Diary of foreclosing on a note...

[Deanna O.]

Feb 2019. Just purchased my first distressed note 2 weeks ago, started foreclosure this week. So far so good, and all the paperwork makes sense. Now it's just a waiting game. Won't know what rehab is needed until I get inside.

ARV is @$97k, there will be @ $80k owed at auction (notes, back taxes, foreclosure costs, outside clean-up) . On current market it MIGHT sell for $50k. Not sure how much work it needs inside. The debris might have protected the walls from some kinds of damage. I'm hoping it's not a gut-to-the-studs.

Plan is to do a Buy/finance/rehab/keep as rental. Initial purchase & expenses before actual foreclosure auction are all cash (I may disclose all # once the deal is done). House is in unappealing condition - no water, no power, FULL of trash, debris, & vermin, but still occupied...neighbors not happy. It's THAT house on an otherwise OK street. The street has about 12 HUD homes from the early '80s. It's in rural far Northern CA in an old gold mining town @30 miles south of the Oregon border near Interstate 5. Winter has snow, but it doesn't stick around long.

Diary;

Feb; Occupant tried to sell house as "owned free and clear" by his mother. After due diligence I purchased the notes from the daughter of the original lender. Son of original borrower quit paying mortgage in mid 2017, taxes unpaid since 2012. The county has the property under tax lien, scheduled to go to tax auction in mid-May. 

March 2019. Default paperwork was filed Feb 28. 90 days on the clock until the "Trustee Auction" date is set (so looking at last week of June for the auction date - AKA "Auction on the Courthouse steps").

April 8 - Just got back from my first look at the outside of the house. Trash pile by side of house is only 3' high, not 4'. Woohoo! Was a bit concerned after seeing the trash from space (ie Google earth satellite photos). Many fewer cubic yards of garbage than I'd originally thought. Haven't seen inside, & insurance co. is cancelling my insurance 25 days from now due to the "state of the property". I will be cleaning up the outside only on my next trip on the 19th, agent says insurance co should restore policy if ALL listed issues are fixed before the cancel date -outside trash, weeds, broken windows, peeling paint on facia (!?!?!). May use a tractor for the trash to avoid handling it.

My plan is to return 4/19. Occupant is still in property, but is being fairly reasonable about the clean up. His friends have already done some cleaning. The property is very under water, and he's unable to muster the $ or effort needed to keep it.

Will keep posting...