Houston Creative Foreclosure Bailout

[Jeremy Bourgeois]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $360,000
Cash invested: $18,000

A partner brought this deal to me. We bailed the previous owners out of foreclosure and refinanced the house. It is rented and cash flowing with tenants. We also were able to take over the property with 20% of equity built into the deal, and it is newly renovated. We plan to hold this asset for 3-5 years.

What made you interested in investing in this type of deal?

Partner brought me in on the deal to help manage and finance it.

How did you find this deal and how did you negotiate it?

He found it through his network and we negotiated it directly with the owners and their hard money lender.

How did you finance this deal?

Took over the hard money loan, caught up the payments, and refinanced into a DSCR loan

How did you add value to the deal?

We prevented the foreclosure, allowing the tenants to stay and the borrower to exit the deal with having that on his record. We also made a deal with the second position lender to get some of his invested capital back which would've been completely lost in the foreclosure process.

What was the outcome?

We now have a cash flowing asset with $60k in equity built in, in a great neighborhood in Houston

Lessons learned? Challenges?

There are plenty of creative ways to avoid some of the worst case scenarios in real estate like foreclosure. Have good connections to potential partners helps you close many more deals.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Christian Duncan (lender and partner)