I am purchasing a property from the current mortgage/lien holder for 195k. The property comps are looking like 395k but the home needs roughly 55k in rehab. The property was originally purchase by another investor who ran out of money and ended up in foreclosure so I am buying the paper from the current mortgage holder who happens to be a private investor. The starting minimum bid on the property is $247000 so its a win win for me because if it is sold at sheriff sale even for the min bid I make a profit or if it is not sold I can retain/ rehab and refi or sell for an even larger profit. My question is what are the negatives that I am missing? What are some of the possible pitfalls of this? Any opinions or expertise is welcome. Sometimes you need someone on the outside looking in to see the risks better. thanks (sorry for the long post)
why is the current holder selling? If it’s a win win if you purchase, it’s a win win for him/her now. Did you do a title search for additional liens? Is it the first or second in default? If the numbers are true, it looks like a good deal.
Back to the sale comment…if the sale will generate $247,000 in as is condition, why did the original owner sell when they could have rode it out for the positive equity? Seems too good to be true.
Good Luck.
Search the title…
I asked the same question. The current lien holder is a private investor that is part of a hedge fund. The property has been in default for over 11 months now. They are to the point that they want to at least replenish the funds. they will make a profit of $25k because the original financing was 175k. They are just looking to get their money plus a little back and be done with it to make themselves whole. They are not looking to take the risk of waiting it out further and it not being picked up at the sheriff sale because of the extensive repairs needed and it sitting another month/ two / three etc. Accroding to them theyd rather go for the sure sale now then wait it out and have to hold it longer. It will be a year next month that it has been in default.
But I will take your advice and do a title search. thanks