All Forum Posts by: Tim Silvers

Thanks for responding. The property is a condo. Sale price $58K. To be owner-occ. Since seller-financed and seller would be putting down $20K, which is a healthy down, but no docs required. Market value based on most recent comps (I have access to MLS). Property is in Nevada; foreclosure time can be 6-12 mos. depending, as there are a ton of laws that protect homeowners now that stall the process. Sounds like too many variables for me to feel comfortable and if I can't obviously get more for the property than a straight cash deal, it makes zero sense to entertain doing an OWC deal.

Am putting together a seller finance deal where I would be holding a first lien position and would be looking to sell the note. Here are the following stats:

1st lien face amount: $38000 

Current Market Value of subject property: $50000

APR: 8.00%

Term: 72 months, fully-amortized

Pre-payment penalty: none

To assess the exit strategy, what would be a reasonable expectation as to its liquidation value? I realize that letting the note season for a minimum of six months may add to its appeal. If there are any online platforms for estimating note valuations, I'd appreciate a posting of the links.

 1st: $135K

2nd: $115K

AP: $175K

ARV: $200K

 You mean it might be doable if I pay off the 1st as part of the deal?

I am looking at a sub2 deal with the following details:

1) Motivated seller that understands sub2 deals

2) 1st mortgage with rate of 2.75% 30 year ARM (loan is current)

3) 2nd mortgage (originally a HELOC) has been in default for 5 years & was already charged off (a charge off means the lender is no longer in collection mode, wrote off the debt, but does NOT equate to the debt or lien against the property being canceled as some people think). The servicer maintains the debt in-house and did not assign the debt for outside collection or to an attorney. They also stated they will not foreclose.

4) Seller's credit is already damaged, has more than one repo, foreclosure, and is insolvent, therefore, there would be zero tax liability for the seller from the cancellation of debt income/forgiveness of debt

Given the above, I have every incentive to keep the 1st and take the property sub2.The road block is the 2nd. The servicer of the 2nd requires full financials from the seller and claim they will not accept less than 50% of the balance which is unacceptable (seller already inquired, but never went through with it). I have had two other deals in which the 1st mortgagee canceled the debt 100% and the seller was insolvent, so no taxes owed for him either. Talk about a windfall for both parties! Why on earth would a 2nd, whose already charged off, and that's been in default for 5 years, still expect 50% settlements?

The way I see it, I have two options to try and force this stubborn 2nd mortgagee to cancel or at least discount the debt to 10% or less:

1) Hire a flat-fee attorney experienced in negotiating settlements on 2nds, especially one experienced in negotiating short sales.

2) Put the 2nd mortgagee through a short sale by having the seller short sell the property to me. The question is - can that be done by keeping the 1st mortgagee excluded from the short sale?

All input and advice welcome and appreciated.

Does anyone know if a HOA lien is superior to a a tax deed??? I'm in a state (NV) in which HOA liens are considered super-priority. So, if you purchase a tax deed at the co. auction, I'm assuming the mortgage(s) are wiped out, but the HOA lien remains and you have purchased property subject to the HOA lien?

I'm interested in purchasing HOA liens in upcoming lien auctions in Nevada but came across this legal blog: http://www.jdsupra.com/legalnews/residential-lenders-in-nevada-losing-out-80648/ which points out the ambiguity as to the outcome of the imminent quiet title litigation between the purchaser/investor and the bank that holds the first mortgage. In the majority of cases at the auctions, the first mortgage exceeds the current value of the property, so my concerns will be based on such.

Before I purchase, I would like to clarify some things.

First off, does anyone know if there have been enough successful outcomes in favor of the plaintiff investor/owner for quiet title actions to be considered a safe bet?

Second, what is the scenario if the bank responds with a counterclaim to the quiet title action within the statute time frame?

Am I correct to assume that if the lender forecloses on the property, the lender is obligated to pay off nine months of assessment + penalties, interest? What about the cost of the legal fees in filing the quiet title?

As I see it, the only surefire way to profit is the rental income less HOA, taxes, deferred maintenance, until the lender settles with me. As we know, litigation can go on for years, so the litigation would have to drag out at least two + years before I'd break even on the lien purchase. But that's just breaking even.

From what I've gleaned, it seems that any other profit play is indeterminable, as all I'm buying are the possessory rights to the property and the process of extinguishment of the loan is uncertain.

Given such, I cannot sell or convey the property until the first mortgage is wiped away via the action, correct?

Also, what happens in the event there is a property tax lien against the property?

Most importantly, would I be correct to assume that the risk to me is that the lender forecloses prior to my collecting enough rent to offset that difference and the final settlement (which includes he nine months of assessments) is LESS than what is paid for the lien, I would be at a loss?

Basically, it's a time play; assuming we cannot extinguish the lien, I'm betting on the come that the lender will not get around to foreclosing until I've recouped my rental income, correct?

Finally, what is the typical cost to file such a claim?

I appreciate your responses.

It has been two years since I started this thread and a lot has changed since - but the concern remains the same!

Since I've been priced out of our local market here in Vegas - from every buy-and-holder from the moms and pops to the big hedge funds paying stupid prices, I have migrated to the Phoenix market and have been been active and going full speed since last year.

My take is that although the market is just as saturated and many of the little guys have already been priced out, there is way more volume for the properties that are in need of major rehab that most don't have the wear with all to handle.

Quick question: What with the lack of inventory and rising prices, the hard-working flippers are seeing a window of opportunity of which to take advantage while it lasts. The question for the ages is - how long?

The rumors I hear (and, of course the one "guru" Preston Ely [ http://www.sfgate.com/business/prweb/article/Real-Estate-Mogul-Preston-Ely-Spreads-The-Word-4083839.php ]has been spewing in his webinar for some time) is that the big hedge funds will wipe all of us smaller investors off the face of the earth by making it impossible for us to compete with them.

And here's the latest one from BP's Steve Cook:
http://www.biggerpockets.com/renewsblog/2013/04/17/good-bye-glory-years-real-estate-investing/

It will be interesting to see where the Phoenix (and many other bubble markets) market is going this year and beyond

What are your thoughts as to the much-touted doom and gloom for us "little guys"?

As an investor submitting offers on multiple REO & short sale properties daily, manually printing out the offer and wet signing it, scanning, and then emailing back is way too time intensive & unfeasible. Other than docusign, what other methods do you guys use to decrease the manual downtime & streamline the process so as to increase the amount of submitted offers & thus boost the chances of getting accepted offers?

That's correct. You can then ascertain the CCR or ROI depending on how the deal was purchased (cash vs. leverage).