All Forum Posts by: Marty Boardman

Here's a pre-foreclosure deal I closed two weeks ago (Arizona)...

Seller slipped into foreclosure in 2021 - did a loan modification with his lender (big mistake). His monthly payment jumped from $1,300 per month to $2,100. He couldn't make this payment so lender set a new auction date for 1/4.

I gave the seller 10K cash at closing (plus 90 days to move out), reinstated his loan (42K) and took title subject-to. The seller will get another 20K when he is moved out.

My all-in with the underlying loan is 275K - house value is 400K. It was built in 2012 so not much work needed, mostly cosmetic (paint and carpet). I should clear about 85K in profit.

The alternative for the seller was losing the house at auction, a nasty foreclosure on his credit report, receiving NO cash and getting thrown out by the county constable within 2-3 weeks.

Congrats Jason on taking the plunge in RE investing!

First of all, these are not crazy times. The market is not crazy, it's just the market. This kind of thinking is what keeps people on the sidelines. There is never a wrong time to invest in real estate, only a wrong way.

Your mindset should be "there are some incredible opportunities available right now with the right strategy".

Second, starting an LLC, getting an EIN, business cards, websites...all this stuff is just getting ready to get ready. It would be like starting a medical clinic without learning to become a doctor first. How can you diagnose a patient without proper training? Learn to be a real estate investor first, that is your top priority. You can sort all the other details out later.

Finally, what is your income goal? How much money do you want to make doing this? Are you looking for passive income per month/year? Do you want to quit your job to flip houses full-time? If this is the case how many houses do you need to flip per month/year to cover your expenses?

You're welcome!

Foreclosure notices are recorded with the county where the property is located. So if you want to find properties on the Missouri side you'll need to look up notices in that county. Each state has their own legal process for foreclosures.

It's great you've done so much research already Matthew. Congrats!

I've been flipping pre-foreclosures and trustee's sales in Arizona for 20 + years. Your TOP priority is to make contact with the owner and get the property under contract ASAP. Otherwise another investor (like me) could swoop in and snatch it up right from underneath you. You can always ask for a 5-10 day inspection period to get financing/rehab estimates sorted out.

With a pre-foreclosure you want to make sure title is clean and that the foreclosing lender is in first lien position. Also, if there are state/federal tax liens it could be an issue selling or refinancing.

What is it specifically you need time figuring out what to do with this property?

The BEST source for this information is your local county courthouse. The Knoxville Focus publishes foreclosure notices in Knox County weekly. Here's the link:

https://www.knoxfocus.com/arch...

Here's an attorney that handles many of these cases:

https://rlselaw.com/property-l...

Shoot me a DM and I can get you more tips/info. Good luck Nilsa!

Is this for a property you already own, or a property you're looking to buy to fix and flip?

For contractor #2 - work up a document that states he's not to proceed with any more repairs without your written consent and have him sign it. It may not hold up in court, but at least you have something in writing. Not sure what the laws are in GA, but in many states contractors are required to provide you with a written estimate of repairs and labor with a completion date. If you didn't get this from him then, ask for it now.

To avoid this in the future stop hiring general contractors. Sure, there are good ones but I've found most of them don't have the ability to handle a whole-house remodel. They are more into speciality projects like kitchens/bathrooms, but get in over their head with doing it all. Project manage yourself (or hire someone to do it for you), pay for the materials yourself and pay the sub-contractors directly. This gives you TOTAL control over the project.

I hope this doesn't sour you on doing more flips in the future Scott! I've hired/fired more than a dozen GC's before I finally figured out doing my own PM, or hiring out, is the better way to go.

Even if you can get a loan through your business name to fund these rehabs, most banks will want a personal guarantee. If you're certain about your numbers then get a personal loan. Chances are the rate will be lower, and underwriting much faster. It took me years in the business (and over 100 deals) before I could get any private lender/bank to do non-recourse loans.

Why not sell one of them and unlock the cash needed to rehab the other?

If your numbers are solid on both deals you should be able to find a local bank to fund the rehabs. Can you provide a potential lender/investor with proof these deals are profitable (i.e. comps, rehab estimates, photos, videos)?

It's interesting that the deceased owner went through the trouble of putting title in her son's name, but never contacted the lender to make sure he could speak to them on her behalf. This is easy to do, either verbally or with a formal loan authorization form. As @Matt Devincenzo and @Chris Seveney have mentioned, the lender will need verification that the owner has passed away (death certificate) and that a will exists naming her son as the executor/heir to the state.

Like Chris also mentioned, the son should still be receiving statements, and should also have his mother's SSN. With this info he could get the payoff statement online (most banks have online payoff request capability).

I've closed a lot of deals like this before (and lost many of them to the auction). There's always drama going on that the parties involved may not tell you about. 

For example, last month I got a call from a guy in foreclosure and he wanted to sell. The loan was in his mother's name. He never went through probate and fraudulently signed a deed from his mother to him right after her death. He didn't think I'd figure it out, but it was pretty obvious from the signatures/dates. I sent the info off to my title company and they confirmed this so I told him he wouldn't be able to sell this house to anyone without clearing up title first (and going through formal probate).