that we must restrain ourselves-tie ourselves to the mast when investing. We can learn that restraint by turning down the noise. We don’t have to follow the stock market every day; we can quit listening to all the experts on TV; we don’t even need to look at our statements daily, weekly, or monthly. Quarterly is sufficient, and then we can adjust if needed. The main point is to trust that the market over time always goes up, and if we’re in it for the long-term, we will benefit from staying the course.

Altogether, Spending Your Way to Wealth is the only book I know to so fully reveal so many of the myths and misconceptions many of us have about investing. I felt relieved after reading the book because I realized what I needed to do was much simpler than many might think. I don’t have to become an expert on the stock market. I just need to find a trusted financial advisor who will help me find the right funds for me. Then I have to contribute regularly to those funds and sit back and let them grow without trying to micro-manage them. This book’s message is straightforward and more relevant than that of any other financial advice book I have read, and I’ve read many of them.

Why aren’t these things taught in our schools so we can all begin to save early? Spending Your Way to Wealth would be the perfect book to give every high school student as a graduation gift to start them on the right path. Actually, anyone interested in investing-and that really should be everyone since we will all someday need to retire-will benefit from reading this book no matter how new or seasoned they are as an investor. In addition, Heys provides valuable information at his website, including an investorship calculator to help you track what you spend against what it would be worth long-term if you invested it. Check it out.

The Basics of Mobile Home Investing

Investing in a Mobile Home for the income from it is a good idea, just like owning a house, or apartments, or a commercial property. However, with Mobile Homes comes a different set of rules. Here is some things to know:

First, most Mobile Homes are located in communities or parks. 90% of the time the rules for living in the parks are that you must own the Mobile Home yourself. Occasionally you may rent one out to a family member, but this is not usual or a good investment. Be sure to check with the park manager first before buying a Mobile or Manfuctured Home as an investment.

Second, the property laws are different for Mobile Homes because they are personal property, not Real property. Make sure that you check out the local and State laws governing renting personal property. One area is the condition of the home – you are liable for the home being up to code and in VERY good condition. This may cause the numbers not to work in your favor. Proceed with caution.

Third, Mobile Homes are cheaper, normally, than other properties, and thus can be a great investment. If you are very careful with the first two issues above, then you will certainly make good money simply because your costs will be lower for the initial investment.

Again, do your home work and don’t assume the Real Property laws will apply to Mobile Homes, but if you are cautious, you will stay out of trouble.

Now, you could also invest in a Mobile Home Park. This is comes with a whole set of different benefits and problems. Mainly though, the park owner only worries about the upkeep of the park, and tenants that don’t pay. Gone are the toilet clogs and roof leaks. Typically buying an established park is the best idea rather than trying to build a new one. Upgrades to make an existing park better normally are simple, compared to starting a new park.

Financing should be easier as well on buying a Mobile Home Park. A lender will qualify the park’s existing income and expenses for the loan, much more than the new owner’s personal balance sheet. Although this is important, it is always recommended to have experience in management before buying an existing Mobile Home park.

Check out more information, tips, advice, and recommendations about mobile homes and manufactured homes at: www.free-mobile-home-info.com