Private lending to buy foreclosures

[Abe Naroth]

I am new to RE 'investing'. Based in Katy, TX, I have a mortgage and my DTI ratio is 30%. I have roughly $100k in my emergency fund and would like to venture into foreclosures. However, I do not want to liquidate my emergency fund, but rather use it for repairs before I flip the property which I buy in foreclosures. I have a partner who can take care of fixes. Would any lender be ready to issue cashiers check for an amount which I request for ( to be used during the day of the foreclosure), with a lien on the property which we buy (the property is subjective to what we bid for and not definite). 

Pardon me, if this is a basic question - again, I am new here. 

[Andrew Postell]

@Abe Naroth thanks for the post.  Always great to hear from a fellow Texan.

When we are buying off market properties we are using some type of acquisition loan (usually Hard Money).  And if you are keeping the property, then you refinance.  If you are flipping, then you just sell.

Now, it sounds like you are talking about going to the auction block to buy properties.  And that would not be covered with normal lenders.  That doesn't mean you can't purchase off market properties though.  Usually, to buy from the courthouse steps you need lots of experience and good, established relationships to get funding.  But there are still TONS of other properties out there that you can get financing with, that aren't in an auction setting.  That's usually how most of us start.

I hope this makes sense how I am describing it but feel free to ask anything else.

[Abe Naroth]

Quote from @Andrew Postell:

@Abe Naroth thanks for the post.  Always great to hear from a fellow Texan.

When we are buying off market properties we are using some type of acquisition loan (usually Hard Money).  And if you are keeping the property, then you refinance.  If you are flipping, then you just sell.

Now, it sounds like you are talking about going to the auction block to buy properties.  And that would not be covered with normal lenders.  That doesn't mean you can't purchase off market properties though.  Usually, to buy from the courthouse steps you need lots of experience and good, established relationships to get funding.  But there are still TONS of other properties out there that you can get financing with, that aren't in an auction setting.  That's usually how most of us start.

I hope this makes sense how I am describing it but feel free to ask anything else.

 Andrew, appreciate the response. My friends & I are looking at bidding for properties at court steps. We are open to bind a contract with some advantage to the lender because we want to learn and less to earn at first. 

We do extensive research and drive bys to ensure that we bid the right for the right lien and that we don’t bid high. But, would there be lenders out there who are ready to issue us cashiers check? What could be a contract look like to get the lenders some confidence / certainty on the amount they lend? 

I cannot add them to the deed because we have not bought the property yet I believe. 

[Ethan Gidcumb]

Hey Abe, one thing I would mention is to consider what down payment would be required with the lender you work with. It is not common that a lender will issue a cashiers check but you also mentioned that you don't want to dip into your emergency fund, so you'll need your "skin in the game" somehow. 

I hope this helps you find what people/companies you need as you put all the pieces together.

[Abe Naroth]

Quote from @Ethan Gidcumb:

Hey Abe, one thing I would mention is to consider what down payment would be required with the lender you work with. It is not common that a lender will issue a cashiers check but you also mentioned that you don't want to dip into your emergency fund, so you'll need your "skin in the game" somehow. 

I hope this helps you find what people/companies you need as you put all the pieces together.

Thanks, Ethan. The interesting thing is court step deals are all cash deals. We are ready to have our skin in the game….. just wondering how to transform that into an innovative contract. 

any input is welcome! 

[AJ Exner]

Quote from @Abe Naroth:

I am new to RE 'investing'. Based in Katy, TX, I have a mortgage and my DTI ratio is 30%. I have roughly $100k in my emergency fund and would like to venture into foreclosures. However, I do not want to liquidate my emergency fund, but rather use it for repairs before I flip the property which I buy in foreclosures. I have a partner who can take care of fixes. Would any lender be ready to issue cashiers check for an amount which I request for ( to be used during the day of the foreclosure), with a lien on the property which we buy (the property is subjective to what we bid for and not definite). 

Pardon me, if this is a basic question - again, I am new here. 

Abe, 

Some solid options here. So another thought would be to go through with a delayed purchase. 

Say you buy the property for 40k at the steps and it needs another 40k and could be worth 130k After Repairs (ARV). If you set up with a lender beforehand, they would be more willing to reimburse you a portion/most of the purchase price as well as set you up with a rehab escrow to get reimbursed for the work to improve the property.

Then, once you’ve finished, refinance and repeat. 

[Abe Naroth]

Quote from @AJ Exner:

Quote from @Abe Naroth:

I am new to RE 'investing'. Based in Katy, TX, I have a mortgage and my DTI ratio is 30%. I have roughly $100k in my emergency fund and would like to venture into foreclosures. However, I do not want to liquidate my emergency fund, but rather use it for repairs before I flip the property which I buy in foreclosures. I have a partner who can take care of fixes. Would any lender be ready to issue cashiers check for an amount which I request for ( to be used during the day of the foreclosure), with a lien on the property which we buy (the property is subjective to what we bid for and not definite). 

Pardon me, if this is a basic question - again, I am new here. 

Abe, 

Some solid options here. So another thought would be to go through with a delayed purchase. 

Say you buy the property for 40k at the steps and it needs another 40k and could be worth 130k After Repairs (ARV). If you set up with a lender beforehand, they would be more willing to reimburse you a portion/most of the purchase price as well as set you up with a rehab escrow to get reimbursed for the work to improve the property.

Then, once you’ve finished, refinance and repeat. 

thank you gentlemen for all your response. Bottom line - get a lender/ private investor who has confidence in what I do! 

[Jacob Sherman]

Quote from @Abe Naroth:

I am new to RE 'investing'. Based in Katy, TX, I have a mortgage and my DTI ratio is 30%. I have roughly $100k in my emergency fund and would like to venture into foreclosures. However, I do not want to liquidate my emergency fund, but rather use it for repairs before I flip the property which I buy in foreclosures. I have a partner who can take care of fixes. Would any lender be ready to issue cashiers check for an amount which I request for ( to be used during the day of the foreclosure), with a lien on the property which we buy (the property is subjective to what we bid for and not definite). 

Pardon me, if this is a basic question - again, I am new here. 

 To go to the auctions you'll most likely need to buy in cash as lenders will require an appraisal as well as go through a full loan process . If getting financing you may want to look on market or wholesale market 

[Abe Naroth]

Quote from @Jacob Sherman:

Quote from @Abe Naroth:

I am new to RE 'investing'. Based in Katy, TX, I have a mortgage and my DTI ratio is 30%. I have roughly $100k in my emergency fund and would like to venture into foreclosures. However, I do not want to liquidate my emergency fund, but rather use it for repairs before I flip the property which I buy in foreclosures. I have a partner who can take care of fixes. Would any lender be ready to issue cashiers check for an amount which I request for ( to be used during the day of the foreclosure), with a lien on the property which we buy (the property is subjective to what we bid for and not definite). 

Pardon me, if this is a basic question - again, I am new here. 

 To go to the auctions you'll most likely need to buy in cash as lenders will require an appraisal as well as go through a full loan process . If getting financing you may want to look on market or wholesale market 

@Jacob Sherman thanks. But, auction houses cannot be run through appraisals and we wouldn’t have enough time for all the process I believe. I am looking for  hard money lender to structure a deal.  

[Jay Hurst]

Quote from @Abe Naroth:

Quote from @Jacob Sherman:

Quote from @Abe Naroth:

I am new to RE 'investing'. Based in Katy, TX, I have a mortgage and my DTI ratio is 30%. I have roughly $100k in my emergency fund and would like to venture into foreclosures. However, I do not want to liquidate my emergency fund, but rather use it for repairs before I flip the property which I buy in foreclosures. I have a partner who can take care of fixes. Would any lender be ready to issue cashiers check for an amount which I request for ( to be used during the day of the foreclosure), with a lien on the property which we buy (the property is subjective to what we bid for and not definite). 

Pardon me, if this is a basic question - again, I am new here. 

 To go to the auctions you'll most likely need to buy in cash as lenders will require an appraisal as well as go through a full loan process . If getting financing you may want to look on market or wholesale market 

@Jacob Sherman thanks. But, auction houses cannot be run through appraisals and we wouldn’t have enough time for all the process I believe. I am looking for  hard money lender to structure a deal.  

 That is why you need ACTUAL cash to buy at the court house steps. Not to mention a high level of expertise. Not at all for beginners. 

[Abe Naroth]

Quote from @Jay Hurst:

Quote from @Abe Naroth:

Quote from @Jacob Sherman:

Quote from @Abe Naroth:

I am new to RE 'investing'. Based in Katy, TX, I have a mortgage and my DTI ratio is 30%. I have roughly $100k in my emergency fund and would like to venture into foreclosures. However, I do not want to liquidate my emergency fund, but rather use it for repairs before I flip the property which I buy in foreclosures. I have a partner who can take care of fixes. Would any lender be ready to issue cashiers check for an amount which I request for ( to be used during the day of the foreclosure), with a lien on the property which we buy (the property is subjective to what we bid for and not definite). 

Pardon me, if this is a basic question - again, I am new here. 

 To go to the auctions you'll most likely need to buy in cash as lenders will require an appraisal as well as go through a full loan process . If getting financing you may want to look on market or wholesale market 

@Jacob Sherman thanks. But, auction houses cannot be run through appraisals and we wouldn’t have enough time for all the process I believe. I am looking for  hard money lender to structure a deal.  

 That is why you need ACTUAL cash to buy at the court house steps. Not to mention a high level of expertise. Not at all for beginners. 

Thanks for your feedback, @Jay Hurst. I humbly disagree - it’s all about the process, checklists and the team. 

[Jay Hurst]

Quote from @Abe Naroth:

Quote from @Jay Hurst:

Quote from @Abe Naroth:

Quote from @Jacob Sherman:

Quote from @Abe Naroth:

I am new to RE 'investing'. Based in Katy, TX, I have a mortgage and my DTI ratio is 30%. I have roughly $100k in my emergency fund and would like to venture into foreclosures. However, I do not want to liquidate my emergency fund, but rather use it for repairs before I flip the property which I buy in foreclosures. I have a partner who can take care of fixes. Would any lender be ready to issue cashiers check for an amount which I request for ( to be used during the day of the foreclosure), with a lien on the property which we buy (the property is subjective to what we bid for and not definite). 

Pardon me, if this is a basic question - again, I am new here. 

 To go to the auctions you'll most likely need to buy in cash as lenders will require an appraisal as well as go through a full loan process . If getting financing you may want to look on market or wholesale market 

@Jacob Sherman thanks. But, auction houses cannot be run through appraisals and we wouldn’t have enough time for all the process I believe. I am looking for  hard money lender to structure a deal.  

 That is why you need ACTUAL cash to buy at the court house steps. Not to mention a high level of expertise. Not at all for beginners. 

Thanks for your feedback, @Jay Hurst. I humbly disagree - it’s all about the process, checklists and the team. 

 Disagree with the fact that you need cash or expertise? or both? Just curious. 

[Abe Naroth]

Quote from @Jay Hurst:

Quote from @Abe Naroth:

Quote from @Jay Hurst:

Quote from @Abe Naroth:

Quote from @Jacob Sherman:

Quote from @Abe Naroth:

I am new to RE 'investing'. Based in Katy, TX, I have a mortgage and my DTI ratio is 30%. I have roughly $100k in my emergency fund and would like to venture into foreclosures. However, I do not want to liquidate my emergency fund, but rather use it for repairs before I flip the property which I buy in foreclosures. I have a partner who can take care of fixes. Would any lender be ready to issue cashiers check for an amount which I request for ( to be used during the day of the foreclosure), with a lien on the property which we buy (the property is subjective to what we bid for and not definite). 

Pardon me, if this is a basic question - again, I am new here. 

 To go to the auctions you'll most likely need to buy in cash as lenders will require an appraisal as well as go through a full loan process . If getting financing you may want to look on market or wholesale market 

@Jacob Sherman thanks. But, auction houses cannot be run through appraisals and we wouldn’t have enough time for all the process I believe. I am looking for  hard money lender to structure a deal.  

 That is why you need ACTUAL cash to buy at the court house steps. Not to mention a high level of expertise. Not at all for beginners. 

Thanks for your feedback, @Jay Hurst. I humbly disagree - it’s all about the process, checklists and the team. 

 Disagree with the fact that you need cash or expertise? or both? Just curious. 

Disagree with the fact that you need to have expertise to bid houses in foreclosure auctions. I believe there are some checks and balances which we need to keep while bidding - e.g. thorough property research - title, drive by, estimate repairs etc. and have the right team - attorney, handy men, title review, investor and real estate brokers , we can make fixer upper on those houses bought in auctions happen. 

What are your thoughts? 

[Jay Hinrichs]

Quote from @Jay Hurst:

Quote from @Abe Naroth:

Quote from @Jay Hurst:

Quote from @Abe Naroth:

Quote from @Jacob Sherman:

Quote from @Abe Naroth:

I am new to RE 'investing'. Based in Katy, TX, I have a mortgage and my DTI ratio is 30%. I have roughly $100k in my emergency fund and would like to venture into foreclosures. However, I do not want to liquidate my emergency fund, but rather use it for repairs before I flip the property which I buy in foreclosures. I have a partner who can take care of fixes. Would any lender be ready to issue cashiers check for an amount which I request for ( to be used during the day of the foreclosure), with a lien on the property which we buy (the property is subjective to what we bid for and not definite). 

Pardon me, if this is a basic question - again, I am new here. 

 To go to the auctions you'll most likely need to buy in cash as lenders will require an appraisal as well as go through a full loan process . If getting financing you may want to look on market or wholesale market 

@Jacob Sherman thanks. But, auction houses cannot be run through appraisals and we wouldn’t have enough time for all the process I believe. I am looking for  hard money lender to structure a deal.  

 That is why you need ACTUAL cash to buy at the court house steps. Not to mention a high level of expertise. Not at all for beginners. 

Thanks for your feedback, @Jay Hurst. I humbly disagree - it’s all about the process, checklists and the team. 

 Disagree with the fact that you need cash or expertise? or both? Just curious. 

OK thought I would pop in here.. I have done courthouse funding for many years for clients. 

there are a few of us that do this not many.. However to Echo Jay H.  which of course is my initials :)  the only folks that get this facility are highly experienced flippers that i have a long track record with. And we get paid a premium above normal rates to do this. I have done this in OR WA MS AL OH IN .. Have not done it in TX  but I understand the process is fairly straight forward.  Right now OH is my big player. With 3 to 7 deals each month.

[Abe Naroth]

Thank you, @Jay Hinrichs for the honest reply. I understand that credibility matters in this play. We, as a team are not essentially looking forward to earn any profit out of our first few flips. We are looking forward to run the “flipper up” for the investors being their boots on the ground. 

Again, thanks for popping in here.