My buddy is a LO and he came across a person he was looking to refinance to prevent a 4closure…Unfortunately he could do nothing for them. He called me b/c he knows I do some investing…They owe 98k for a 2flat in Harvey Illinois…It is worth roughly 130k…Please advise what my next steps are…We are pulling title on it to make sure there are no liens…I was thinking I could contact the homeowner, have them sign the consent form, so I can have access with the lender…Then I could make an offer of 3-6k in exchange for them signing over the deed to me…After I get the deed signed over, I would then call the lender and bring all the payments current…From there I am free to see it to someone else…Let me know if this is even close to the process…I am eagerly waiting any replies…Thanks
The only problem I see is a possible violation of their privacy by your friend if he gives you their number and you call them. He should give them your number and they should call you if they are interested. Other wise your LO friend would be violating privacy act laws that protect the loan application process and credit reporting laws that I am sure you are aware of.
Ted, thanks for the follow up. I should have prefaced my post with saying that during the clients and my LO’s friends conversations it came up that selling to avoid foreclosure was an option. Me and multiple investors names came up and the client asked for my number, probably as well as theirs and said he would be reaching out to people. In my haste to get the x’s and o’s of the process down, I didn’t give specifics of the entire story…But thanks for making note of that and giving me an opportunity to clear up any ambiguity about the facts,as well as the entire situation
First, PLEASE, look at the numbers here a little more.
Sure, there might be a deal, but you need to gather all info, and do not go in thinking, “I;ll just give them $3k-$6k for the deed” and then resell.
You say they owe $98k?
Now, add in any arrears, and fees etc.
You will need to get a resinstatement amount from the lender.
Since Illinois as a rather long foreclosure process, these folks very well could be behind THOUSANDS.
So, assume they owe $98k, you pay them top end, $6k, ($104k so far), then arrears, even small, say 3 months, another $2k-$3k, then, repairs, maintance, marketing to sell, carrying costs etc, and you are stepping into a property (assuming your value is accurate), then this leaves you with a VERY small margin.
so, verify numbers, such as value, arrears, mortgage balance, rate, insurance, taxes, repairs, vacnacy rates, if there is a security deposit with the existing tenants, and what they pay in rent, and how well.
come back here with that info, and someone can surely help you further.
Just make sure you buy a deal, not just sign up a transaction because the sellers are willing to be creative.
Good luck, and HTH,
Howdy Jim FL:
Great points. I have seen some that are 4 years in arrears and owe an additional $100,000 on the property. I made a mistake and assumed that they knew all this . I made the mistake in making the assumption. Never assume anything in doing deals as it will come back to bite u in the butt.
Jim & Ted, Thanks for the feedback…
This is the type of info I am searching out…I found this site about 20 days ago and have been an avid reader ever since and putting the info into action. Thanks for cutting to the chase
Since my first time loggin in to the forum I have started a 4closure mailer, with 5000 postcards from PK Graphics. Their turnaround time was amazing, 2 days. I ordered 50 bandit signs from banditsigns.com, also and idea I picked up from the forum…Finally I picked up the pre-foreclosure letter from John Micheal and when I get my stationary I plan to start sending those out as well.
In regards to this property I already have my exit strategy…Once I verify what it owed,arrears,reinstatement fee and the like, if it still makes sense I will offer as little as possible cash to the seller… Once I own the house my plan is to sell it to an investor who would like to rehab and rent it out Section 8…I have completed a decent amount of flips in the last 18 months and I know some investors who are as eager to do their first flip, as I am my first sub 2… I plan on securing them the initial loan, plus the construction loan…I will give them access to my contractors, and I have entertained the idea of serving as the project manager for the rehab portion…
This way I make money money on the purchase and can get out of the deal in 45-60 days from when I get the deed…Thoughts??? Again, the more detailed the better…I’m new to the sub2 aspect, but I see it as a way to make the same margin(or at least 70%) that I make on flips…w/o the 120-150 turn time that it usually takes me to get a contract accepted,close the deal,complete rehab, find a buyer, and then close that transaction…
Thanks for all of the feedback
who is john michael?
John Micheal is a frequent poster to the site and from the posts I’ve read, he breaks it down to practical situations where his posts make a lot of sense…