Cloud on Title

A cloud on title is something odd about a deed for real property that has been recorded that might invalidate or impair the title.  It usually stems from unresolved issues with the property. Buyers should proceed with caution because there is something about the deed that requires closer attention.

Some examples of a cloud on a title include:

  • A wrong spelling of the property’s address in a deed conveying title.
  • Foreclosure proceedings underway by mortgager in response to a borrower defaulting on payment.
  • Failure to transfer certain property rights to the former owner, such as mineral rights.
  • A mortgage lien whose repayment has not been officially recorded with a local record office.
  • Covenants are rules, conditions, or restrictions place on a property by a subdivider or other landowner to create uniformity of building and uses within tracts of land or groups of lots.
  • Probate matters that involve estates and inheritance can create a cloud on title. If a property owner dies without a will defining who gains control of their estate, the property title may become in doubt as heirs challenge each other in court.
  • A fraudulent title recorded would create legal confusion and a cloud on the title.
  • An encumbrance is a claim or right held by some party other than the owner or a claim that is not a lien that limits the ownership of the property such as conditions, restrictions, easements, reservations, etc.
  • A mechanics lien placed on the property for construction work contracted.  The lien remains on the property and does not follow the owner, forcing a buyer to assume responsibility for repayment.
  • Any pending lawsuit before a court of law over ownership of the property.

Title Insurance

Title insurance protects the insured and their heirs from loss or damage due to defects, liens, or encumbrances in the title or actual ownership of the property as of the date of the policy.

A Clear Title

A clear title is one without any kind of impairment, lien, or levy from other parties and poses no question of legal ownership.

In most cases problems with a title can be cleared up when proper documents are submitted to the local record office.  This lifts the cloud on the title. This is not complete legal advice.  Please be sure to consult your real estate agent and attorney.

Closing Delays

One thing is sure:  a cloud on the title will slow down the paperwork associated with buying and selling property.

Patience may be a virtue, but it is one that is often tested when you are eager to close a loan and get on with your project. To save your dream and your nerves, Clean up the title ASAP. 

REI Capital Resources

REI Capital Resources built its reputation on finding private funding for investors for quick turn purchases and difficult situations.  This is still true today.  

Give me a call or send an e-mail and share with me your plans and needs, and I’ll see what lending solution I can generate for you.

Patrick St.Cin

W – 512-213-2271 a hand an

Austin, Texas


Fourteen House Flipping Mistakes to Avoid

I decided to visit fix-n-flip websites to come up with a list of the top rooky mistakes you can make when buying, fixing, and reselling a home for profit. One of the websites I consulted while compiling this list of mistakes to avoid while fix-n-flipping houses for profit is Dave Ramsey’s website. Dave Ramsey is well known for his advice that all of us get out of debt, and that is good advice. If you have cash that you can spend to finance your fix-n-flip project, you will not feel so much pressure if the house does not sell quickly. You won’t be tempted to sell the property for a loss because loan payments and interest costs are eating away at your bottom line.  You will be able to wait out the market and sell for a profit.

However, if you need to find funding, there are private lenders and hard money lenders out there that will finance your project and I can help you find them. Calculate how much you need and give me a call.  I’ll do my best to find you the right loan for the right price quickly.

Below are 14 mistakes fix-n-flippers make in the areas of planning and budgeting, buying, renovating, and reselling properties.

  1. Planning and Budgeting: Not calculating permit costs, property assessment fees, loan originating fees, loan processing fees, inspection fees, points, or interest in your budget.
  2. Planning and Budgeting: Not knowing how much you can afford for the entire project before making a deal, including purchasing a home, making repairs, completing renovation projects, and selling the house.
  3. Buying: Buying a property sight unseen.
  4. Buying: The location you choose to buy in has a housing inventory shortage and such a high demand for houses that you become entrenched in a bidding war and end up paying above-market prices for a fix-n-flip property.
  5. Buying: You bought a house to renovate that is far away from your residence causing you to spend too much money on gas getting to and from the job site, and the repairs take longer to complete than they would if the house was nearby.
  6. Buying: Not knowing the market and not knowing if you are getting a good deal on the house you are buying.
  7. Buying: Not looking for black mold, a bad roof, or a cracked foundation when evaluating whether to buy the house to fix and flip.
  8. Renovation: Putting in high-end upgrades while renovating the house that cause the house to cost more than the neighborhood can afford.,
  9. Renovation: You did not have a reliable contractor help you estimate the repairs for the house and a surprise repair broke your budget.
  10. Renovation: You underestimated repair costs and did not add 20% to your estimated repairs.
  11. Renovation: You tried to do repairs yourself without experience and without budgeting for contractors when you need them.;
  12. Reselling: Because you don’t know the market and have not done your research, you can’t accurately calculate the house’s potential value, and you don’t know how to price the house for sale.
  13. Reselling: Failure to network with buyers and build relationships before picking a house to fix-n-flip.
  14. Reselling: You did not list with a real estate agent even though you hate hosting open houses.

REI Capital Resources is “focused on funding your success!”

Contact me at
512-213-2271 Grid Table 7

Have You Hired an Uber Driver Today?

House flipping has made it to the Wall Street Journal. In a recent article (May 28, 2019), Uber Drivers Seek Extra Cash Working for House Flippers,” I read about a new way house flippers are finding houses to buy in today’s competitive market. They are maximizing their chances of locating houses to fix-n-flip by paying Uber drivers to identify homes on their routes that are ripe for flipping. This cuts down on the amount of driving and scouting the real estate investor has to do to find potential homes to buy, and the Uber driver makes some extra cash.

Uber drivers take a picture of a property using an app developed by DealMachine, LLC. The app uses GPS and county online property records to identify property owners. The DealMachine website in the Google app store says that the app “is the fastest growing solution for investors and agents who want to build their own marketing list and find local deals.” It advertises that you can “See a run-down house, find the owner, and flip it for a profit.” Their app gets in touch with the property owner via direct mail or e-mail. The app user instantly sees the owner’s name, phone number, and e-mail address to contact them on the spot.

Driving for Dollars

Homes that have owners that might be eager to sell include houses that appear vacant and those that have newspapers piled up and a “for sale” or “for rent by owner” sign in their un-mowed front yards. Uber drivers take pictures of the houses and submit the referrals when they are not driving a client.

Some real estate investment companies pay the Uber driver a hefty commission if a lead pans out and others pay some for each good lead and more if a referral leads to a deal closing. One Uber driver interviewed by the WSJ writer has sent in 400 photos and has not had any of her leads close yet, but she says, “I understand real estate is a numbers game. What do I have to lose? I’m driving around anyway.”

REI Capital Resources is a direct lender as well as a broker of funding solutions. We offer short and long-term financing options for real estate.

Please give me a call when you find that perfect real estate investment and know how much money you need.

Patrick St.Cin


Parker, Will and McWhirter, Cameron, Uber Drivers Seek Extra Cash Working for House Flippers,

WSJ May 28, 2019 0feffffff0

Taxes: Buy/Flip or Buy/Hold

There is no way around it, when you consider investing in real estate, or anything else for that matter, you need to do your homework to keep your investment safe and avoid surprises.

First, spend time with yourself to define your goals and then, spend time with the math to estimate the costs carefully before you invest. Everything costs something, but somethings are worth the cost.

First your goals: Ask Yourself:

“Do I want to get my hands dirty?”
“How involved do I want to be?”
“Do I want a single pay out of profit”
“Do I want a steady stream of income?

The buy-n-flip model of buying a distressed house at a low price, renovating it, and reselling it for a profit within 12 months is usually pretty hands on. If you don’t actually do the remodeling yourself, you will be supervising your contractors, so you get quality work, on time, and within budget. The Fix-n-Flip model will give you a one-time pay out, and if you did your preliminary market research properly, it will give it to you quickly, in less than a year.

The buy-and-hold model of buying houses, fixing them up or not, and renting them out will give you steady income. In this model, an investor can choose to rent the property out or occupy the property. There are varying levels of involvement for the investor to consider. Landlords are investors who own one to three properties and manage them themselves. This is the hands-on level. Portfolio Investors own four to ten rental properties and hire property management companies to manage them. This level of involvement is less hands on. Turnkey investors are the least involved personally with their investment, they purchase a property that already has a tenant and management company in place. Basically, only their money is involved.

Different Taxes

One of the cost differences between investing in fix-n-flipping and investing in fix-n-holding is the income taxes that you will have to pay on the profits. According to, flipping houses is generally not considered passive investing by the IRS. Most real estate fix-n-flippers are considered dealers by the IRS. A real estate dealer is defined as someone who purchases real estate and sells it to customers “in the ordinary course of business.”

Ordinary Income. Profits on flipped houses are treated as ordinary income with tax rates between 10% and 37%. The profits you make are not considered capital gains with the lower tax rate of 0% to 20%. Taxes for flipping also usually include self-employment tax, which is 15.3%, double what you typically pay as a W2 employee.

Capital Gains. On the other hand, according to, profits made from properties held more than 12 months are typically subject to more favorable long-term capital gain tax rates ranging from 0% to 20%. This profit is also subject to self-employment tax .

Keep Your Receipts

The answer to handling the tax expense for a fix-n-flipper or the fix-n-holder is to think like a business; budget for the taxes in your expense calculations and take them out of your expected profits so the return you expect is realistic. And, keep excellent books. You will want to itemize your deductions and income in either type of investment so when it comes time to calculate your profit for tax purposes, you can determine your profit by subtracting your expenses from the final sales price. Keep your receipts. If you keep no records, you might have to pay taxes on the entire amount of the sale, not just on the profit.

white graphing paper

REI Capital Resources is a direct lender as well as a broker of funding solutions. We offer short and long-term financing options that are perfect for buy-n-flip projects or buy-n-hold projects.

Please give me a call when you have the perfect investment in mind and know how much money you need.

Patrick St.Cin

4 Most Common Mistakes that Slow Down the Loan Process

Getting a property financed can be an overwhelming process. Sometimes borrowers don’t recognize the bumps in the road that will derail their project plans and loan schedule. Here is a list to help you see and remember the small, but important, details involved in getting a loan. These are the most common time sucking land mines that drag the loan process out (or even cause disqualification) along with tips to avoid them.

  1. Scheduling & Anticipating the Appraisal

Loans officially start when they are put into processing, which does not happen until appraisal reports are turned in or the application fee is paid. A loan will be delayed if there is an issue getting the appraisal. Sometimes a borrower will schedule an appraisal when the property is not available or repairs/rehab are incomplete. For example, someone may live in or on the property and will not allow the appraiser access to the property. The loan will be delayed if this happens. If the appraiser arrives and finds the home in the midst of rehab, the loan will also be delayed.

Another bump in the road related to the appraisal occurs when the value of the property is based on too little research. This usually leads to an inflated initial value. If the appraisal comes in lower than what the borrower expected, this will delay the loan process and can even halt it altogether.

Key: Be ready, careful, and deliberate about scheduling the appraisal. Coordinate with the current occupants and your contractor.

Key: Be really accurate from the start about the value of the property.

  1. Documentation

Procrastination, my favorite strategy, does not help when it comes to loan documentation; like taxes and even more than hearing protection, documentation is required. It is a terrible idea to wait to start gathering the documents necessary to move the loan process along until the appraisal comes in. Start by making a list of the documents you need as soon as you come up with your project and begin immediately, while the idea is hot, to gather them and check them off your list. Your goal is to have them ready as soon as your loan goes into processing.

Key: Gather the necessary documents when your idea is hot.


  1. Hazard: Wrong Policy Type or Amount

You might not think of hazard insurance in connection with your loan but obtaining hazard insurance is a very important component to securing a loan. Carefully study the types of coverage available and don’t just buy a policy to say you have it. Buy hazard insurance that covers 100% of the replacement cost of the property and calculate the premium carefully. Often the wrong type or amount of coverage is purchased, which will not only slow the loan down but can also potentially change your loan parameters (up to and including disqualification).

Key: Know your numbers. Buy hazard insurance that covers 100% of the replacement cost of your property

  1. Title Clouds

Liens, judgments, delinquent taxes, and mortgage releases are all common things that show up on a title. These things take time to clean up and drag the loan process out. Be sure to check your title for these attachments before you start your loan. If you have any clouds on the title, you’ll want to clean them up asap to keep your loan on schedule.

Key: Start early, Clean up the title ASAP.

Patience may be a virtue, but it is one that is often tested when you are eager to close a loan and get on with your project. To save your dream and your nerves, follow these tips: coordinate the appraisal, be accurate on the value, gather the necessary documents, buy the right insurance, and clean up that title.

I would be pleased to give you a hand, and I have funds available for lending.


Austin, Texas


Photo credit: Niklas Bildhauer CC BY-SA 2.0 (


I recently added an Escrow Glossary of Terms to my website. You might want to check it out. The first word is a rather sad one, “abandonment.” Of course, the list is alphabetic. “Abandonment” is an official term in real estate the means the voluntary relinquishment of rights of ownership or another interest (such as an easement) by failure to use the property, coupled with an intent to abandon (give up the interest). This subject is relevant  because in your search for a fix-n-flip project to invest in, you might run into a house that looks abandoned. It may be. It may not be.


Intention to Abandon

According to the Letter of the Law, volume 13, number 4, 1999, by Judon Fambrough, “an essential element of abandonment is the intention to abandon and such intention must be shown by clear and satisfactory evidence.” Judon goes on to say that non-use and failure to maintain and repair property is not sufficient evidence on its own to prove abandonment.

While title to real property cannot be lost by abandonment, it can be lost in other ways. Land title can be lost by adverse possession when another person possesses and uses the property without permission for a specified time. Real property can also be lost by forced sale when a sheriff sells the property for delinquent taxes, a trustee sells the property for delinquent mortgage payments, or a homeowner’s association sells the property for unpaid assessments.

Adverse Possession

On the website, David J. Willis explains that adverse possession refers to circumstances under which one may lawfully lay claim to ownership of property not originally one’s own. Classic examples include the rancher who fences in an adjoining tract and pastures his cattle there for a decade and the family that gradually takes over the empty lot next door.

According to Willis, foreclosed houses are often perceived to be abandoned because they are sitting idle. These houses are not abandoned and the courts have tended, he says, to protect the interests of the absentee lenders who are now owners.

Facts and the Law

Everything about an adverse possession claim must be based on facts and the law. For one thing, to make a legal claim of adverse possession, you have to have a legal description of the boundaries. The boundaries cannot be uncertain. Paying taxes or back taxes on a property does not guarantee possession either if the original owner shows up, it does however prevent the eventual sale of the property in a tax sale. If a title search reveals an owner of record that can be located, it may be better to contact them and buy their interests.

Willis also says, the law is does not condone or contemplate the use of the adverse possession rules as a business plan for aggressive investors. This strategy is involves breaking the law, for example, breaking and entering, file false instruments, slander of the title, and fraud.


If you find a house you think is abandon, fall back on my strategies for finding motivated sellers. Knock.

When you find a home that looks abandoned, one that might be up for sale if you can find the owner, knock on the door. Knock on the neighbor’s door too. If no one answers, ask about what is going on with the property. Leave behind your business card. Write down the addresses and research the property from your computer. Write about the house in your journal of prospects and follow up every month. You can keep an online journal too, photographing the house and making notes to help you remember to follow up.

Remember the door hangar. It can be something simple that you make yourself with a hole punch and rubber band, or something you more polished that you order form an online printer. It should say something like, “We buy houses. Call 512-555-1212.” If no one answers when you knock, leave one of your door hangars.

When you have contacted the buyer and have done your research on the value of the property and know how much it will cost to remodel the property, I can help you with a loan program to purchase. Your fix and flip or rental property. I am happy to announce that a loan program is now available to purchase rental property for the purpose of building your short-term or vacation rental property business.

We have funds available for single-family residential property, condos (warrantable only), and ocean beach front property.

I would be pleased to have you call or e-mail too.


Pat St. Cin


Austin, Texas


References website, David J. Willis

Letter of the Law, volume 13, number 4, 1999, by Judon Fambrough

Finding Houses to Buy and Owners to Sell — Strategy #3

When you are looking for properties to buy and owners that are ready to sell, there is nothing like using all your contacts and making new contacts to help you find houses that are ready to buy and owners that are ready to sell. In this strategy you ask others to be a detective with you.

The Mail Carrier and the Dog Walker

Enlist the help of others who can refer you to people thinking about selling their place and moving on, including landscapers, general contractors, cleaning/maid services, dog walking services, pool cleaning guys, mail carriers, etc. There is a whole raft of professionals, like these, who regularly service homeowners. Get to know them, cultivate relationships, keep in touch with them; it can pay off big time for you and the seller.


dog_walker_in_parque_mexico_-_condesa_district_-_mexico_city_-_mexico_6480181701.jpgDistressed Sellers

You can also draft a letter on professional letterhead and it into the hands of a real estate office in your area. Explain you are a real estate investor looking for distressed properties and can close quickly if the price is right.

You might ask, “What is a distressed property.” Well it is a distressed owner that makes a distressed property. An owner who really needs to sell for whatever reason becomes distressed when they cannot get the deal completed. We’ve listed some of these distressed owners in our previous blogs. They include people who can’t afford to make their mortgage payments and are under threat of foreclosure, people with tax debts that have required them to sell the property, and estate executors and estate lawyers for deceased property owners. They are all people, some facing divorce, some facing the loss of their job, some being transferred. They need to sell and often need to sell quickly below market value. You are willing to buy and that is a help to them. You are getting a great deal and they are unloading a headache. It is a potential win-win situation.

The Real Estate Army

By contacting the real estate agency, you can have an entire army of real estate agents working for you, free of charge.  If one of them finds a property for you, the seller of the home will pay the agent’s commission. You owe them nothing; it comes off the seller’s side. Promise to use them as an agent when it comes time to sell the home you just fixed up.


Remember this business is a numbers game.  The more you detect, the more you find. The more you market the better your chances for success.  There are plenty of opportunities in your metro area to find sweet deals that will make the owner happy, you a bit wealthier and the neighborhood happier for renewing a distressed house.  It is a win, win, win business.

As soon as you find a deal, give me a call for a loan fix-n-flip rehabilitation loan. You can e-mail too.

Pat St. Cin


Austin, Texas

Finding Houses to Buy and Owners to Sell — Strategy #2

When you are looking for properties to buy and owners that are ready to sell, the internet is your number 1 detective tool even when you are looking for local properties. Your second most valuable tool in this search for houses to buy and owners ready to see, is your phone. I’m sure you use these everyday already, but just in case you have not considered all they can do for you, I’ll run through my list here.

For Sale By Owner

First search Craigslist ads (for example,,, local online newspapers, and even real estate sites like where you can find properties offered by owners. You can wing it too by typing into your browser window, every combination of key words with locations that you can think of related to houses that might need work and owners that might be ready to sell like with a location:

  • Fixer upper housing
  • houses for sale
  • must sell house
  • house for sale that needs work
  • vacant house for sale
  • real estate by owner
  • seller financing
  • FSBO (for sale by owner)
  • motivated seller


Properties Being Sold for Taxes

You might also want to look at government and auction websites where you might find houses for sale and motivated sellers. Some of these include:

 Probate Properties

Probate properties for sale are another possible place to find a deal. Probate properties are owned by the estate of a deceased homeowner and are often sold below market value to property investors and potential homebuyers. The process of purchasing these properties can take anywhere from 6 month to several years.

You can find these properties from a real estate agent that might be hired by the estate executor to disperse the property of the deceased. You can also find them with probate lawyers. You can also contact the local court directly and ask for a list of all probate cases filed within the previous six months. There is probably an online docket you can check as well (for example, Contact the attorney for the estate or the executor. This information should be on the docket sheet maintained by the court.

Contact each representative directly and ask for information on the status of the property, how they are handling the sale, and whether an asking price has been established. If the executor is motivated to sell, they may negotiate with you directly if the court has already approved the asking price.

Some estate properties sell at public auctions which are advertised. These however often sell at or above the market value of the property.

If you make an offer, you will have to put 10% down and be aware the court will have to approve the selling price. For more information about buying probate properties see

After you have accumulated a list of houses, you need to start calling and setting up appointments to visit the property and discuss the purchase. Don’t forget to request an inspection. When you have a price, give me a call for a loan. You can e-mail too.

Pat St. Cin


Austin, Texas


BE AWARE: Part 1

When making a commercial real estate transaction, whether as buyer, borrower, or lender, you really need to do your research into the property’s current and past uses and potential environmental issues. Remember hard money loans are offered based on the value of the property. So, you want to look carefully at anything that affects the property value now and in the future.

This type of look around and document is called a “due diligence” assessment. As the purchaser or mortgage holder, you want to compile information and investigate the property you are interested in buying to make sure you are aware of any issues with the property that will affect your financial outcome. And, you want to do this before you buy.

Just as you would look for issues with the property’s title, such as judgments and liens, on the financial side; and on behalf of your future renters and buyers, check out the safety of the neighborhood at night; and again on their behalf, inspect the road for gargantuan pot holes that might eat their Prias or VWs; you also want to look at the property itself and at its current and past uses for your own sake to make sure you are not inheriting any costly environmental issues that you are not prepared for.

Cleanup Will Cost You

Environmental contamination, such as asbestos, PCB’s, radon, leaking underground storage tanks, mold, mildew, and lead-based paints on a property can cause the cost of “fixing” the property to explode so you want to be aware of these situations and prepare for them or walk away.

The official name for the investigation into environmental hazards and liabilities on a site is called a phase I environmental assessment. It determines in a methodical way if there is any environmental contamination or hazards in a building’s region or within the building itself. There are many professional firms out there that do this kind of work and one may have already been done on the property you are thinking about.

Get the History

The environmental site assessment typically addresses the history and current conditions of both the underlying land as well as physical improvements to the property. This assessment would scrutinize the land for soil contamination, the groundwater and surface water for contamination and quality.

It would look at the structure or structures on the property you are buying. Are there abandoned drums of unknown liquids or materials, an unlicensed dumping ground in the woods in back of the house, contaminated water wells nearby, or chemical residues, asbestos, mold, mildew, or other hazardous substances in the basement?


Abestos (tremolite) silky fibers, photo taken at the Natural History Museum in London by Aram Dulyan, public domain, Wikimedia commons.

Neighboring Properties

The phase I environmental assessment would also evaluate if there are contamination risks on neighboring properties that might affect the value of the property you want to buy. Before you invest in the formal environmental assessment, you might want to do a little sleuthing yourself to see if you want to invest even that far  You can start by performing some visual inspections and record searches yourself.

Walk around the neighborhood and take notes on what is nearby, within a half mile or a mile. Are there hazards or attractions in the vicinity?

Review Federal, State, Local, and Tribal records of the property using its GPS coordinates and review the records for properties up to a mile away.

Interview people who are knowledgeable about the property, for example, past owners, current owners, managers, tenants, neighbors.

Fires, Floods, Mud, and Spills

Examine municipal or county planning files to check for prior usage and permits granted and conduct file searches with public agencies, such as the fire department, state water board, county health department. Ask yourself, has a previous building on the site burned down? Why?

Examine historical and aerial photos for previous and current structures in the vicinity, like an old rail yard, military base, or gas station. It is a good idea and sometimes even fun to look at photos back to a time when there was only bare ground at the site.


USGS Topo of Lake Conroe, Tx and vicinity, public domain, Enter a caption


Debris flow in Ladakl, India photo by Dan Hobley, Wikimedia commons.

Examine USGS maps and look at the drainage patterns and topography. We have seen enough in the news lately to make us aware of the dangers of floods, mudslides, fires, and hurricanes.

Where one of these has occurred, it is likely that another will follow sometime down the road. Ask yourself, has this property been flooded before or does it lie in a floodplain or an arroyo?


If you are considering lending money on a property, you might want to take into consideration the requirements of the US Small Business Administration’s 504 Fixed Asset Financing Program. It requires specific and often higher due diligence requirements than regular real estate transactions. These assessments are required for certain NAICS codes that associated with the prior business use of the property. There are 58 specific NAICS codes that require Phase I Investigations. These include, but are not limited to: funeral homes, dry cleaners, and gas stations. According to Wikipedia, “The SBA also requires a Phase II Environmental Site Assessment to be performed on any gas station that has been in operation for more than 5 years. The additional cost to perform this assessment cannot be included in the amount requested in the loan and adds significant costs to the borrower.”

The US Department of Housing and Urban Development also requires a Phase I ESA for any condominium under construction that wishes to offer an FHA insured loan to potential buyers.

Remediate or Remodel?

All of this detail is indeed not meant to scare you away from buying real estate to remodel and resell or to remodel and rent. It is only meant to make you aware. It is trendy and even admirable to consider buying old junked up industrial property down by the river or in the mining district and turning it into polished urban housing or shopping pavilions.  If you have ambitions in this area, be sure to look around carefully, do your research, know your costs, and have money ready to remediate the site for you are probably looking at more than a quick remodel.

Disclaimer: I am not providing environmental advice or investment advice.


Austin, Texas