All Forum Posts by: Han Oh

I am in contact with a 2nd position private lender who is willing to sell his note at a small discount. The property is in California, the sale date is scheduled for mid December and he is the foreclosing lender. There is a 1st in place which was previously in preforeclosure but that has issued notice of rescission and I can't find any default notice since then. The current owner has filed for bankruptcy about a month ago and the 2nd position lender is saying that he is in the process of getting a release of stay from the court which should happen pretty soon. I do not yet have information on whether it is a Chapter 7 or 13 bankruptcy as I have yet to make more detailed contact with the lender. There is plenty of equity in the house.

I'm thinking about purchasing the note from the lender after bankruptcy is lifted and taking over his foreclosure process. 

Being this my first note purchase experience, what are the risks and potential complications that could arise from this? If the bankruptcy was filed just one month ago by the owner, why would the court grant the release so soon especially if there is a payment plan in place, and can the 2nd position lender request for the release? Can the court order the 2nd lien to be reduced or even relinquished due to the owner being in bankruptcy? Do I run any risk of losing part or all of my investment?

I sincerely appreciate all of your responses in advance.

Happy Thanksgiving!

@Todd Toback @Keleko Fischer I'm also curious as to why you've stopped doing lease options in CA? Are investors still doing LO in CA or is that pretty much non-existent here?

Hi @Joe Homs Good to see you here again.

Yup that's the one. I agree, no chance with me doing this one..

Thanks guys. I didn't mention this in my OP but he said that this house is in escrow so apparently there is someone who still thinks something can be done to it, but escrow is getting delayed and delayed so he's looking for another buyer. Maybe the investor realized what he was getting into..

I got a call from a seller today who has a 1300+ sq.ft. house that been vacant and yellow taped for some time. The house sits on top of a hill, giving it a nice view, but that is giving way and sliding off. Half of the backyard is literally hanging off of the cliff. There are visible cracks along the floor of the dining and kitchen areas (as you can see from the pictures). The city is currently evaluating plans for soil reconstruction and remediation. 

Seller owes $60K of back taxes (has not paid taxes for the past 6 years) which I verified via county website and has a lien worth about $5K according to him. He says he will sell the house to me for $80K with him taking care of cleaning up the title. Property is in a nice area of Orange County, CA and could be valued at $600-700K after repairs and of course soil remediation. Sold comps around the neighborhood run between $700-800K.

Being that I don't have a lot of experience yet, I don't have any idea how involved and how costly (in terms of money and time) it will be to bring this house back to normal and up to par with other properties around. 

Is there any investor out there who works this kind of a house?

@Abraham Hodroj

Just make sure to remove dups on the mailing address and again on owner name columns so that you don't end up sending multiple letters to the same owner - you will probably get a nasty call from an angry owner. When you talk to the owner just ask him if he has any other properties that he'd be interested in selling and he should open up if he's motivated.

@Abraham Hodroj

You will find many more in state absentee owners than out of state and many of them living within 50 miles of the subject property. It doesn't mean that they will not be motivated to sell. You should definitely keep the in state leads and add extra filters by equity, property type, age, etc to refine the leads you will be mailing too. 

@Chris Seveney Thanks for the feedback. Yes I was overthinking this, just wanted to be sure that I had all the bases covered for possible entry/exit strategies in case we couldn't agree on a purchase price with the seller. We spoke to him again today and he is willing to walk away with money out of pocket which is not much different from what we had in mind, so it's looking promising.

Hi BP Nation,

My partner and I got a hot lead in north OC and need input from experienced investors to properly structure the deal.

Property is owner occupied, seller is 4 months behind in payments and was recently served an NOD. He's also behind in HOA payments. The total arrears, according to him, is about $10K.

He bought the property in '05 for $525K and has not put much work into it. He owes $150K on it, with a monthly mortgage payment of $808. Very rough ballpark figure for the repairs is $30K-40K (will be getting more details about the condition on our next call today). Sold comps around the area run about $465000 on average.

We are thinking about offering him 3 options. 

OPTION 1

Full cash price at 80% of the ARV - repairs - arrears, about $325K. We'll start negotiating at 75% and come up to 80% if we have to. If we can do this, our exit strategy would be to wholesale it or JV with a flipper investor to flip it.

OPTION 2

This is where we have questions. If he's OK to get paid over time, we can offer him more using payment in terms. In this case our exit strategy would be to rent it out. Is there any way we can structure this deal using a combination of sub2 and seller financing? I ran some numbers myself and see if we do that we could potentially end up with a monthly payment amount that will not make sense to keep this as a rental. Maybe another exit could be to find a TB on a LO? Say we can agree to buy it at $400K, put about $35K in repairs and advertise the property as rent to own for $470K? Property is in a good location with excellent schools. 

OPTION 3

Offer the seller to have the property listed and sold the traditional way. 

Appreciate all of your valuable inputs in advance!!

@Gregory Hodges

I use Podio too but did not try Joe McCall's version. What I do is I create apps in Podio, one of which is a lead entry app where I can enter all sorts of information about a prospective seller, and so far it's working well for me. If you PM me I can share more details and show you how I do it.