All Forum Posts by: Rick Pozos

Most people like simple.

Keep it simple for the owner. "If I give you some money, can I take over your payments??"

Half of the people will tell you NO. The other half will get some equity in their hands and you will have half of the deals that you go after.

That is going to be a local question.  Talk with other investors who are closing deals and ask them where they close. Call up the closer and ask them for a couple of minutes of their time. Ask all the questions that you need to know.

You really have to network with people at your local REIA.

Have the homeowner call the bank and ask for a Reinstatement Amount and a Payoff Amount. The payoff will tell you exactly how much is owed on the house and you can make the offer based on how much the owner is going to put in their pocket at closing.  

If you are buying subject-to the mortgage, you want to know how much arrears there are so that you can catch it up and then know how much you need to get the sellers.

The one thing that you really have to look out for are liens and judgements. I am talking about on the property, but also on the sellers themselves.  You will need to have a title company or attorney(depending on what is done in your state) run a title search for you. This way you will know if the seller has IRS liens, liens on the property or child support due or any other items that cause the title to the property to not be CLEAR.

But yes, it is legal and this is a great way to find foreclosures before they become foreclosures.

I think we should be having the meetings every 2nd Wednesday of the month.

@Account Closed the house is 2 blocks west of St. Mary's University, right off of Woodlawn and 36th St.

I have always been thought of as someone who is a little quirky and I do things a little out of the ordinary. I have prided myself on that and especially now being in the real estate game where it has really worked to my advantage.  I see things that most people dont. There are always many ways to do the same thing, but we get in a rut and do them one way. 

I was talking to a lady, we will call her Gloria(my wifes name), about her house that is going to foreclosure. She filed for bankruptcy (BK) a year ago, but then did not make payments and was out of it. She had missed payments to the 1st mortgage and the 2nd mortgage. 1st was about 41k balance, 2nd at 17k. First was foreclosing. Repairs needed for a flip were about 20k with ARV at just over 100k. I offered 60k.

We talked about giving her cash for her equity and do a sub-to, sale and lease back, credit of her equity for rent credits, lots of different options. After talking for over a month, the day before the foreclosure sale has arrived ("manic monday" because foreclosure sales in Texas are 1st tuesday of the month). She wants 10k equity, nothing less. Because of the condition of the house, I could only give her a few thousand $$. She wanted more. I could have just let her lose the house and nobody gets anything, but since I am a nice guy and always doing things so that karma does not bite you when you are not looking, I came up with a solution for her.

I told her that I could give her the reinstatement amount to bring her home current($7175) if the 2nd would work with me. I figured if I could buy the 2nd at half price ($8,500)or less and then pay the arrears, I would help someone and have an ok return. I found out that her 2nd was at 3%(not a good return). I told her that we would have to modify the terms of the 2nd if I was to help her. Instead of 3% it would be 10%, also the term that had 20years left would now be 5 years. She agreed on manic monday. Now this all works if the 2nd agrees to a BIG discount.

So I go to the 2nd, who is a local non-profit, and ask to buy the loan. They already know that the 1st is foreclosing and that she might file bk again. If foreclosure takes place, they get wiped out. If bk, then they wait another year without payments, but they are a non-profit so they are not really concerned about that. I mention that if foreclosure happens, and it will if I dont buy the loan and catch up Gloria, they will get NOTHING. After all of the work I have put into this I start thinking that I need to really make some money here. So I offer 10% of the 17k. After they choked a little and their eyes were wider than salad plates, they agreed. They would rather get $1700 than get wiped out tomorrow.

The executive director was not there to sign the assignment of deed of trust so I would come back tomorrow to hand them the cashiers check for $1700 and get my assignment. So I wired the money to the 1st so that he would pull it from the sale.  

Tuesday morning I am going to drop off my cashiers check and get my assignment of deed of trust so that I will now own a 2nd for total $9k out of pocket, but with a balance of 17k. The final numbers are 42% on my money if she pays on time, or I can sell the note after she seasons for 6 to 9 months for an even bigger return. Someone will pay 14k or maybe even 15k for the note if I need the money. The 2nd was trying to squeeze me on Tuesday morning to try and get more money from me, but in the end, they took the $1700 and the owner stayed in her home. Gloria is really the one who came out ahead if you really think about it. She did not make payments for several months, her loan balance on the 1st is now smaller and she is 100% current on both her loans. The 2nd took a bath because they did not pursue the homeowner and keep her on track.

PS This type of deal would have been perfect for a self directed IRA(SDIRA) or solo 401k.

Lake Flato is a big name here in San Antonio. Take advantage of all the networking that is available to you. And welcome to Bigger Pockets!!!

Make the 3 hour drive. No one can represent you better than you. Since you are there, they have lots of museums to go to, Shopping at the Galleria and maybe Quest IRA has a class going on that night about SDIRAs. Maybe you could network with some people from here, BP, that you could have lunch or dinner with while you are in Houston. Then maybe they could go to court for you next time.

You could also check on the property and the area while you are there.

Yes, the good karma!! I try to help by asking if the people have a 401k or IRA that they can borrow from. That way they can get current. Also, do they have any family members who can help?? Do they have any friends who have some cash to lend them or put a 2nd on the house??

Just about anything short of ME giving them the money to catch up on their payments. If they have no other way to catch up, then I offer to purchase the home.  I think most people do not want to leave their home so I want to help their situation first. If there is no way they can stay, then I would make an offer. If they can catch up, great, I helped someone. I leave a few cards with them so that they can pass the cards to friends or relatives who might be in the same situation and pay a referral fee $500 if I buy their friend's house.

I have helped WAY more people than I have purchased properties. 

Again, yes good karma.

I deal with a bunch of foreclosure situations. People just think the problem will somehow magically go away. They put their head in the sand.  I always try to help the people first, but if they can not or will not help themselves, I offer to purchase the property.

Because of the timing of the sale and usually the bad condition of the property, you can usually get a pretty good discount off of ARV.