I am new to real-estate investing and need some advice from the pros on this board.
Here is the deal. I have been hounding a guy for about 6 months to buys his house!
Today he called and wants me to make him an offer asap!
It seems he is around 10 months behind on the mortage and has only 14 days untill the bank proceeds with the forclosure process. He owes around 10K in back payments.
I have looked at the house and overall its not in terrible condition. It needs some basic repairs but off hand it should be less than 15K
Here are the details and my questions.
Location: Allen, TX
ARV is around 230K
SQFT - 2700
Built in 1996
Original Loan - 140K ( pulled from county records online)
Payoff Amount - unknown ( he has not disclosed what he owes)
Repairs - around 15K
Past due mortgage - 10K
Fence - 8K (The HOA replaced his fence - I’m sure they will put a lien soon)
Questions
With only 2 weeks left before the forclosure process starts how should I approach this deal?
What would you do?
How do I check for liens?
If I close the deal before the HOA puts a lien will I still be liable for the fence cost?
IMO, you should offer him whatever he owes, plus 10K. Even if all you mentioned including that 10K its only around $175K. If its worth $230K, there’s a good $55K.
Before you make an offer you may want to get ahold of your title company and have themdo a title search. It will show any additional liens that have been registered against the property.
You don’t want to find out after the fact that there are liens that take up all your profit.
I would get a Release of Authorization to speak with the bank and make and offer to the seller with a contigency clause (buy your house upon clear title research or else I’m out of the deal). Then if both of these are accepted by the seller, then you may be able to buy some time from the bank and have the title research (due delligence) done along with setting up your financing. Theres more to this story, but that is the basic to it. Theres going to be a lot of ifs but the main thing is to make the offer YESTERDAY and have the Release of Authorization signed YESTERDAY!!! Get the point?..
Wish ya luck, my email is available if you have more questions!
The house is in forclosure - and will be auctioned off in the 1st week of december.
I did a title search at the clerks office - Their is a 10K lien from the HOA.
Question…
If he accepts my offer can I use traditional financing to buy it? This is the way I would like to go but concern is that there is not enough time to go this route.
If I pay cash…
Where do I start? Who do I contact to get a contract written, title searched, liens paid off, etc?
I’m sorry but your going to need to make your email address, “Unprivate” or send me an email to mine by looking at my profile. I was exactly where you were at 2-3 weeks ago. I know your anxious and probably have nobody to answer your questions. I can tell this will be a back and forth kind of thing. I’ll answer as much as I can.
HOA liens cannot be shorted, they are similar to prperty taxes. THey always want their money to. Get a Authrization t release info from the HO. Fax the letter to the bank. Call them monday to verify that they have the letter. Talk to them. Tell them you want to buy the prperty and to postpone the sale.
ARV = 230,000
Balance Owed = -84,000
146,000
HOA Lien = - 9,000
137,000
Repairs = - 10,000
EQUITY = 127,000
Do you know if the balance owed includes the fees and back payments? Unless my math is wrong, not including closing costs: I would say if there is this much equity in the property I would say get a hard money/private money loan to pay it off. Once you finish rehabbing. sell it
Lord have mercy, if there is $127K in equity, get it under contract, now! Submit the contract to the Title Company. Make sure you put “and/or assigns” so that you can assign the contract. Give yourself an out in the contract - like $10 option in the Texas TREC contract. Get the authorization to release information and get info from the bank. Get your hard money lender lined up. With that much equity even after all the encumbrances are paid, I’m sure you could assign it to another investor & make $5-10K and not rehab if you didn’t want to. Then if you want, you could take a portion of your profit, say $500 and help the seller relocate (moving costs, etc.).
One other thing. B/w you and the owner, figure out the repairs needed, and then you can call a contractor & have them come out & give you an estimate. You can use the contractor for your rehab, or provide the estimate to your buyer on an assignment.
