All Forum Posts by: Martin Sterling

Question about podcast 106 with Mike Sumsky

If borrower is behind and the property is worth 100k.
They owe 75k on 1st Mortgage and 35k on 2nd Mortgage, the interviewee on the podcast said he will get the 2nd Mortgage for $1500 because lender won't get anything in a auction. Couldn't the 2nd just foreclose? Couldn't they bid up the price in the auction to cover their debt? Why would they accept that?

The interviewee also said they short sale the 2nd mortgage and took over the 1st Mortgage subject to?

How do you short sale a 2nd Mortgage?

What is a buyer buying and why?

Thanks in advance

Regarding Podcast Episode 106

If borrower is behind and the property is worth 100k.
They owe 75k on 1st Mortgage and 35k on 2nd Mortgage, the interviewee said he will get the 2nd Mortgage for $1500 because lender won't get anything in an auction. 

1 - Couldn't the 2nd foreclose? Why would they accept $1500? 

2 - If property goes to auction, doesn't lender on 2nd mortgage have the right to bid up the price to the amount needed to cover their loan?

3 - The Buyer (interviewee) short sales the 2nd mortgage and took over the 1st Mortgage subject to?

4 - How do you short sale a 2nd Mortgage? What is buyer buying and why?

Thanks!

I'm in New York City and from what I hear, wholesaling is very difficult contract wise as well is in practice. I was trying to think of some creative ways to secure my interest.

Can I create a referral fee contract for buyer and frame it as a research service on the subject property that I can create a lien against property if they do not pay?

I've heard many different versions of what they consider due diligence before they make an offer on a property and I'm confused as to what is considered responsible and appropriate.

For example, on a buy and hold, I've read where in order to determine a properties value an investor would need to find at least four comps, look at all the expenses for each comp, do a vertical analysis to determine each line items percent of GOI, then compare that to the subject property. We are assuming you already know title is clear, no liens, the sale price is at least 20% below ARV including any repairs as well as repair costs if any, the neighborhood is 70%> tenant occupied. What if it's a "hot deal" and the seller/wholesaler needs to close in 7 days. How do you pull off this feat? Whats the appropriate amount of due diligence (specifically).

Where does the diligence end? When is it past being efficient and become excessive?

I guess my confusion is how detailed do you get when making an offer? Do you go as far as getting five comps in a half mile radius, getting monthly expenses of all the comp properties and doing a vertical analysis to see what percent of the GOI is each expense. Then compare that to your subject properties expenses aside from calculating purchase price as a percent of ARV, Gross Rent Multiplier, etc...?

Are you guys doing all that before making the 1st offer?

Just trying to get a little clarity.

Thanks guys. Great information.

This may be a newbie question but if I'm dealing with a wholesaler or other investor and I want to buy their property and they quote me an asking price, what is the process steps of getting the deal while ensuring your research is sound on the deal.

I ask because I see wholesalers looking for a close within 7 days. That's a very short time to get all your inspections and evaluations done

Thanks. Great Information.

How do Chapter 13 or Chapter 7 effect a note you have purchased or about to purchase? What are the opportunities and procedures necessary to take advantage?

Thanks in Advance

Which would you say is better for a Buy and Hold strategy or Wholesaling, Properties or Notes? What do you think are the pros and cons of each?

I'm just starting out and the way I see it, Notes seem to have more flexible exit strategies. In addition, buy buying the note I could foreclose and take the home at a much deeper discount than I could've got negotiating with the homeowner or bank. Granted, depending on the state, foreclosure can be time consuming but it can still be profitable.