All Forum Posts by: Derriel Cribbs

Hi Matthew! Investor in Florida here. Most of what I go after is at foreclosure auction. If we want to make an offer to the bank prior to auction, we generally have our realtor or attorney send an offer to the attorney for the plaintiff (bank). Keep in mind, if it is close to auction date, they may not even entertain it or pass the offer along. I have seen auctions cancelled just days before, so it is possible to get an offer in and have it go through a full review. Always do your research though on liens or encumbrances that may be on the property. When I first started, I couldn't compete at auction with the more established people, so I had to try to snipe what I could. It is a good way to get something at a great deal. Keep in mind, final judgement amount isn't an indicator of what the bank wants for it. It is possible to make an offer before auction date and have it not accepted, and then pick it up at auction for way less than you offered.

I picked one up two weeks ago at auction. We knew competition would be fierce for it. I had my attorney offer their attorney 60K. Final judgement amount in the case was 86K. Plaintiff's attorney declined it, said there wasn't time to do a full review and they were proceeding to auction. I had attorney send another offer for 70K, carbon copy reply to that one. One week later at auction, I picked the house up at 65K. Agent for plaintiff told me afterwards his bid-to number was 57K. If it weren't for other investors bidding, I could have potentially picked that one up for 3K less than I initially offered. 

Long story short, contact owners and be polite. Present it as an option to prevent foreclosure and help them. Don't sell it as just that, because you are in the business of making money also. They can usually steer you to the attorney or bank that has initiated the foreclosure. Reach out to them and make the deal happen, but do your research. Don't get discouraged, it is a tedious process, but you can do it.  Hit me up if I can help or if you have any questions.

If foreclosure auctions are your game, then go to every single one. In Orlando I am sure competition is brutal. Where I live, there are times I may be the only investor that shows up. If plaintiff hasn't given the bid-to number to the agent or doesn't want the property back, there is a chance that property goes for $1000 or less. Those are nice properties to pick up and cash flow on quickly.

Sheesh, @Tyler Watkins, that brings a whole new meaning to being crapped on by tenants! I found "presents" left behind by cats in our newest property we picked up last week, but never human gifts!

I think one of the biggest fails I have made is one we all probably have made. Relying too much on insider information. House is going to foreclosure auction 2 weeks ago. A realtor we work closely with is the realtor who sold this property last, only 3 years ago. She tells us that when she sold it, she personally oversaw the renovations to make it more attractive, since the owners lived out of state. She says the exterior cedar was repainted, new roof, new AC unit and air handler, new ductwork. All electrical work was brought current. Brand new premium carpet installed, and interior painted. The only thing the house needed would be a kitchen remodel and she would list it at 110-120K. The previous owner being foreclosed on passed away about 3 months after she purchased the house, so I figured the inside couldn't be bad.

Picked it up at auction for 65K. Entered the house that afternoon and damn near vomited. Apparently after the lady passed away, the family allowed her 6 cats and two dogs to have free reign over the house for what must have been months. They did attend to them to feed and water, but no effort appears to have been made to relocate them for quite some time. 

Two weeks in and all of the premium carpet we had no plans to replace has now been ripped out. The tack strips on the corner were rotted and sticky from cat urine. We have bleached and scrubbed the entire concrete floor several times. The kitchen "remodel" was basically a complete tear out. Cabinets were rotted and falling apart. Bathrooms haven't seen any updates since 1960. Back screen porch had rabbit wire nailed to the interior to keep cats from clawing out of the screen. It was attached to the porch with roofing nails. Every two inches.

We are still in good shape though. Reno is going well and ahead of schedule. Got great deals on cabinets and other stuff, but dang, we would have been in fantastic shape to make a lot if things were as they seemed from the realtor.

Realtor felt awful when she saw it after we bought it. I really feel she had no idea the interior would have been that bad in just a small amount of time. Lesson learned though, we are making the best of it and it will look great.

Thanks for the input, @Greg Scott! Don't sell yourself short, I bet you could manage a mean property!

I completely understand what you mean about scrubbing the thought of the old appraisal. For some reason I tend to use it as an early benchmark when evaluating a property, but I can see how that could be a recipe for disaster. Would you recommend using the property appraisers site to gain a better understanding of comparable properties in the neighborhood or is that better left to a realtor?

Good to know about the foundation issues. It eases my mind a bit about potentially buying this property to use as a rental until we could decide what to do with the foundation.

Hi everyone!

As the title says, I am relatively new to REI, have been educating myself, learning, absorbing, and reading everything I can get my hands on. I went to my first foreclosure auction last week, and even though I lost by a few thousand, I was confident in my numbers. I have some construction background and family who are general contractors, so I knew the value wasn't in the deal any higher than I wanted to bid. That being said, I don't have the experience to know when too much rehab is too much, so to speak. One deal I am looking at now is a good example.

I want to preface this by saying I am not in any way seriously entertaining this deal yet, just wanting to get a feel to see if it is worth researching and doing the legwork to determine if it is viable. 

I live and invest in North Central Florida, relatively rural area. The city I live is not large, but growing. Growth is expected to continue at a fast pace here. I came across a property from a coworker who came to me that she owns. It is a ~1400 SF 3/2 home built in 1987 in a nice and desirable neighborhood. I noticed in on MLS and saw the sale price of 60,000. Red flag. Checked the property on the property appraisers web site, last sold for $144,000 in 2005.

I talked to my coworker and she informed me that the house is built in a neighborhood with a lot of hills, and the house was built on one, as most were. It was not disclosed to her when she bought it that it had some soil compaction issues and the foundation had some cracking. I did not think to ask her if she had a home inspection done at the time. After the cracking got worse when they moved in, they talked to their insurance company, who sent someone out to test the soil. About a week later, her insurance company dropped them. The bank assigned an insurance company and their premiums skyrocketed. They ended up buying a new house, and renting this one out. Cracking continues to be an issue, and the bank finally agreed to negotiate a price to sell the house. That is where we are now. 

She has it listed with a realtor, who she says received multiple quotes to have the foundation/soil repaired. She claims it was in the $40K range. Current tenant is leasing for $1100/month and would like to remain there if home can be repaired.

So, a few questions:

1. If I were to make an offer and go after the house at say, $40K, and put 40-50K in fixing the soil/foundation issue, would the home regain its original appraised worth, or is this a scarlet letter on the home that will forever cause it to be devalued?

2. If I could pick the home up as-is and just monitor the situation while continuing to have it as a rental, would that be an option? I realize there is a moral issue I am having a hard time squaring about having a renter and his/her family in a potentially dangerous home, although there are no indications the home is in immediate danger. I also realize I would pick up a pretty hefty insurance price on the home. 

3. If the home was ever condemned, would there be any real value in tearing it down and rebuilding on a lot I now own in a nice neighborhood, or is this being overly optimistic about taking a giant bite out of a poop sandwich?

4. Any other ideas/options that could be on the table here? The homeowner really wants to sell and be done with it, and I am thinking the bank may be willing to play ball and dump a home they have no desire to take back. Coworker says they haven't ruled out letting the bank foreclose on it, and I have to think that the bank would do everything to keep that from coming back to them on their books.

5. I have the cash to purchase this property as-is. However, I would need to find funds to perform a drastic rehab. Do hard money lenders take on a property that is in a state of repair such as this one, or should I seek out external investors? 

I tried to put the most important relevant details in without dragging a wall of text out further than needed. Would be interested to hear the thoughts of people who are vastly more experienced than me. One of the things I see repeated here as well as other sources I have been studying is that sometimes these "hidden potential" homes are overlooked by others, but they could also end up being a nightmare.

Thoughts please, and thank you very much in advance. I have thoroughly enjoyed my short time here, this is a great community at BiggerPockets.

-DC

While I am new and probably not the best person to offer proper real estate investing advice at this point, I can tell you that one of the common themes I hear from talking to many successful investors echoes what @Jay Helms said above. You can spend a lot of time as a first-timer wondering what to do when the answer is to DO THE DEAL. In this case, put yourself in the best places to help you find opportunities. Align yourself with people who share your tenacity to get it done. It is infectious, and I would bet Dad would soon be on board with your line of thinking. 

Do your homework, get your financing in order, and do what you have to do to find the deal and then close it. You got this buddy!

Hi Aurailia!

I am in a very similar boat as you, just starting out, albeit in very different markets. I realized I had money sitting around and it wasn't working for me. I could continue to do what I have done so far and maintain the status quo, or put it to work using the ambitious bulldog tenacity I have always had but never felt was being fulfilled. I studied fanatically thanks to BP (articles, forums, podcasts, etc.) and have become so enthralled with this new adventure. I attended my first foreclosure auction today as a bidder, just 60 days after committing to learning this craft, and lost a fantastic flip home by $16K. I put so much work into researching and figuring rehab costs, consulting with realtors to determine ARV, pricing contractors and repairs, and doing my best to not get emotionally attached to it. I had my number to bid to, and when two guys ran it on up, I knew I made the right call. If I were going to buy and hold, I would have bid higher, but using the information I learned here, knew when to walk away. It was exhilarating. I noticed as I left the courthouse, I was not bummed at all, but excited to move on to the other properties I have researched and kept in the pipeline in case this one didn't pan out. Back to auction next week!

While I was disappointed, I can sleep well knowing I had faith in my numbers and the deal wasn't good for me. Reading your post reminded me why I got into this in the first place. Your passion for this is infectious. People who tell you that you shouldn't do this, well, just ignore them. If you are passionate about it and determined, you will succeed. Those people will be coming to you in a couple years wanting to know how to get where you are. 

Thanks for sharing, and welcome to BP. If you ever need a newbie to bounce ideas off, please let me or any of the other folks here know!