Realty411 Magazine The Future of Real Estate is Here | Page 86

Safety in Numbers, pg. 18 Taking Title by Garrett Sutton, Esq., pg. 81
valued at more than you have with a lien on it that’s larger than
the amount of money that you have to invest — you’re just not
a player for that a parcel that size, where rates of return can be
much higher.”
Unless you’re coming into the tax lien industry with substantial
resources, Gleason says most of the time you’re going to get
squeezed out — and you certainly won’t be able to achieve any
of the economies of scale fund-based buying allows.
“An investor who tries to walk into one of these auctions by
themselves with $50,000 may be able to buy 50 certificates at
$1,000 each,” said Gleason. “But working with a group of
investors, we can pool our resources and buy 1,000 certificates
— further diversifying the risk.”
And in the unlikely (but possible) event one of those properties
goes “bad,” so to speak, it’s going to appear pretty insignificant in
comparison to the overall pool of liens. It’s a model that’s made
a historically safe investment even safer — and more profitable.
“What we do is we make it a passive investment, and we’re
able to enhance the rate of return for investors because of the
economies of scale,” said Gleason. “We’ve been able to produce
great returns in very safe, reliable investments — that’s very
attractive in an uncertain market.”
Gleason says he continues to think safety and security are the
right watchwords for investing right now more than ever before
— and that MMG’s group of investors are like-minded.
“You can’t find a more favorable risk vs. return scenario in
real estate,” said Gleason. “Pooled investing in tax liens is an
extremely safe and reliable investment that’s also very profitable
— when you know what you’re doing.”
Gleason laughed. “We’ve challenged some very sophisticated
people to find us a more favorable risk/reward investment out
there, and so far, no one’s been able to do it.” It was so bad in 2009 that a large national title company
announced it would no longer issue title policies to two large
national banks. These lenders’ records were just not trust-
worthy, and the title company was not going to take the risk.
Know that for years to come there are going to be title issues
arising from the real estate collapse in 2008.
It is for this reason that sellers (mainly banks) of foreclo-
sure properties are using quit claim deeds. They don’t know
what happened and they aren’t about to warrant or guarantee
that they have a clean title to convey to you. The quit claim
deed they use instead says, “We don’t know what we’ve got
but whatever we’ve got we’re giving to you.”
What is offensive is the lengths that some of these lenders
will go to get you to bite on a quit claim deed. They will tell
you that it grants you full rights to the property. It doesn’t,
because neither you nor the bank really knows what those
rights are.
To further get themselves off the hook after taking your
money for the property these banks will bury the fact that they
don’t warrant good title in an Addendum at the end of a sixty
page contract. They want you to waive any rights you may
have in the matter. They may or may not know that the title
is so defective that the property will be severely devalued.
But they want you to release them from any future problems
and sign off that everything is okay. There have been reported
cases where the Addendum is intentionally withheld and only
provided to you at the closing. (You know, at that last meeting
at the title office where you are expected to sign 47 documents
without reading them.) Accordingly, please be very careful
and have your own attorney review such transactions.
The second reason a quit claim deed is not preferred is
because the quit claim deed severs an express or implied war-
ranty of title. (Remember, you are just granting whatever you
may own which may be something, or nothing.) As such, the
title insurance doesn’t follow. While this may not seem like a
big deal, let’s consider an example.
You buy a property in your name. Part of your closing
costs includes a policy of title insurance. Several years later
you want to transfer title to an LLC for asset protection. Your
friend says a quit claim deed is the easiest and quickest way to
go. You file the quit claim deed and now the property is titled
in the name of your LLC. Later, you learn that the boundaries
weren’t properly surveyed. You seek recourse from the title
company since they insured the boundaries were correct. But
you now learn that by quit claiming the property into your
LLC you have unwittingly canceled your title insurance poli-
cy. The boundary issue is no longer insured.
The way to avoid this problem is to use a grant deed or a
warranty deed. A title insurance policy isn’t extinguished in
such a transfer. As well, a grant deed is just as easy to prepare
as is a quit claim deed. But in either case, remember that easy
isn’t always best. If you are not an expert at title transfers, I
would have a lawyer or title company handle them.
For more information on tax liens and MMG Capital’s investment
fund, visit their website: www.MMGInvestors.com
SBD Housing Solutions Expands to Florida, pg. 21
celebrate your successes!
SBD’s Exit Strategy
Please tell us specifics of the
exit strategy. This was a true
flip. We listed it and got a con-
tract on it on day 5. We priced
it aggressively to get a fast
sale, but hit it right on the head.
We poured over the numbers
to make sure that we weren’t
going to be asking too much.
Every day a home sits is a time
and money wasted!
Q: What insight did you learn
from this deal?
A: Staging a home is HUGE
factor in differentiating us
from the competition in Flor-
ida. The cash offer actually
asked us in their offer, “can
Realty411Guide.com

the Seller vacate the home in
14 days if possible for a quick
closing”…..which is hilarious
as they thought we occupied it!
It is obviously a vacant invest-
ment home. But testament to
our wonderful stager!
Moreover, I believe that
there are simply some homes
that will NEVER sell retail.
Whether it is just dirty or total-
ly run-down, with all the stuff
on market right now, a home
that is not good looking just
won’t sell. Herein lies the op-
portunity for us to come in and
do our value add.
To learn more about SBD
Housing Solutions, visit:
www.SBDHousing.com

For more information on this and other title matters, please
read my book Loopholes of Real Estate or visit:
www.CorporateDirect.com
PAGE 86 • 2014

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