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?