All Forum Posts by: Denice S.

Hi BP Community, thanks for reading… I’m looking for some direction

I'm pursuing a property via mortgage foreclosure auction.During my lien search at the county, I like everything I see except for this:There are 2 mortgages on the property, a HELOC and a regular mortgage, separate loan numbers – both originated by GMAC, both later reassigned.

The HELOC is for 50k and is dated one full day earlier than the traditional mortgage and it's also recorded one full day earlier.The traditional mortgage is for 100k and is dated one full day after the HELOC and recorded one full day after the HELOC. The foreclosure is by the bank holding the traditional mortgage of 100k.

Both loans go hand in hand with an effective year built of 2000 (new build replacing an old home). Both loans were assigned in 2009 to Residential Funding (an apparent subsidiary of GMAC).The HELOC assignment ends with Residential Funding LLC, but the conventional mortgage goes through 2 other assignments. I don't see any lien release for the HELOC, but there was a Lis Pendens filed on it in 2009 (Just 3 days after it being assigned to Residential Funding ).That Lis Pendens was cancelled within two months of its filing.

I have a regular closing attorney and ran this by him and as suspected, he cannot say one way or another how this HELOC would impact the cost, given the earlier date.Maybe there is no balance? Maybe it's maxed out and will come back to visit someday. But the auction would be over by the time he could obtain and review the search.

HELOC 50k

Date of HELOC – 1/4/00

Date HELOC Recorded – 1/5/00

Conventional Mortgage 100k----Foreclosing

Date of Mortgage – 1/5/00

Date Mortgage Recorded 1/6/00

I've called numbers for Residential Funding –they answer OCWEN or Wells Fargo, the HELOC loan number isn't valid anywhere.

Any ideas on what I could look into by Monday morning?

Repair/Maintenance Outlook

Neighborhood and Expected Tenant Quality

Anticipated Vacancy

Proven annual increase in market rents

Hi David,

I've used this method successfully 7-8 times over the past 10 years when flipping and can share my experience and methods. 

I have a good credit rating and I have 6 cards from different banks each with 8-10k cash  options. These cards are never used to purchase items, they are only used for taking money.  Having cards from all different banks is essential for mitigating the risk of worst case scenarios (i.e...house sits on market or flip is a FLOP).  If all of your cards are with just one or two banks, your financial risk increases because you cannot transfer balances within the same financial institution...in other words limited bail out strategy.  So, hopefully, your cards are spread out amongst Discover, Chase, Wells Fargo, BOA, Cap 1 etc...

The pro's of using credit cards are all you imagine

• Easy Access
• Usually deposits within 10 days of request
• Low cost (mine are 2-3%) for 15 or 18 months
• The 2-3% fee is rolled into the balance, so I don't really even pay that up front.

The cons I've found to be as follows:

• After about 40 days of cashing checks, my credit score drops about 50-75 points and it takes 4-6 months for it to rebuild after the balances are paid. --This could be difficult for a buy and hold investor.
• Each card requires a minimum monthly payment of around $150-250 (depending on balance). Multiply by 4 or 5 and that could be over $1,000/month so you'll need to have money to cover these MINIMUM payments. ---Buy and Hold, these would cut into your cash-flow.
• One late payment and your promotional rate could end.
• If you don't  pay the balance owed within the timeframe you face enormous rates (15-25%)

I've never gotten into trouble.  Mostly because my flips have been successful but also because I learned the rules/terms of each card and had a plan to carry these high balances.  These are my golden rules... 

• Never make a purchase on a card while a promotional cash advance offer is in effect.
• Have money in reserves to pay the monthly bills and Pay on Time - Late payments can end the low promotional rate.
• If I need 40k for a flip (10k from 4 cards)...I deposit them all the same day. 
• I don't proceed with deals until I know the money has dropped.  Credit card companies can deny these checks.
• I Never use all of my available offers at the same time because I might need to transfer a balance in 15 months if something awful happens.  Remember, your credit rating will lower...so you may not be able to apply for new cards.  Keeping 2 out of 6 cards open for a balance transfer later could really save you from disaster.

My business model would not allow for a 40-50k loan on a buy and hold property with essentially a 12-15 month balloon without first having that money in reserves to begin with.  But those are my numbers...maybe it could work for you, just be sure to read all your terms carefully and consider the "cons" I've outlined.

Best of luck. 

LOL...Based on the scene,  that's piled way too high for a backup.  

My guess is this:  see that bowl on the toilet?  That's someone's "business bowl" and after they do their business in it, they dump it on the pile...again and again and again and...again until they're evicted.

Oh, and this is why you never turn off the water on a tenant.

Hi Ashok,

A good rule of thumb is .....If the locals aren't biting, don't be that fish!

I don't see the asking price number working.  In my world "General Rehab" means cosmetics throughout to an A+ showing potential.  This alone would be in the neighborhood of 10k on a 3/2 house. (flooring, paint, fixtures, hardware, cohesive look, landscape etc...)

Add holding costs ?, add selling costs (10k for commission, attorney, title etc..) and you've just broken even.

Add the ant problem....?  You're losing money.

Add the inevitable unknown problems....?  Seriously bleeding money.

Now, that being said,  when properties have been on the market longer than 3 months, you should have no shame in making a ridiculously low offer- make that Realtor twitch at the thought of presenting.  But frankly, I don't recommend and wouldn't attempt out of area flips simply because I know that managing them and having a trusted team are key to their success.  BUT....if that's what you're doing, all your offers should always be low enough to cover all the major unknowns.

A couple of my rentals (and my own house) have a few non-grounded outlets too. They are fine as long as you...

a. don't rewire a 3-prong outlet into them

b. don't use an adaptor

doing either a or b allows a 3-prong appliance to be plugged in without the protection of a ground. Keep your non grounded outlets as 2-prong and nothing that needs a ground can be erroneously plugged in.

I wouldn't share your adaptor strategy with tenants, you're not really grounded, you just made it all fit.

If you use those adaptors, you have to connect the grounding tab to a ground in order for it to be considered safe.

Hi Lance,

I would not change security deposit rules and "approve" of a tenant using it as rent. Instead I would say "hey, I'm willing to work with you regarding breaking the lease, you've been a great tenant, etc... but I'll need the rent every month you decide to stay." "I can, however, promise to get you your security deposit back as quickly as possible and offer you a great reference for your next landlord."

If she's always paid on time like you say, why assume she can't fulfill her obligation to continue paying rent? Allowing her to use the security leaves you no way of recovering expenses for damages and/or clearing out stuff she leaves behind.

She may not pay anyway, but I wouldn't give my tenant the green light to do this.

I hope it works out for you.

Hi Gabe,

Try your tiny local banks or avoid all banks for now and turn your focus to seller financed homes - you might find these in your local paper, craigslist, word of mouth...etc. Keep your ears open for anyone who needs to unload a property, anyone struggling to sell or listings that continually expire etc. These rarely have any type of requirement other than a medium credit score and sometimes not even that.

Another source might be to look at sellers with assumable loans. They do exist and the takeover qualifications aren't as stringent.

just think beyond banks....

good luck

Funny, mine have been the opposite. 100% of my selected tenants have been the ones who took the application home and faxed/emailed it to me by the deadline.

Those who applied on the spot didn't qualify...and they always had incomplete info. I don't do "first come, first served" so there is no reason for anyone to rush their application with us.

My best tenants had "others to view" which, in retrospect, might be an indicator that they are a quality tenant.

Just shows how very different every market is.

Absolutely not. As a realtor and investor, I can assure you that you'll have the most showings during your first 7 days. Your flip should be finished and sparkling clean.

The best way to reduce your # of days on market is to accurately price your property and have it show ready for day one on the MLS.

Best of luck!