All Forum Posts by: Matt W.

@Wayne Brooks Sorry, forgot to mention previous owner is dead, wife is dead, kids are MIA and I can't find them.  Neighbors say one child is in Florida (doesn't it seem like one missing sibling always ends up in Florida??) and the other is dead.   Kinda depressing, but I tried hard to buy it from them before it went to auction the first time. 

A little background: 

September 2019, while driving for dollars I noticed a run down house with papers on the windows, obviously headed to foreclosure. During my research and after hiring an attorney to do a title search we figure out that a $25k HELOC is causing the foreclosure, but an older mortgage of unknown balance would survive.

November, house sells at auction. Bidding started @ $12000 and finally sold at $80000. Needs lots of work, but ARV is @$200k. So many months go by and it never gets fixed up and ownership does not change on tax records. So today I contact the register of deeds and see that the winning bidder defaulted on their bid, lost their $6000 deposit, and the property is back for sale.

I contact the "trustee," a big law firm, and they won't tell me a straight answer about what they plan to do with the property or when they will do it.  I skip traced the winning bidder and he says he thinks the bank was coming after him for $50k additional money to get a clear title and satisfy the older surviving mortgage. 

Point being, is there any way to get the bank to sell straight to me in order to avoid going to auction again and potentially having another defaulting bid? The HELOC and phantom mortgage were both with Wachovia (now Wells Fargo), but of course they could have been bundled and sold as a MBS ten times by now. I know to some worker bee at the bank this property is just a column on a spread sheet, but it seems like it could be a win/win. Any advice is appreciated!

@Byron Law

Go crazy at Taco Bell.

@Rachel S.

He bought something worth $140000 for $750? That makes no sense, and if it were possible so many other investors would have bid the price up.

This whole story sound like a game of Telephone!

(Disclaimer: yes, I'm a noob and I'm not planning to go out and lose my life savings on this plan tomorrow.  I'm putting this out to the BP community to see if the concepts are valid.  Any advice is appreciated! However, we all know "advice" can take the form of "don't buy real estate, it's risky, you'll be fixing toilets at 2 am, my uncle lost it all...")

We all know and love the BRRRR method, but why can't the core tenants of the BRRRR strategy be applied to building a brand new house from the ground up? I call this DURRR: Develop Underwrite Rent Refinance Repeat.

Say you/your private lenders have the funds to buy the land, buy plans, hire the GC, permitting, everything until you have a fully built house with a Certificate of Occupancy.  Then, instead of selling it, you get tenants in place, get an appraisal and refinance out your money.  

Advantages I see: because the house was built new to 2020 standards, it would require almost no cap ex anywhere for many years. A decent, brand new house attracts a higher quality tenant. Construction costs could be more predictable, as there is no "surprise issues" like rotten subfloor, asbestos under tiles, etc. Possibly banks/appraisers will be more willing to give high appraisals to brand new homes.  You can keep the design and finishes extremely simple and rent proof, yet still quality; simple one pitch roof, standard size windows, LVP floors from the start, off the shelf insert bathtubs, cabinets, etc. 

Disadvantages I see: Obviously more issues to juggle building a brand new house.  Even though you'll have a GC house builder, you still have to manage them. Probably harder to find financing than compared to fixing up an existing home. 

I know many homebuilders lost their shirts in the last big downturn, and by doing this I could be setting myself up for the same fate. In my case, don't need to sell for a profit right away. Also, if the appraisal came in low and had to leave $10-20k in the deal, that would not be terrible because it's like getting a brand new investment property for 5-10% down, which is a great deal!

Thanks and let me know your thoughts!

@Ron S.

I spoke with the guy at the bank/servicer, they are adding on so many fees and back interest that it does not make sense to try to buy it before auction. I will go bid on it when it it sold!

@Damian Antonio

In 2016 she did a loan modification where they reset the loan term to 40 YEARS, so pay off 2056! I’ve never heard of such a thing plus the lady is @60 already.

Anyways, even with the loan modification I don’t think she ever made payments. I was supposed to be sold 2 years ago but it kept getting delayed and then of course Covid delayed it again.

Thanks for the advice. At $110 it’s an OK deal, not great, so if the bank won’t accept less I might have to pass.

@Wayne Brooks

Thanks!

Hi BP,  

Like everybody I'm searching for off market deals.  This is in my town of Wilmington, NC and any investment grade houses below $150k sell very fast, usually for what seems like too much.

I found out about this house on a law firm's sale list.  I contacted the owner, and she is very willing to sell and just move on.  She has provided me with the paperwork that she has been sent regarding payoff and some people in particular at the bank who I may be able to contact and negotiate a lower payoff.  

She has owned it for 15 years and is current on taxes. There is an HOA that she has mentioned "is mad at her" for the condition of the outside. Of course it is overgrown and needs wood repair and painting. Current payoff is $110k, ARV $170-180. Repairs are @20K. She's agreed to take $5k for her equity. So this is a borderline true BRRRR, but I am ok leaving money in the deal.

The plan is to contact the bank and try to negotiate a lower all cash payoff.  Assuming we agree on a number, what steps do I need to take to purchase this property and protect myself until I refinance into a conventional mortgage? Here's what I already know:

---Hire lawyer to write contract/handle closing---Hire lawyer for title search---Get title insurance---prepay home owner's insurance for at least 1 year at closing---contact HOA company and find out about fines/liens---

Am I missing anything?  Anybody here ever buy a pre-foreclosure all cash?  Let me know!

@Renjie Song

Thanks, I’ll look into those suggestions!