All Forum Posts by: Jason M.

Well, the plot thickens.  I called the foreclosing attorney and they said the 12 month redemption is correct but couldn't tell me why.   Next I called the attorney of the entity who is currently on title which is an llc.  Apparently this investor essentially purchased the property from the owner right before the sheriff sale in order to obtain redemption rights.  The attorney told me his client intends to redeem the property when the redemption period ends.  If I proceed with buying the sheriff deed from the bank this investor would have to pay me $133k plus interest if he does redeem.  I stand to make about $20k but I would be tying up $110k until next February.  I'm not sure what to do

The EMD was $5500

About a week ago I was the winning (and probably only bidder) on a town home that I thought was a good deal and would make a good flip or buy and hold. The property was being sold subject to the redemption period and is currently occupied (foreclosure sale was 2/10). I drove by it a few times and it looked decent from the outside and was able to see pictures on the MLS from the owners trying to short sell it in the winter. The winning bid amount was $110k and the comps were $170 so I figured it was low risk to hold it for a few months until the redemption expires and then deal with getting the occupants out. I've done flips on these town homes in the past and even in horrible condition they are usually $10k give or take to put them back into shape. I have already signed the PA with Auction.com and sent in my earnest money. The seller (Wells Fargo) is paying for buyers title insurance as well.

My excitement for this deal has been deflated in recent days after doing some research. I discovered that the bid amount at the sheriffs sale was $133k well under the $200k that the owner owed on the property. I also discovered that the notice of sheriff sale that was posted in the paper indicated a redemption period of 12 months!!! MN at least used to be 6 months so thats what I was expecting. Apparently they changed the law this year where if the borrower owes less than 2/3 of the original balance then redemption is 12 months...not the case here so how could it be 12? I also noticed that the owner quit claimed the deed to a LLC in December which turns out to be an attorneys office! Now my wheels are spinning and Im not sure if I want to proceed with this sale. I have some questions to anyone with experience or a similar situation.

1) Do you think someone (another investor maybe) may have taken over the deed in order to eventually redeem the property? The sheriff payoff is only $133k and the house is worth about $170. If this happened would they have to pay me the $133 since I would own the sheriff deed?

2) Is it likely this gets redeemed by the owner or refinanced by someone during the time I would own the sheriff deed?

3) Whats up with the 12 month redemption? I see the law has changed but the amount owed by the borrower should have kept it at 6 months

4) What can I do to take possession of this property sooner? I don't want to tie up $110k for 9 months.

5) What are my other risks or is there something else I'm not considering?

Thanks in advance,

Jason

About a week ago I was the winning (and probably only bidder) on a town home that I thought was a good deal and would make a good flip or buy and hold. The property was being sold subject to the redemption period and is currently occupied (foreclosure sale was 2/10). I drove by it a few times and it looked decent from the outside and was able to see pictures on the MLS from the owners trying to short sell it in the winter. The winning bid amount was $110k and the comps were $170 so I figured it was low risk to hold it for a few months until the redemption expires and then deal with getting the occupants out. I've done flips on these town homes in the past and even in horrible condition they are usually $10k give or take to put them back into shape. I have already signed the PA with Auction.com and sent in my earnest money. The seller (Wells Fargo) is paying for buyers title insurance as well.

My excitement for this deal has been deflated in recent days after doing some research. I discovered that the bid amount at the sheriffs sale was $133k well under the $200k that the owner owed on the property. I also discovered that the notice of sheriff sale that was posted in the paper indicated a redemption period of 12 months!!! MN at least used to be 6 months so thats what I was expecting. Apparently they changed the law this year where if the borrower owes less than 2/3 of the original balance then redemption is 12 months...not the case here so how could it be 12? I also noticed that the owner quit claimed the deed to a LLC in December which turns out to be an attorneys office! Now my wheels are spinning and Im not sure if I want to proceed with this sale. I have some questions to anyone with experience or a similar situation.

1) Do you think someone (another investor maybe) may have taken over the deed in order to eventually redeem the property?  The sheriff payoff is only $133k and the house is worth about $170.  If this happened would they have to pay me the $133 since I would own the sheriff deed?

2) Is it likely this gets redeemed by the owner or refinanced by someone during the time I would own the sheriff deed?

3) Whats up with the 12 month redemption?  I see the law has changed but the amount owed by the borrower should have kept it at 6 months

4) What can I do to take possession of this property sooner?  I don't want to tie up $110k for 9 months.

5) What are my other risks or is there something else I'm not considering?  

Thanks in advance,

Jason

What happened with this? I'm in a similar situation with auction.com on a property I won.

Thank you for your insight. I have been making lots of offers lately on potential flip houses but keep getting beat by others willing to pay more. I've been getting frustrated but your post has reminded me to be patient and the right deal will come.

When I decided I wanted to buy rental property back in 2002 I knew I needed to save some cash for a down payment. I made a difficult decision at 26 years old to move back in with my parents to save up. In one year with I was able to save about $30k and in March 2003 bought my first single family rental with 5% down. I stayed at my parents for another year and did not move out until I had acquired 4 rentals all acquired with 5% down. I continued to buy properties as for the next several years but I always had roommates helping covering the mortgage on the house I lived in so I could continue to save down payment money. Fast forward to today and I still own them all. I enjoy nice cash flow and equity. I still buy rentals but fewer and farther in between as I like to pay cash or use equity loans. The take away is to make sacrifices in order to get the first couple deals...it may take time and be uncomfortable...but it's worth it.

A few years ago I started using a property management company (renters warehouse) for tenant placement as well as advertise myself on the usual (craigslist, postlets, etc).  This has worked out great and I only pay them if they find a tenant before I do (about 1/3rd of the time).  If they find a tenant (that I approve of) they do the background checks and write the lease up.  Their fee is typically one months rent so its not cheap but it beats a vacancy!

I drive a 2015 f150 lariat eccoboost and have a 2013 Ford Focus as a "running around town to look at houses or stop by my rentals" car. I don't want my tenants seeing me drive around in a new $50k truck. My wife drives a 2015 MDX. We love new cars and have sacrificed many years to build our portfolio so we can enjoy the rewards. I believe you have to be smart about your spending in the early years of REI while at the same time live for today. As a side note I recently sold my 2013 F150 for $29k that was paid for in cash. I will use that money to put back into real estate via a buy and hold or flip. I took out a loan for the new 2015 F150 because I found it easier to get a car loan than to finance a new property. A creative way to generate cash and at the same time get s new truck!

I drive a 2015 f150 lariat eccoboost and have a 2013 Ford Focus as a "running around town to look at houses or stop by my rentals" car. I don't want my tenants seeing me drive around in a new $50k truck. My wife drives a 2015 MDX. We love new cars and have sacrificed many years to build our portfolio so we can enjoy the rewards. I believe you have to be smart about your spending in the early years of REI while at the same time live for today.