Pre-Forclosure deal structures.

[Harry Neakok]

I am a new investor in Tracy, CA. I have been going to the San Joaquin County Records Office to find NOD's and Lis Pendens. I have been successful in locating them, and now I want to start a direct mail campaign. I have around 25-30K to invest and would like to get them under contract. I, however, do not know where to get a contract to use, how to structure the deal, and what to do if I am able to get a property under contract. Can someone please show me where to find help in the proper documentation, contracts and deal structures that would be of help?

[Eric Mitchell]

@Harry Neakok

  Hello. I would offer to split the equity 50/50, their share being cash and my share being equity in the home. I would find out what the average comps are in the area based on similar beds, baths, and sqft. I would offer 87% of that price and out of that pay all debts and liens to get a clear title on the home. What ever amount is left over, I would split that with the homeowners. For example:

Avg sales price of homes in area:                    $ 400,000

Your offer would be 87% of $400,000:            $ 348,000

Amount of debt and/or liens for clear title:       $ 250,000

Subtract $250,000 from $348,000:                   $98,000

Split 50/50 with homeowners:                           $49,000

The homeowner walks away with cash without the debt of the home following him/her

You purchased the property at a $52,00 discount plus another $49,000 cash at closing.

All you would need is a good RE Agent,and a title company that specialize in this type of deals, and of course cash and/or financing. Everything will be done by the letter of the law and you wont have to worry about being sued or taken to court. I hope this helps.