Homeowner profit incentive

[Michael White]

Hi guys,

New to BP and loving all the content. As someone new to the USA and pre-foreclosures I was wondering if there was anything from a legislative perspective preventing potential investors from offering homeowners in the pre-foreclosure process a % of profits from a flip or wholesale in return for agreeing to hand of the deeds etc.

E.g. Bill is behind on mortgage payments and bank have started the foreclosure process. Investor approaches Bill to try and negotiate a short sale and tells Bill he intends to rehab said property and sell. As an incentive, he offers to give Bill 15% of net gains from rehab in return for handing over the deeds.

Is there anything ethically or legally wrong with this? I ask as the pre-foreclosure market appears to be very competitive and potentially a little saturated?

Thanks in advance

[Tom Mole]

@Michael White, don't give up so easily! There are more ways to skin this cat than short sales. I know someone not far from you who uses just that business model. He is quite successful and has been doing it for years

BTW, welcome to the BP family. It looks like you might be just getting started in RE investing. Have you read "The Ultimate Beginner's Guide to Real Estate Investing" by @Brandon Turner. It's a great place to start.

I see you've already found the forums, but have you checked out the podcasts yet? There are 105 podcasts hosted by @Joshua Dorkin and Brandon Turner where they interview other successful investors using every conceivable strategy. It's worth it to listen to every one of them. You can listen to the podcasts in your car while you wading through So Cal traffic, if you need to find the time.

It's quite cool to see another So Cal investor interested in financially distressed property. It would be great to get a cup of coffee and compare notes. 

All the best.