Has anyone ever used Liran Koren's off-market investment strategy

[Dale Peterson]

Hey, everyone. I'm a long-time lurker but new poster. I recently came across a real estate guru called Liran Koren (lirankoren.com). He seems legit, but I wanted a second opinion before I pull the trigger.

His strategy seems like utter simplicity, even better than a subject-to deal, but in the back of my mind I wonder if it's too good to be true. His strategy is to cruise the foreclosure lists to find junior lien holders, specifically HOA/COA foreclosures before the senior lien holder has filed for foreclosure (only works in judicial foreclosure states). Then you contact the homeowner, work out a quick cash payment for a QCD deal, pay off the HOA to stop foreclosure, and then you can rent out the property for years for pure profit without ever having to pay the original mortgage. Something about you are now a party with indispensable interest, since the bank doesn't have a promissory note with your signature. It all seems so simple, but before I buy his course I'd feel more comfortable if I could get a second opinion. Am I missing any risk factors?

[Chris Seveney]

Umm... Where do I even start?

1. Typically in these instances, the property is significantly underwater AND the HOA fees are very significant. Why else would a borrower let it go, if they had equity they file BK.

2. IF they are reviewing FC lists, the 1st lienholder is aware as they are also part of the lawsuit for the Foreclosure as anybody with an interest in the party is named.

2. You can pay the person to get a QCD but it does not remove the mortgage and the 1st can still foreclose.

Let's look at this in a numbers scenario, if an HOA has filed a foreclosure, the borrower was not a few months behind they would typically be a year. Let's use $500/month as an example. So they are $6k behind in HOA then tack on FC and fees etc you are going to be at $10,000.

I can guarantee you the property will need at least $10k in rehab costs and take you two months. During that time you incur another $1k in HOA fees so now your in it for $21,000.

The first is not going to go "years", they may go a year, lets say they even went 2. If you can get $1,500/month in rent, you would feel good right?. You still have to have insurance etc. (it will be HOA requirement) so let's say you net $800/month since you have HOA fees.

Even after two years, you are still LOSING $. 

What if the loan also had assignment of rents in it, the lender can then step in and collect the rent. Now you are really effed.

Also, once the HOA's find out your doing this, they will not really appreciate it as well, and in many instances they may have rental restrictions and/or have approval rights over any tenant.

Yes it is too good to be true. Does it happen once in a while - Yes. But it is extremely high risk as you have ZERO control over the situation.