wholesale issues

Bird Dogs, Wholesaling
1

got a call from an investor interested in getting rid of a property:

He purchased a property subject to in 2009. He paid $8000 for deed and deed is recorded.

The property came with a $50k defaulted mortgage that the bank has not proceed to foreclosure with this, yet.

5K in water
4k in back taxes
2k in gas
no actions filed yet for the above

we have a title search that returned 26 judgments against the previous owner but not against the property

tenant in property that is not paying rent

should I offer him minimal amount to deed to me?

what are the options here if any?

2

Hi,

This is a Rats Nest!!!

Run JBARRY5, Run!!!

Don’t look back, don’t pass go, and don’t collect $200 dollars!

              GR
3

Why would you even consider buying such a house? Do you know anything about real estate investing at all?

4

Before I echo the sentiments of others, how much is the house worth (after-repaired value) and what kind of condition is it in? That’s key.

I figure it’s not worth enough, if it was the investor who’s selling it wouldn’t be trying to give it away. But say if the ARV is say, $150k you could get it under contract for what’s owed on it ($61k) then flip it to another investor for say $70-75k.

5

Doesn’t sound like this is worth anything.

6

You given me enough info to scare me and to raise a red flag but I’ve intentionally got involved in a couple of deals like this that turned out to be quite profitable.

Step one, get a $1 option and require the owner to start eviction, if he really is an investor he should have started this already. Step 2 deal with each problem, one by one, but only if the value of the property is acceptable when done and the total purchase price total is less then say 50 percent of a quick sale price depending upon where ever this property is. Would be nice if this site had a location for each poster to give us a clue seeing as the posters aren’t bright enough to let us know where the problem is occurring. Yes not nice, but do you expect the same answer for war zone Detroit as you do for Beverly Hills.

7

I agree. Before I write off a deal as hopeless I want to know all the facts. If the seller is motivated, 9 times out of 10 there’s SOME solution to the problem that can result in money in your pocket.

Liens, judgements, defaulted mortgages are all just a part of the game. These can usually be negotiated for pennies on the dollar. Evicting a non-paying tenant is part of the game as well. These are just normal problems that can be worked through. As long as you have little to nothing at risk, and you see a realistic profit, and have a couple of good exit strategies mapped out just simply deal with each problem one by one like Bay Area Brian said.

The biggest problem I see here is if he needs to do a short sale…he will need the full cooperation of the person who’s name the mortgage is in. By this time that person has probably washed his hands of this whole thing. I’m dealing with a similar situation right now. The bank will only deal with the person who took out the loan, not the person who actually purchased the deed sub2.

8

Thanks for the replies.

Property in Phila, ARV is 81K, based on last 3 like properties sold in the 3 block area. estimate repairs of 10K.
current owner wants to walk will sign deed over for nothing.
Owner has not started eviction because he does not have required rental license and taxes are unpaid. He needs to be current to file eviction in PHL
he has a signed authorization of the mortgagor to speak to bank.

targeting 30k to bank in short sale based on negotiating 7 closed short sales this year so far.

I put an ad on CL for 45K cash only and got 7 replies.

Is there enough room here for acceptable profit?

If I can sell for 48K which is 60% of 80ARV
Closing costs 4K
Carrying costs 2K
Title Cleaning 2K
Gas arrears 2K
Taxes 4K

looks like I could net 4k out of this?

what else am I missing?

9

Hi,

 If the current owner has made this a rental property the bank (Lender) is not going to do anything to short sale or modify his loan, that is the bottom line to it!

In order for a property to meet the lenders criteria for a short sale current owner must be owner occupying the property, must have a reason to ask for a short sale (Loss of Job, Health Reasons, etc.)

The lender will not and can not help an investor with a portfolio property to do a short sale, this property is an investment and not owner occupied!

I don’t know why you would even bother as $4k is not worth it to do a short sale, especially considering when the lender finds out it’s an investment and it’s leased!

                    GR
10

Hmmm…I don’t know about that one GR. From what I have gathered, banks will simply do whatever in their best financial interest. If that means shorting a mortgage on a rental property they’ll do it. They don’t want to own rental properties any more or less than they want to own owner-occs.

IMO the key here, as I stated earlier, is JBarry5 will need the full cooperation of the person who’s name the mortgage is in. That person HAS to be on board. The bank will need their borrower’s financials, hardship letter, paperwork, etc, who in this case is not the person who owns the house.

The way I see it, if the original borrower is cooperative and if JBarry5 has the time to work this thing it may be worth a shot. Heck it’s a free house and it already has equity!

  1. get it under contract or better yet get the deed (record it in a land trust)
  2. do whatever it takes to get that deadbeat tenant out
  3. get all the paperwork from the seller and the original owner including a signed borrower’s authorization
  4. try to negotiate a settlement with each & every entity that has a lien against the house, including the lender
  5. sell it…if you get it negotiated down cheap enough wholesale it for cash…otherwise list it on the MLS and flip it to a homeowner for a discounted price, if it’s not in too bad shape

Oh and don’t put ANY of your cash in the deal for ANY reason.

11

Hi,

Ok, NSU buddy, I don't completely disagree with you however I talked with a friend tonight (Tried to get ahold of him last night) who works in Management for B of A handling Short Sales and Modifications.

He told me tonight that the only time B of A will step in to help an investor with a rental is when that investor is in default on all of his properties (Notice of default has been filed) and has a legitimate reason for the financial meltdown!

This includes the primary residence and requires the investor to submit 2 years of bank statements with the hardship package! Investor must also sign a declaration that he has no other capital and no ability to continue to own and pay for his properties! (Excluding retirement savings accounts exempt under federal law)

Now he does not specifically know what other banks and lenders are doing but he suspects that lenders are not helping investors by any means and probable has similar requirements before considering whether to step in and allow a short sale!

It has never been the banks intention to step in and rescue investors, as the bank would rather if investors made bad decisions to force a foreclosure as it allows for potential collection of a deficite and places the foreclosure in there credit report for 7 years.

                      GR
12 
                    GR

[/quote]
Hmmm…I don’t know about that one GR. From what I have gathered, banks will simply do whatever in their best financial interest. If that means shorting a mortgage on a rental property they’ll do it. They don’t want to own rental properties any more or less than they want to own owner-occs.

IMO the key here, as I stated earlier, is JBarry5 will need the full cooperation of the person who’s name the mortgage is in. That person HAS to be on board. The bank will need their borrower’s financials, hardship letter, paperwork, etc, who in this case is not the person who owns the house.

The way I see it, if the original borrower is cooperative and if JBarry5 has the time to work this thing it may be worth a shot. Heck it’s a free house and it already has equity!

  1. get it under contract or better yet get the deed (record it in a land trust)
  2. do whatever it takes to get that deadbeat tenant out
  3. get all the paperwork from the seller and the original owner including a signed borrower’s authorization
  4. try to negotiate a settlement with each & every entity that has a lien against the house, including the lender
  5. sell it…if you get it negotiated down cheap enough wholesale it for cash…otherwise list it on the MLS and flip it to a homeowner for a discounted price, if it’s not in too bad shape

Oh and don’t put ANY of your cash in the deal for ANY reason.
[/quote]
Thanks! I would not use any of my funds on this. Owner is starting eviction process, turns out the license fee is minimal and the clerk overlooked the tax issue.
All the judgements are personal not against the property, we have a title agent that is knowledgeable and says she can work with it.

Its not gonna be pretty, but it may be worth it.

We have negotiated many short sales in the last few years and oo or noo has never made a difference. The biggest issue issue in a short is LPMI and this file does not have it.

13

Hi,

I think your absolutely right Jbarry5, I am pretty sure the banks are backing us investors, in fact I am pretty sure every real estate investor in the world will not lose a dime this year because of the lenders desire to do what ever is in there best financial interest!

And miraculously there will be absolutely no more foreclosures because it would theoreticly be in there best interest to short sale every foreclosure property!

And provide 100% financing with no money down at 2% interest for 40 years with cash back at closing and new Rolls Royce for every buyer!

And husband’s and wife’s with three kids who were both working and suddenly the husband who lost his job and has no other assets and no savings will suddenly be entitled to a short sale!

There will be no further need to submit a short sale package because it will be in the lenders best interest’s to short sale every property!

There is no further need for lenders to employ a foreclosure department because every property will be a short sale! And all 130,000 current foreclosure department employee’s will become short sale “Approved” stampers for the lender!

There will be no further need to file for default as the home is approved for “Short Sale” the day after the first payment is missed!

The 2011 United States statistics for properties will read Short Sales 1,000,000 / Foreclosures 0.

Every body will become a real estate investor because the lenders have guaranteed investors no loss and everyone including children will become investor home owners!

And oh / yea I am pretty sure the government will grant a vacation to Hawaii for every investor it steps in and saves in a short sale as a consolation prize!

President Barack Oboma promises investors “ZERO” real estate losses and approved rental property “Short Sales” if they vote for him in 2012!

No, I am afraid in 32 years of investing I just can’t believe the Jbarry5 “Short Sale” program!

Good try, but I am pretty sure getting an investment property (Rental) approved for “Short Sale” is the exception rather than the rule! Good try anyway!

But hey, you spin your wheels for a while and I will buy real estate! The key to success is not to get hung up on any one property! And just because there looks like equity, does not make it a good deal!

                     GR