All Forum Posts by: Rick H.

Are you asking how I find these type deals or how do I physically gain access into the properties? The purpose of my post was to attract others who are prospecting for, marketing to and working deals that fit these and other scenarios that result in a property that is vacant because the owner demonstrates no interest. That last part is an important clue to vetting the don't care properties from the ones that the owner just hasn't gotten around to working on (REO, rehabber, developer, etc.).

Do you mail, door knock, hire kids on bicycles, etc.? Which scenario are your favorites?

Any other investors out that that work Orphan (vacant & abandoned property) deals?

I started working foreclosures in 1978 and, although I'm best known as a probate investor guy, I really love working the weird stuff. Here's my short list of the primary reasons people leave their houses , during all economic cycles:

1. Drugs and alcohol. While certainly no laughing matter, druggies & alkies provide about 25% of our opportunities, I figure
2. Incarceration. Be careful here. These sellers may lie to you to when truth sounds better!
3. Skipped. Sometime people just want to get outta dodge before selling.
4. Severe mental & emotional problems. We used to call them 'goofy" but that's insensitive. Also, it's not so funny when you have an owner who has lost touch with reality.
5. Senior dementia. This is a particularly tricky area. Your target property owner may be alive and living in an assisted living or nursing facility around the corner or hundreds of miles away. The challenge is to find someone with the capacity and power to do business with you
6. Deceased. All the expensive government studies have concluded that people will continue to die and leave messes. Count on it. BTW, in my State, California, it is not automatic that a property will be probated when the owner dies. Some properties just fall between the cracks.

Any other investors here hunt for these properties and work these type of deals? Is there enough for a separate discussion group?

@Eric michaels -
I'm getting into this post about 72 hours late, however my quick take is that your normal research methods did not pick up the fact(s) that a 1st had become subordinated to a junior position and you bid it as a 1st.

Given the fact most sales are cried 'without any representation...'. It leaves few tools for your counsel.

As a so called title geek, I'm in favor of accomplishing two things:

1) Find the error of my ways, and
2) Implement changes to my system to eliminate or reduce a risk in the future

I sympathize with your unenviable position, particularly because you're both stuck, distracted and hemorraging expenses, all at the same time and potentially for naught.

I find it useful to take a break from the conflict and see if there's other ways to either approach a problem (and turn lemons into lemonade) or to at least find a way to extricate myself from the situation, stop the bleeding and go into salvage mode.

In the meantime, what can you do to make profits while the pontificators attempt to find a legal loophole for your problem file?

I like Aaron's comments to you, as well. For most people, the investor's objective is to either acquire (or tie up) equity or cashflow at a discount.

If you're trying to control property to some extent now to receive benefits that probably won't occur until the future, the are other techniques. Using an option to either purchase the property or the equity later for terms you agree to today seems to fi your objectives.

The original question revolved around documentation. Here's a good habit (from the guy who had to learn to makes things simple after 30 years of making them complicated:

Just write down on a piece of paper the basic terms that apply:
The price
Components of the price
Down payment
Funds due upon at possession
Other Consideration
Existing loan to remain
Amount of Secondary financing (equity of carry back note, wrap, etc)
Other non-cash consideration (car, boat, ugly yellow motor home, etc.)

Addressing your original post, I believe, is that you keep the offer simple, can show the initial equity of the wrap 2nd either separate from the 1st, or since there really isn't ANY equity in your example, show the existing 1st as a component of the wrap 2nd your are creating.

Another matter that you will need to document is : who will receive the benefit of the equity created by the amortization of the underlying 1st mortgage? It will be different, depending on which side of the transaction you are on. If you are the buyer, you want to gain the benefit of the reduced unpaid principal of the underlying 1st.