I know pretty close to nothing about foreclosures. I was contacted by a seller whose house is being sold in 10 days. With two mortgages and a tax lien he owes around $140K total. No comps yet, but the tax value is $190K. Any tips, advice, or steps on tackling this? Again, I know nothing about how this would work. Thanks!!!
Howdy JNanners:
The best way to do foreclosures is to buy the house from the owner before the sale and do a sub2 by curing the default and then fixing up the house and reselling it. Or better yet get it bought and resold without doing any work on it at all.
$50K seems like a lot of equity but if it needs $20K in work and you have to get a hard money loan that $50K will disappear in fees and carrying costs really fast.
Thanks Ted!
Would I need to work with the lender at all? Would I just get the sub2 in place and then the seller would contact the lender?
Thanks!
Howdy JNanners:
Do not give the seller the money for the lender. I would get a letter from the seller giving you authority to deal with the lender. First hand knowledge is far superior and when you send the lender the cashiers check you will know it got there.
There is missing information here that could allow for more creative suggestions:
What does the seller want? Is he willing to sell it to you for 140k?
What repairs are needed, if any?
What are the comps? (very important)
If the answers to above are “Yes”, “Minimal”, and “Above Tax Value” then you could also wholesale it for a quick 10k-12k profit. That would put your buyer at approx. 80% LTV.
TedJr - do landlords like 80% LTV properties if they are move-in ready? What’s the formula for that?
Howdy Bob:
Some pay retail and some pay 90% and some like me only about 80% that are already rented. It is not a whole lot of difference on low priced houses. An example of one I did recently:
Appraised value $30K
Purchase price $16.5
Fix up $4K
Rent $500
No brainer at at about 70% of the appraised value
I would like to do 100 of these but can not find the small loans. Most lenders want $50K minimum