All Forum Posts by: Derek Nemec

I recently bought a foreclosure at the courthouse. Getting the deed this week. It looks like the previous owner has not been at the premises for a couple of weeks (things remain in the exact same position) but he left all his stuff. Since it looks abandoned, can I enter the property and begin remodel/repairs? I am a bit confused on how to go about the next couple of steps. (Southeast Texas)

Quote from @Troy Jones:

@Joey Anderson

Typical rates at the moment are mid 5s to mid 7s depending on fico, LTV, and property type. We have up to 40-year options available that a lot of investors are liking at the moment.

 Are there prepayment penalties?

Location: Southeast Texas
Details: 3 bed 2 bath, updated home, 1500 sq ft. 
Purchase price: $147,000
Closing costs: $6,000
Improvements costs: $7,500
LOAN: 0% down, 5.5% fixed for 30 years (No PMI)
PITI: $1280
RENTAL ESTIMATE: $1525-$1600
RENTAL MARKET IN LOCATION (Southeast Texas): scorching hot in demand for SFH rentals
ARV: $179,000-$187,500
Total cash out of pocket: - approximately $13,000

Given the numbers above, do you believe the cashflow is sufficient enough for this to be a solid investment, or given the high PITI and questionable real estate market's future, would it be best to take advantage of the current market configuration and sell for an easy $25k profit? This is the first time I have a PITI over $1,000 for a SFH rental; but figured it would be worth it considering I get a 0% down payment from the loan offered by a credit union. For further personal details: I am 23 and have 5 other SFH properties other than this one - all in great condition. I am also a licensed realtor here in Texas.

Quote from @Nathan Gesner:

You asked for opinions, so here's mine: I don't like to speculate in a peak market.

How long will renovations take? What if cost of goods increases or the work takes longer than anticipated? What if new problems are discovered? What if the market tanks and you can't unload it 6-12 months from now? How well do you know the property condition? How good are you at estimating renovation costs? Can you stay within budget?

Maybe you've got that all dialed in. I think it's speculation in what appears to be a peak market with very little room to go up and a lot of room to go down.

I absolutely agree with this, seems the future is less likely to continue the trend of double digits appreciation and more likely to dive into negative territory

Quote from @Matt Stewart:

@Derek Nemec  I've bought a few that way.  In Ohio you have to wait for the court to confirm the sale.  That usually takes about 30 days, but I've found it may be longer if the property is still occupied.  Once that happens they'll mail a copy of the deed to you, or you can print it off the county recorder website if those records are online in your county.  The deed you get is a sheriff's deed and there is no closing.  I always have my title company run a title search and issue title insurance.  That way I'm certain there's no issue when I go to sell.

 I am in Texas and this was a trustee sale - nonjudicial. I guess at this point I am at the whims of the attorneys on how fast they want to go with the process and mailing it to me.

Quote from @Randall Alan:

Quote from @Derek Nemec:

Hey there everyone!

I recently attended a foreclosure auction at my county courthouse and came across a trustee sale for a SFH in town. I bid and won the auction and paid for it immediately upon winning in cashiers checks. (105k)
I seen the property on auction.com, and before the auction: I checked property taxes and they were all paid up. Checked the county records and appeared to have no remaining liens. My questions now are (being it my first foreclosure), when do I get the deed? Do I get to pick the closing company? Should I go to an attorney now and ask for assistance? 

Thank you as always BP!
- Derek

 I would reach out to your county clerk’s office (presuming that is who manages the auction.)  In Florida there is a 10 day period where the property can be redeemed (ie. The owner can make a payment after the foreclosure and get their property back.  You would get the monies you paid back as well), so the clerk holds the title for 10 days, then it comes in the mail.  Where I’m at, the County Clerk bafically acts as the title agency and when you receive your deed in the mail the property is yours. So no need for a lawyer or title company… but I can’t speak to Texas.  But I think a phone call to the clerk’s office will give you lots of answers.

All the best!

Randy 

 I made a mistake in saying "no remaining liens" as the bank still had their lien. The bank is the one that holds the title, considering it was a mortgage default, and so I was wondering when they provide it to me in the mail? I called the attorneys that were appointed to handle the sale, but they said it could take 2-4 weeks to 2-4 months??? I am now out of a ton of opportunity costs for possibly months just so I can get a deed??? This just is baffling to me lol. Do I continue trying to contact the attorneys? Should I call the bank? Ugh!

Hey there everyone!

I recently attended a foreclosure auction at my county courthouse and came across a trustee sale for a SFH in town. I bid and won the auction and paid for it immediately upon winning in cashiers checks. (105k)
I seen the property on auction.com, and before the auction: I checked property taxes and they were all paid up. Checked the county records and appeared to have no remaining liens. My questions now are (being it my first foreclosure), when do I get the deed? Do I get to pick the closing company? Should I go to an attorney now and ask for assistance? 

Thank you as always BP!
- Derek

Quote from @Nick Velez:

@Derek Nemec

DSCR loans would be another avenue to go. 30 year fixed and rates are around 1-1.25 higher than conventional loans but they do not factor in DTI or income.

Have not heard of this, do conventional lenders offer these such as credit unions? 
Another question is, say for a 30 year fixed SFH mortgage, what is a typical hard money loan rate? 
Is there any reason why I should go with a hard money loan and NOT a DSCR?

Quote from @Scott Trench:

First of all, it sounds like you are crushing it, so congratulations! 

I think it is now time to move beyond conventional financing and into private money. One of our sponsors, Aloha Capital, (yes, they are an advertiser with BiggerPockets) offers loan products for both hard money and what we call "alternative to conventional" financing. You might find that the rates and terms are reasonably close to conventional terms, and don't come with the same barriers and rules of conventional mortgages. 

Personally, I plan to use conventional financing until I run into the problems you are having, and then switch to these "alternative to conventional" or "private" long-term financing solutions. Perhaps others here can chime in with more companies that offer these loan products as well.

 There is absolutely no way in hell you just replied. I literally just googled you about an hour ago and did a whole investigation on you haha! Read your book too a couple years ago. Even if it's an assistant, that is so cool. Thank you!

Quote from @Alex Gunnerson:

Hi @Derek Nemec,

This isn't going to work for every property, but I would recommend seller financing if you can convince the owner to do it. I would point you to BiggerPockets episode #554. The guest does an excellent job of explaining the process he uses to convince owners to consider seller financing.

Thank you for responding so quickly, I would ABSOLUTELY love to get seller financed deals. They are the best.
However, like you mentioned, it isn't going to work for every property. My goals are to expand rather quickly, so I am trying to find a more permanent method. I read private lenders/commercial loans are the only thing I can take advantage of in my current situation. Is this true? If so, my question is: 

How do I find private lenders that aren't going to be savages with their rates? Commercial lenders don't use DTI?
Can I use an LLC to continue purchasing SFH with conventional mortgages? UGH, I just want a conventional mortgage for 1,000,000 properties!! lol.