New Member Investor from Pittsburgh, PA

[Judy Lipinski]

Hi all,

My husband Adam and I are moving forward with real estate investing. he is a stay at home dad, just recovered from back surgery, ready to do more remodeling.

I author and teach technology training courses on how to write software for websites and mobile apps. im really looking forward to being able to focus on real estate and not being beholden to client schedules. we have an almost 2 year old son.

I'm a workaholic, and although my business is doing well, and I can bring in money for deals, I hope to be able to shift my focus to real estate to have more time with family, residual income, and a sustainable future.

We have experience with renting, both good and bad. 

I'm reading up on the articles here on BP, trying to make informed decisions. we did a cash out refinance, and are selling a property. so we can pay cash for fixer uppers...We have been looking at foreclosures to hopefully get a couple of rentals going out of the cash we current have.

One friend in the business recommended a house he can't buy at this time for us  to flip, which could help lead to more purchases. he told us about the 1031 exchange, to reinvest the money into buying more.

TWO IMMEDIATE questions:

ONE - preforeclosures

how do I go about getting a house in preforeclosure? it's up for sheriffs auction Nov. 6th, and I was able to track down the owner through mutual friends in another state. the sheriff's notice also lists a bank. I have his email, and was going to ask him about his situation and what is owed. I could do a title search if he seems interested. any advice or articles? still trying to understand that strategy.

TWO - contractors

My husband is very handy and we know a few people that can do quality work. But even with people we know we have found it's very hard to find dependable people. 

Example, doing our own home remodel, the friend only showed up a few times when he should have been there for weeks. 

Has anyone developed a good method / contract for people to keep them motivated?

I've read, don't pay until the work is done. I've started getting estimates from multiple contractors, but I know we have saved thousands. I just know in future, I can't afford delays. I guess the answer might involve paying more, but I've had friends still get burned on drywallers especially.

Thanks, hoping to learn and eventually contribute!

Judy

[Josh Caldwell]

@Judy Lipinski - pre-foreclosures can be a great opportunity if you can find the seller and if they will cooperate.  It sounds like you have already solved the first problem and found the seller.  A lot of times you need to resort to skip tracers to locate them. 

Part two is the deal itself.  The property is already scheduled for sheriff sale, so the seller has some pressure.  You can save this house and make some money if the deal works.  The first thing you need to know is all the liens and encumbrances on this house. You will need to do a title search to find out that info.  That entire debt load will stay with the house, and that debt load NEEDS to be less than the value of this house, in this instance.  You can go beyond that number but I dont want to confuse you. 

So you have a mortgage at price X, and you have a host of fines and fees associated with the foreclosure.  You can stop the sale at any moment up to the morning of the sale in Allegheny county, by making up the payments and fees in the arrears.  Before you do this, you NEED to have a contract with the owner to buy this house in a way that is profitable for you.  Generally you will want to buy this as a deal subject too the existing mortgage.  There are a few ways to do this but lets keep it simple.  Buy the house with a lease option device attached to a decreasing amortization table, agreement for deed, or land contract. That is all lawyer territory.  

In essence, you will be buying the house for the arrears amount, then picking up the mortgage as it sits as X per month for the rest of the mortgage time.  You can then turn around and rent or wholesale the house. This is all assuming that there is value here.