All Forum Posts by: Nick L.

@Yashira ZavalaI'm a conservative guy so I'm going to recommend the simplest/safest way. Someone else might recommend something different.

Have you been in your current house for long enough to satisfy the owner-occupancy requirement on your mortgage? If so I would look at refinancing to pull out equity, then renting it and using the equity to buy the new house owner-occupied. It sounds like the seller would sell to you for a below market price as long as he can satisfy his mortgage. You might be able to get a 203k or Streamline 203k to build renovation into the new mortgage.

If you can't do this, a seller finance, Sub2 or lease-option would all work. You could even do a hybrid... like say for example you need to stay in your existing house for another 6 months and the new house has a tenant whose lease will expire in 8 months. You could lease-option or seller-finance the new house to take the headache away from the current owner today, then execute the option when both of those timelines are satisfied.

I personally would be reluctant to do a Sub2 or to break an owner occupancy clause. People do them all the time and the risks of getting caught are low. But they would make me nervous because there is always the chance of getting into big trouble.

@Percy N.I called the city to ask about any code compliance problems and they told me the water had been turned off at the street. Luckily for me it's a smaller city, so they were able to put me straight through to the engineer who had turned it off. He told me about the flooding. 

The day before this, I had spoken to the head of the subdivision's HOA. He had told me he didn't know of any problems with the property. I don't think he was lying but it's hard to see how he wouldn't have heard about this.

By the way I spoke with the engineer on the morning of the auction. So that was cutting it fine. I guess at least two other people didn't find that out or didn't care, because the place sold to a third party bidder for $30k above the opening bid. I hope they at least got a free truck out of it!

Sounds perfect for a master lease option or sandwich lease option. 

Wrap around financing would also be good as long as you don't intend to occupy. Otherwise you fall into the nightmare of Frank-Dodd regulations. 

I came here to say the same as @Brandon Battle. I had a similar basement room and rented it to a tenant with a candle making business. Cheap rent for her and a productive use of space for me. 

Don't rent it to anyone who you haven't screened. Otherwise you put your other tenants' security in jeopardy.

@Vanessa PetersSorry to hear that. Don't forget that the other bidders may be shills until the auction reaches the reserve price. 

Sometimes the banks price the reserve way too high or way too low - you just have to keep trying until you hit a winner, and hope nobody else found the same one!

@Account ClosedAll the big auction sites will shill bid against you up to the reserve price. Maybe not on regular sales but for sure on REOs. Sometimes you can guess what the reserve price is from the pattern of bidding. 

For example I bid on one where there was just one bid above me and then nothing until the last hour of the auction, when a flurry of bids came in. They were all under the reserve price. I'm guessing I was the only real bidder and the reserve price was just above the top shill bid, to get me to outbid them and hit the reserve at the last minute.

Yes, you have to look through windows, look at prior listings if any, talk to occupants or neighbors, whatever else you need to do within the bounds of the law. Obviously the less information you have, the lower your bid needs to be for safety.

Yes, most title companies will perform a search & hold or similar preliminary report for free or low cost.

Cash for keys, eviction, finding people a new place to live, whatever you need to do. There's a story somewhere on this site about a guy who couldn't get access to his own unit for a year or more due to illegal occupancy and tenant-friendly laws. Obviously that's extreme but it can happen. Cash for keys is simply - if you are out of here in X days and leave the place in good condition, I will give you Y dollars. Usually Y is enough for a security deposit and first month's rent for an apartment.

@Joseph LeonardI hate to go against something that @Jay Hinrichshas said as he is definitely an elder statesman. But in my experience not all auction.com or other online auction properties come with marketable title. Maybe the discrepancy is because we are in different states?

In my area, auction.com and its competitors (homesearch.com, hubzu etc.) get properties from a wide range of sources. Sometimes these are regular warranty deed sales like with any other transaction. More often they are post-foreclosure REOs that are sold with QCDs only. I bought one such property 2 weeks ago. The contract makes it crystal clear that insurable title is NOT a condition of sale. 

Of course the majority of properties will be fine because the lender will have wiped out junior liens at the sheriff's auction, but that's not guaranteed. There are all kinds of stories here on BP about auction.com type buyers being strung out for months or longer over title issues, and I have even heard of one poor guy who paid for a worthless QCD due to errors in the foreclosure process.

You are entitled to get your own title insurance but if there are problems you just have to ask for your EMD back and hope the seller is kind enough to comply.

@Vanessa PetersThe opening bids on auction.com and similar sites are not valuations. They're just low teaser prices to bring people into the auction. The reserve price is the true minimum sales price but of course it's hidden. If the auction ends and the reserve price is not met, the property won't sell. (Occasionally you hear of sellers approaching the highest bidder to make a deal after the auction, but only if the bid was nearly at the reserve anyway.)

You also have to watch for shill bidding on those sites. The site will generate fake bids up until the reserve is hit. It's in the rules but still kind of shady if you ask me.

Have you run title? You mentioned checking the city for liens but deeds are normally held at the county level. Maybe it's different in Louisiana with the parish system.

They're called quit claim deeds. And yes they can be very risky.

What is so wrong with title on this one property that you can only get a QCD? Have you had a title company search it?

A QCD just says, I am giving you whatever interest I may have in the property. That interest may be non-existent - I can quit claim you a deed to the Golden Gate Bridge. Or it may be a real interest but encumbered by a bunch of liens that you will have to pay off.

There is a role for QCDs, for example in family transfers or in REO auctions where the buyer is responsible for the title being valid. But not in regular transactions.