Purchased HOA lien - Looking for options?

Question

I am new to the Real Estate investing.  I was looking for tax lien property and with incomplete knowledge I end up with HOA lien property.

I think I have wasted my money (based on various forum) and now wants to make the best of situation.

Following are details of my case.

Property value: Based on Realtor.com is 260K (neighbor property in another street is listed 269K with 100 sq feet less build up area)
Mortgage amount: New Mortgage was taken and worth 222k on 6/2013 by previous owner.
State: Denton County, TX

I think I have 2 options:

First Option

1) Ask the previous owner to give me monthly rent until the lender foreclose the house. Atleast I'll get some money back.
2) Lender foreclose the house after few months and I end up loosing rest of the money.

Following are question based on this options:

Q1) Am I violating any law by taking rental money (skimming rent in TX) as I did not sign any contract with any lender for this property?
Q2) If lender foreclose the house then will it against me or previous owner?
Q3) If I don't pay taxes for 2014 then will I become deliquent tax payer in denton county?
Q4) If other investor buy the property in foreclose auction then will I still be deliquent tax payer or it will be responsibility of investor who bought the property.

Second Option

I figure out if there are additional liens on this property.  If not, then negotiate with current lender and own the property untill it is sold.

1) Till now I know about 222K mortgage amount.  I read after sheriff sale you will see many more liens encumber the property.
How much time will it take to know about all current liens on this property?

2) Will current bank be open to negotiate for the mortgage amount?  I mean if I say I am ready to refinance for 200K and bank take a loss of 20K as they will loose much more in foreclose sale anyway.
Is it valid assumption?

3) Is it valid investment? Any other cost need to be worry about? 
 220K + 5K (tax) + 16K (Real estatge Agents) + 10 K (repairs) + 4K (misc) = 255K (without bank negotiation)

Wayne Brooks · Answer

@Rajiv Jain Just to be clear, you did Not buy the HOA lien.  You bought the Property at an HOA foreclosure auction.  There is a difference, but people often refer to it as "buying an HOA lien" mistakenly.  Yes, more than likely the mortgage is also in foreclosure.  Find that local RE attorney!

Rajiv Jain · Answer

Thanks for the replies!! I bought HOA lien auctioned at sheriff's sale.

I read in other posts that if owner did not pay HOA dues most likely be defaulting on the Mortgage too.. that is why I was thinking about my next action.

Tyler H. · Answer

@Rajiv Jain it sounds like you simply purchased an HOA Lien to the property. If so, you may be able to foreclose, but seek legal advice. HOA liens are at the bottom of the pecking order, especially if there is a first lien mortgage on the property. The key is to try to contact the previous owner and see if you can buy the property subject to the existing mortgage, or make arrangements with their lender to halt foreclosure, if the numbers work.

Steve Babiak · Answer

You might find some related matter at this next link:

http://www.biggerpockets.com/forums/41/topics/6897...

Wayne Brooks · Answer

Sit down with a local RE attorney.  The first thing he'll do is a title search.  This is how you know where you stand, and he can tell you your options.  You now own the property, and can charge rent (no skimming issues) and evict/eject the old owner.  Negotiating with the mortgage holder will likely be difficult, but possible.

Mark Ferguson · Answer

Did you butte HOA lien?  Did you buy the property? I don't understand what your position is.

Hattie Dizmond · Answer

I'm entirely confused by your post.  Did you purchase the HOA lien?  If so, how did the mortgage come into play?  Just because a property owner has neglected to pay their mandatory HOA dues or has unpaid HOA fines doesn't mean there is an issue with the mortgage or assessed taxes.  Why are you comingling all of those issues?

You can conduct or pay someone to conduct a title search and find out about any and all liens on a titled piece of real estate.  There is no need to wait until any kind of sale.  (Still confused about why there would be a sheriff's sale, since you didn't say there was a tax lien on the property.)

Finally, if real estate investing is something you are serious about, you are going to have to learn how to properly value a property or find a realtor you trust to do it for you.  Going by the "valuation" formula of ANY of the online services is a disaster waiting to happen.  You need a minimum of 3 comparable properties that have SOLD not longer ago than 6-months, more recent is better.  Those properties need to be similar in configuration and in the same neighborhood.  You find the average cost per square foot of those properties, multiply it by the square foot of the subject property, then add/subtract for condition and other factors.  There are some really good blog posts here on BP about finding the value of a property.  One is by Brandon Turner, another is by Mark Ferguson.

Rajiv Jain · Answer

Please provide any advice or guidance.  I am new to Real Estate investment. I live in Dallas Fort Worth, Texas area.