Working with Pre-Foreclosures?

[Daniel Lee]

Hey guys! So finding a deal with enough meat on the bones in the Los Angeles area is tough (for me, at least), so I've started to look at foreclosures. Now, I know foreclosures can be tough, but I've been focusing specifically on pre-foreclosures. Correct me if I'm wrong, but is this the overall procedure? 1.) Find a property in pre-foreclosure with decent equity (<75% equity, lower is better) that has NOT gotten to the auction phase yet. 2.) Perform my analysis on the property to ensure the numbers make sense. 3.) Due diligence to find out if there are any secondary/additional liens on the property 4.) If free and clear, contact owner by any means necessary and negotiate a purchase. - Example: ARV is $450k, current mortgage balance is $190k and default amount is $45k. I'd offer $250k to pay off their mortgage and they get $60k (roughly), giving me about $200k in equity. 5.) Financing depends on exit strategy - hard money/equity partner for rehab/retail or wholesale. I'm not sure if the short sale process kicks in, since the owner still has the right to sell before an auction kicks in. Anyway, let me know your thoughts!