All Forum Posts by: Dan Norton

This has already happened and bankrupted people here in Orlando; I remember reading about it in the paper a few months back.

A likely result in this market, with a legitimate company looking out for a win win situation, is that they end up having to hold onto the house for longer than they hope, taking lower amount of money if they do find a buyer, or dipping into cash reserves to keep from losing your shirt.

HOWEVER, there's also a much worse possibility: They buy the home with a low price and using your credit, then they find a lender who gives them an equity loan as a line of credit or a straight second mortgage [without your knowledge]. No one makes the payments on the home, and you're stuck holding the bag. Yes, it's a 'safe' investment for you because it's backed by a valuable real estate asset -- {ahem} but how safe would you feel about that if your benefactor didn't make payments and you had to take the house back? You pretty much bought yourself an extra house, and now have to pay for it on your own. Can you afford that?

A few years ago this may have been a very creative option where some people probably did make many thousands of dollars, many times over... But in a declining market, I can't think of a single reason why this could be a good idea.

No John, not at all... Longwood was dead on, I wasn't being negative at all. What I said was (for someone who has never done it before):

It won't be a letter; I have a phone number to call... However, you'd have to be an idiot to call someone and say any of that, but what I'm asking is how to appropriately pitch yourself to someone who just took off and left their home trashed. It FEELS like I'll just be calling and saying 'hey, I'll keep your credit from getting any worse, give me your house', but clearly that's not the way to do it. So I'm hoping to find out from someone who has been there/done that...

(as for the assumptions you implied; remember, this isn't a random home, it's family member's neighbor... My girlfriend's parents live across the street, and although they weren't friends, they know enough about them to not be surprised that they'd 'take off' like this. Of course I'll want to find out from the homeowner what happened, but if it's just 'payment got too high, things got rough at home, didn't want to deal with it', ...then what?)

So I've gotten some advice in the past few days from not only Matt (above), but also a local guru and those on another board, who have all given me the essential 'get it on paper first' answer -- but my problem is that it'll be my first time doing this, and I'm not sure how to approach an absent seller about signing their home over.

Here's what it FEELS like I'll be doing in this situation: "Hi, my family lives near your home in Florida. You're going to be foreclosed and ruin your credit -- clearly you don't care since the home has been trashed by animals and a vagrant. However, I can help to limit the damage done to your credit, but in order to do that I'm going to fax you a form to sign a purchase agreement which would sell the house to me for a dollar, then a form to release info so I can talk to the bank. Since you left the home to rot, you don't mind signing your house away to me, right?"

Is there anywhere that discusses the HOW TO aspect of working with an owner in this situation, or can you offer some help on specifically how to discuss the 'please sign your home over to me for virtually nothing' aspect?

-- Dan

Thanks Matt -- I PM'd you for additional info.

Primarily, my confusion is --> A contract needs a sales price. If I don't know how much the bank will accept, or even if they'll negotiate, and I'm shooting for as low as posible, how can I get a contract from the seller with an amount?

yup, first option is the internet, but it sounds like original poster does that and just gets the mailing address. Still, keep looking for ways on the web to track that person down. When you find a property, knock on neighboring homes' doors and ask if they know how to contact the homeowners... if that doesn't work, you can use a skip tracer to track down a disappearing owner, if you don't want to send direct mail to the mailing address. [Like a private investigator, used for collections and repo men, etc, when a debtor disappears with no contact info]

One more possibility: maybe the owner has other properties, perhaps they're not all vacant and the renters have contact with that person, or a management co. Check tax records on the owner's name.

OK, I know about a potential deal here in Florida and wanted to get some advice on 'what to do next' at my local REI group meeting, as I am new to the foreclosure and short sale process. I spoke with two foreclosure/short sale experts at my meeting tonight, but didn't have time to engage in an in-depth conversation... so their advice was simply "Just get the deal on paper first -- get them to sign it over to you before doing anything else."

Here's the deal --

My girlfriend's parents' neighbor has abandoned their home and apparently run away to Kentucky. Lis pendens was just filed within last two weeks. Home was bought in June '03 for $89,900, mortgaged for $76,400 with Countrywide on an adjustable rate that, according to my calculations, should be about 10.75% right now after resetting. {ouch} The house is Trashed and needs probably 20k in repairs. I'm guessing that ARV will show to be between 125k and 140k [still need to do a bit more definitive research, as it's not in a subdivision and not my local market], while the tax assessed value is just 70k.

I have a phone number for the owner's son and plan to get contact info for the owner, but HOW do I 'get the deal on paper' when I call the owner of a trashed, abandoned home? My girlfriend's parents would like to buy it for 60k, but I think I may be able to get it for less in a short sale, with the condition and the mortgage amount. What do you say to an owner, when they've walked out on the home and you don't know what price you can negotiate with the lender??

Any help is appreciated!!

I don't know the Ohio market, but the 1% rule hasn't been true in much of the country for a while -- if you bought a 120k property to rent out here, there's NO way you'd get anything more than 750/month for it, IF that. For a 2/1 so close to downtown, I could imagine 1495/month for this property, but people just can't afford much more. However, you'll never find a SFH for under $150k in downtown Orlando, where the median price is in the mid-200s.

That said, and as I just wrote in my prior post, I know Zillow is crap, but it's Very hard to find anything for sale less than tax-assessed value. The owner bought in Apr '04, and the big run-up in appreciation happened from then to about Aug '05, so the combo of finding a seller who wants nothing to walk away from it, and was purchased before the run-up in equity (plus is in a popular area) is very tempting. ...I know there's value there, I just don't know how to best make money off it.

Yes, I have NO faith in Zillow, but I wanted to post this ASAP and didn't have a good idea of true comps. I've been in real estate for a couple of years, but as a builders/developers rep selling new construction in tract communities, and so this mixed downtown neighborhood was a tough one for me. I just wanted to post whatever I could, so I showed the 300k Zillow along with the tax assessed value, which was a better figure to show that there's equity in it. [as with many areas, tax assessed values here are only a percentage of a property's real value]

I guess I hadn't expected anyone to hang onto each individual word -- I'll give you this one, because I knew as I typed it that it was not the accurate word choice, but it was late and i was tired. :shock: Yes, I'd run negative... But that's really why I posted in the first place.

I'm not looking at this property as a rental primarily, because I already knew I'd lose money in the short term -- instead, my real question was more along the lines of "What potential DOES this property have, and what could be the best exit strategy?" Telling me that it's a poor rental is clear, but I guess I was trying to see if taking a partner to front the capital and then rehabbing would be best, or if my first impression to assign it with a 10k bump in price is the thing to do, or to lease option might be feasible, or something else...

I suppose it's harder to evaluate a home that is in such a different market; this neighborhood is so close to lots of change in downtown, and one of this week's top local stories is the discussion of the new NBA arena to be built just blocks away. Kind of changes the outlook a bit.

-- Dan

Also, a followup question: With this situation -- a seller would give up his equity if I assume his loan and let him walk from the headache of absentee ownership -- Is there really any room to negotiate price? He's not really getting anything if I take it for the loan balance, so if the price dropped he'd effectively be paying me to take his house and equity.

OK guys, I'd like your thoughts on this one... [and I have to act fast, as I think I've got competition for this deal]

Just found a home with an out-of-state owner who says the home has 'become more of a burden than anything else'. He used to live there and moved for work, and now rents it out. It has an assumable VA loan with a balance of 226k, and he says he doesn't want anything else but to have someone just take it off his hands. :superman:

The home is in College Park, a popular downtown section of Orlando with a wide mix of building styles from mid-century bungalows to waterfront million $+ estate homes.

Here are the details: 2bd / 1bath, 1150 square feet, Concrete block/brick, slanted roof, built in the mid-1950s. Corner lot, nice double carport, small pavered back courtyard and screened-in patio. [I know it's only a 2/1, this is one of the only areas of town I'd consider such a home]

Zillow's Zestimate is just over $300k, and tax-assessed value is estimated at $251k for this year. [the land is valued at 178k itself]
Currently rented at $1200/month, but lease expires in August. Could likely rent for a couple hundred more, based on rentometer.com info.

Home has very nice tile and wood flooring, 4 yrs new, could use some small touches inside and will look much better with landscaping outside, needs some curb appeal.

My biggest problem here is: WHAT in the world to do with this property?? It seems that renting it might have me running negative with property taxes, but it's in a great area less than a mile from downtown and a couple of blocks away from an up-and-coming revitalization area, so could be good if I can find a money partner and keep it for a while... or maybe a quick 10k assignment, or a bigger short-term light rehab and flip... and I don't know much about VA loans/assumables, so that's another factor...

UGH. OK, Let's start with some feedback and discussion on this one -- ?? (and if the answer is "GRAB IT" -- since it's assumable VA, how to go about doing that?) Thanks!