This may be a crazy question.
In the forclosure process do you have up until the property is auctioned off to try to get it from the owner instead of waiting until the trustee auctions it off?
Also what is the best financing to use when acquiring a pre-forclosure property that may need less than $5000 of work and has a market value of 450,000.00, but I’m not sure how much they are behind on payments and what taxes are owed because I’m still trying to locate the owner
From my understanding you do have up until the property is auctioned to get the deal done. In fact, I read somewhere that most deals actually occur right before auction. The in between time is still a hopefull place for the homeowner to think they can get themselves out of the mess.
As far as the deal. Its really important for you to know what the back payment amount is. Are there liens on the property? You have to get the financials to put the deal together. I recently did a deal just like this just a smaller home value:
Mortgage: 269000
Back Payments: 11000
Liens: 0
Comp Value: 320000
I gave the owner two options. I always try to give them options. Rather than them saying no, they tend to choose one of the options.
A. Sign the deed over. Ill make up the payments, SAVE you from foreclosure, and I will pay cash for your home in 30 days.
B. I will take an option to purchase the home in 30 days and will not make up your payments . and the purchase price for both situations would be the balance of the loan.
Usually, I always try to give the owner something, no matter how little… Its about being able to help people while you help yourself. However, there wasnt enough equity in the home to allow that.
Let me also be clear when I offered to make up the payments I had no intentions of making up all four payments she was behind. At best I was going to pay 2. That gives me time to get the home sold without worrying about being foreclosed on.
She took option A. I gave her 20 for the deed, and am in the process of selling it now.
nwphew, What state are you in?
In Virginia
Ashley is right, in Virginia the borrower can reinstate the foreclosing lien right up to the sale.
If you plan on fixing it up and selling it quickly then private money is a good way to go. You’ll need enough cash to give to the seller (if any), pay the backpayments, do fixup, and make the loan payments while holding it.
Your profit is based on the sales proceeds less the borrowed cash amount + interest/fees, sales costs, back taxes, and paying off the loans. Obviously it should be big enough to go through all that effort.
You should be able to draw up a deal analysis to show to any investors.
If you’re going to hold it then you can actually use two funding sources; investor and lender. The investor quickly gives you the lump sum for cash requirement and would want a % return fairly quickly. Your private lenders would just want to get interest payments on their money. These are usually older folks who think CDs are a good investment. So you use your investor to buy and fixup the property and your lenders to pay off the investor and receive a return from the rents (cashflow .
Good luck.
Thank You all for the help. I really appreciate it