Purchased directly from bank

[Chris Clothier]

I recently purchased 3 properties directly from a local bank and wanted to share it as an idea for other investors. I have had a borrowing relationship with this bank, but do not have any significant accounts with them.

They contacted me with three properties that were in foreclosure. The bank loans were at $290k and I agreed with the bank that a conservative value for the properties was probably $355K and to get that price would probably take 120 DOM (but really - who knows in today's market). All three were currently occupied which meant they probably have deferred maintenance if the owner was not paying on the note.

The bank offered them to me at $225k with no app., no closing fees. I paid the back taxes of roughly $3,000. The bank covered the sellers costs. They combined the three into a loan with 15 year AM. at 5%. Essentially, I just took over the note that they discounted but sped up the pay off from the original 30 year note.

Gross rents today are $3,200 which is low but I won't make any adjustments until current tenants leave. Current payment is $2,004 including tax and ins. Two are located in very nice parts of town and one is in a trendy neighborhood I don't usually buy in.

It seemed like a great deal for me as they are leverage deals when most of my buying today is done with cash. What do you think?

[Robert Dobbs]

Here's another bank story:

Interesting things can happen in December, when you deal with banks.

Usually the last week in December being the end of the "bank's year".

I've heard about it for years now: "Banks getting motivated to clear their books of REOs before the end of their bank year".

But that just went "in one ear and out the other" for me.

Until November of 2009.

Me? Dealing with Florida land and "cruisin' the Net" for deals, back then, I read about 18 vacant lots in Citrus County, Florida that were "bank owned".

Each lot was 1/3 to 1/2 acre and each lot was listed for sale, if I remember for somewhere around $6,000 to $8,500 each, which was at or near county tax-assessed value.

I did my due-diligence and made an offer to the bank's listing agent.

"I'll take all (18) lots for $21,600 (or $1200 each)".

The Realtor told me in not so many words, that, "I was out of my mind", the bank WILL NEVER consider my offer! Please don't waste my time!"

I asked the listing agent to "humor me" and still present my offer, as I reminded him that I was also a licensed agent and ALL offers must be presented to seller-clients, regardless of how low an offer may be, in the great State of Florida (plus at the bottom of my "offer package", I wrote "carbon copy to: "XYZ Bank". I never really sent a "carbon copy" to the bank, LOL!).

Within a few days, I received a phone call from the agent, and he said "I don't believe it, but the bank said if I can close by (I think it was December 28th?) before the end of their bank year, the bank will accept my offer of $21,600 or $1200 per lot!

I gained some valuable experience that December month in 2009;

End of the bank year DOES mean something to certain banks regarding REOs!

This bank was so motivated to get rid of these (18) lots by the end of their bank year, they ran with my offer, plus as a bonus, one of the lots had a mobile home on it, with a well, septic, electric and all the proper permits. The bank made me sign that I would be responsible for removal of the mobile home. I said sure, OK!

I flipped all (18) lots quickly, for a nice profit, and the lot with the mobile home? Recently sold by my investor-buyer for over $16,000 (he paid $3200! LOL!). What I think, the bank thought that mobile home to be a big liability for them, and just want to unload the lot, so "they threw the baby out with the bath water" (with all 18 lots!) LOL!

Now I try to make multiple REO offers in November-December, stating boldly that;

"I guarantee to close before the end of the bank year!"

Anyone else have good fortune with "end of year deals"???

I'd love to hear your "war stories".

Bob
Land Rescue League LLC

P.S. What the bank didn't know was I had all (18) lots already sold to (4) different lined-up buyers, well before the end of their bank year! LOL!