Hi. Total newbie here. I have been reading the books and listening to the podcasts and talking to other seasoned investors (when they have time to reply) about the process for pursuing and winning preforeclosure deals in Texas. Here is what I have been doing and hearing so far. If there is anyone out there with some experience that wouldn't mind holding my hand a little, that would be great!
1. Secured lending through a hard money lender. They explained the LTV amount and would just need the address of the home I was looking to purchase, rehab, and flip. They would then send a proof of funds letter that would have a range that I could offer on the house and still have financing for any rehab (based on the condition of the house). They can also send an updated Pre-Qual letter with the exact amount should I actually get to that point where I am ready to make an offer.
2. I have been searching foreclosure.com (paid service) for preforeclosures in my area. I am focused on these because I heard auctions are normally cash only (not enough cash to purchased) and REO may be marked up by the time they reach a site like Zillow or HAR.com. With preforeclosures, I was told that I could essentially work with the homeowner directly.
3. Once I've identified homes in my price range (sometimes foreclosure.com will list the balance on the mortgage and that gives me a starting point), I drive by the home to just get a cursory view of the home to see if it's in good shape on the outside, check out the neighborhood and neighbors, and to see if the home is still occupied. I also do more research on the site to see how long the preforeclosure process has taken, when the auction date is set (usually within 2-6 weeks so I have to act fast), and identifying the homeowners name.
Here is where I may need some help. The feedback I am getting is basically I should send a letter to the homeowner that asks, gently, if they are willing to discuss selling their home. Has anyone had success with this method on this small a scale (5-10 letters a month)? I've also read that I could knock on their door. Being in Texas, I don't know if that's a good idea.
If you have some experience with preforeclosures or if I am totally missing some steps, please share and drop some knowledge. Thank you!
