All Forum Posts by: Richard Chapman

Will do.

Thank you, Bill.

I recommended that the owners list ASAP and sell as-is. I am helping clean. Not expecting anything extra for me unless I help make the loan current.

I do have a lot to learn and will explore the Investor Basics and Foreclosure Investing forums on the BP site. I’m looking forward to joining you guys in the investor arena soon. I appreciate your feedback!

In my post on Mar 06, 10:24 AM, I wrote; “The owners already bought another house and live somewhere else. Their family members were in the house until the owners didn't have enough money left to continue to pay the additional mortgage. They finally had to kick them out and the house is now vacant.” (about 15 down from the original post)

In number 4, I would probably have to clear up the deficiency if I wanted to be part of the deal. Since there is no other money available, the contractor would have to cover fix-up costs and "pay PITI in the hopes that it might sell some day." I am not an expert in rehabs so I am not sure it this is something a contractor would consider.

The owners were trying to make everyone happy, the bank and the family members until their money ran out. They are good people (not so bright about helping out family members) but they just don’t have the funds to make the loan current or continue paying on the second home. They need to sell.

The reason I started this thread is that I have heard from a lot of “guru’s” promotions that investors can take over properties in pre-foreclosure SUB2 and sell them to make a profit. In this case, I might be able to do that because the owners have equity but how would that work for a property with no equity or the loan amount is more than the house is worth?

Why is there so much hype about real estate investors getting on pre-foreclosure list services if you can’t do anything with the properties to make a profit?

In this case, I primarily want to help out the owners but eventually I would like to apply proven techniques to “make money with foreclosures” (as the gurus say) in addition to helping out those who are in foreclosure. Is anyone out there making money with foreclosures? How?

Thanks for all of the feedback.

To sum up, if I understood correctly, the options are:
1) Have the owner list and sell as-is and hope it closes before the bank finishes the foreclosure. I would make an arrangement with the owner to get compensation (on the side) for my help cleaning, etc. This option results in the most money for the owner, least risk (and money) for me, and still has the risk of foreclosure.
2) I make a loan to the owner to reinstate the bank loan which would get them back in good graces with the bank. Have the owner list and sell as-is and hope it closes before the whole foreclosure thing starts/finishes again. This option gets me more money (if it doesn’t foreclose), allows more time to sell but still eventually has the risk of foreclosure.
3) I help the owner pay for some of the repairs, create a loan for compensation, list and sell partially rehabbed for maybe a little higher price and hope it closes before the bank finishes the foreclosure. This option might make a little more money but the risk of foreclosure is the same as option 1.
4) Bring in a 3rd party rehabber to finance the repairs and pay for holding costs, list and sell at a higher price after rehab, then split the net returns. This option allows more time to sell but any profit would be split between more parties. This might be a good option if rehab costs are low, rehabbed sell price is high and holding costs are reasonable. Eliminates the foreclosure risk.
5) Have the owner sign over the property to me (SUB2) for some reasonable consideration to them at closing. I would do one of the first 4 options above but now as the owner. If this deal goes to foreclosure, the owner would still have a foreclosure on their record and I would not make anything on the deal (also might lose a friend) unless I went with option 4 and bring in a 3rd party.

Clarification question – If I take over a property SUB2, am I actually the “owner” or is the current owner still at risk of foreclosure?

Are there any other options already proposed that I missed?

I heard about a method where you can sell to someone who wants to buy a house and can pay the payments but can’t get conventional financing.

6) Option 6 might be this: I loan money to the owner to reinstate the bank loan, help find a buyer who would do the rehab for equity consideration. Create “wrap-around” loan(s) to buyer where I get payments on the loan to reinstate the original bank loan plus some extra consideration for my efforts and the current owner gets the rest of the payments. The current owners, and I, continue to receive payments from the new buyer. The current owner continues to pay on the bank loan. This option might result in the most money for me and the current owner but profits are spread out over a longer time and there is a risk that the new owners might not continue to pay which would start the whole thing over again.

Do any of you have experience with something like option 6? What are the risks/benefits? If it is a legitimate idea, how would I find a buyer, etc.? How does it work from the buyer’s and seller’s perspectives regarding property taxes, insurance, income taxes, etc.?

Owner has been in regular contact with the bank. The bank says “they are in the foreclosure process” but no date has been set yet. Only late fees so far, no foreclosure lawyer’s fees yet. A date could be set at “any time” but if some sort of sale is in the works they could delay to accommodate the sale.

Local realtor said value as-is is around $280k. If in tip-top shape it could bring $330k.

I am not a realtor.

Marketing time could be 30 to 90 days based on what a realtor told me.

I can probably pay to get the loan reinstated but I can't afford to pay for repairs.

We would need another partner/contractor to do the repairs. Can we do some sort of wrap-around mortgage to a retail buyer and have them fix it up to build equity?

I can't afford to make additional payments other that what is required to get the loan current.

The owners already bought another house and live somewhere else. Their family members were in the house until the owners didn't have enough money left to continue to pay the additional mortgage. They finally had to kick them out and the house is now vacant.

Did I answer all of the questions?

The owner already lives somewhere else. I have been helping clean the place out to get ready to sell. I trust them completely to honor any type of arrangement we can work out. They also trust me to do the right thing. I can set up any contracts necessary and they will sign. I do not want to take advantage of them, just help them out and make a little bit of profit or residual income for my efforts.

What contracts do we need to set up and how can I “put someone in to make repairs?”

I might be able to help them get current on the loan. After that, how do I "look to a wrap arrangement and put someone in to make repairs."

I am not interested in "getting control" of the property but I would like to partner with the owner and get a little bit of the net sales proceedes or a portion of the payments. How might I set that up and "put someone in to make repairs?"

It is a large brick colonial style house (almost 4,000 SqFt) in an upscale neighborhood in Denton Texas. Retail value is around $330k (per property tax appraisal) $336k (on Zillow). Mortgage is around $200k but currently not paying. Fees and back payments are probably around $7-10k. Owner was helping family members, who were in financial trouble and out of work, by letting them live in the house. They actually took advantage and generally trashed the house while the owners were paying the bills. Estimated repairs amount to ~$15-25k. Owner would allow up to $50k to a retail buyer who wanted to fix up and live in it. Not to flip and make a killing.

Is there a way to help someone sell their house or use some sort of wrap-around financing to sell their house and get back a portion of the sale or payments for myself?

The owner has some equity but I don’t want to steal it from them (deed-in-lieu or something like that). I just want to help them out of a bad situation and make a little something for myself.

Does anyone have any recommendations about how to do this? The property is located in Denton Texas. Is anyone already doing anything like this in Texas?