All Forum Posts by: Scott T Brady

equity lines usually have a limit of how much % of the property value they'll go up to, and my guess is that the % limit is lower on investment properties than primary residences.  If that's true, it'll probably be tough to find a lender that would give an equity line much above that 75% dtv you'd already have.

Thanks @Cara Sides & @Dahlia Khalaf for commenting :-)

I'm looking for a Tulsa area contractor that is open to walking a property and providing a square estimate about what it needs to be brought up to rental standard; in todays crazy market I wouldn't expect anyone to do that for free and I'd expect to pay someone for their time and opinion, especially since it may take several shots to find the right property.

I'm an out of stater myself (Utah); any suggestions of who I could line up with?  Any contractors out there reading this that are open to that arrangement?  Thanks for any leads!

You didn't say where the property is, but do you feel pretty confident on how stable the prices are there? Rules of thumb (like MAO) are great starting points, but in the end if the numbers were solid and stable, would you rather pay $188K, get the deal, and make $10K less, or not do the deal at all?

If you're in an area where the prices are starting soften a tad, then may want to be careful.

Thanks @Chris Seveney, #1 confirmed what I'm seeing.

Yes, the plan now is to reinstate the 1st, leaving the 2nd and all other encumbrances in place, brushing up the place with $5K-$10K, and selling as is. Inventory is low enough and there are enough house hungry people here that it will sale, but it obviously won't be full ARV.

1st Principal: $270K
1st Reinstatement: $75K
2nd total balance: $97K
Other taxes/liens total: $25K

ARV is $550K - again we won't update it to that level, but $510K-$530K is likely.

We won't have significant money costs for the small amount put in (reinstatement + minor repairs/cleanup), and my partner who does hard money loans is a licensed broker so we'll be able to work out the listing commission.

So it's not upside down, but margin is too small for most professional rehabbers.  There's better room for profit to get it at foreclosure sale, but in our market that bid would go higher than I'd want to be involved in at this stage.

I'm working with a seller to stop his foreclosure; the 1st (Wells Fargo) has been in default for over two years, foreclosure is scheduled April 1st, they are still interested in being reinstated. A 2nd (US Bank) is a HELOC w/ an $86,800 credit line, maxed and in default for just as long, currently a $97K balance. There are additional state and fed tax liens affecting the property.

My Q isn't should I do this deal (I've left out critical numbers for that question)... there's not much risk of a huge loss, more likely a little to modest gain, from taking the property sub2 (everything), reinstating the 1st, do an extremely light fixup (basically wholetail) and sell within 2-3 months.

My question is "Do you see a way to acquire the 2nd Note from US Bank, at a discount, rather than have US Bank take $0 on their $100K balance at foreclosure?"  I'm dealing with a very cooperative seller.  If I could drop the balance on the 2nd, even marginally, then the deal becomes much sweeter rather than something I'll probably do for the learning experience, with a little profit on the side.

I own and run a title company, I'm not new to real estate and how liens work, but no, I am not a Note investor, and have read in the forums that purchasing a specific note from a large bank is nigh impossible.  Just wanted to explain I'm doing this to make the house a good investment, not the note itself.

Lucy, late answer to your thread, but yes there are people wholesaling in Southern Utah.  Like anywhere they have to be careful to do it correctly, but just this week I received notice from a wholesaler on a St George property.

Agreed with @Russell Brazil, I do title work in Utah (presumably very different from New York), but everything looks really normal other than the property/transfer taxes, and that just sounds like the cost of business in that state.

Why are you paying the seller's share then, is this a distressed seller you're buying it from?

That would be the simple process, yes.

The thing is it's insurance, unfortunately almost any insurance claim (auto, home, & yes title) is anything but simple.  Once there's a claim it's now in attorney world, and the messy thing with this property was the tax liens were far and above the value of the property, and title policies have coverage limits (owners policy typically limited to purchase price, and lenders policy typically limited to the loan amount).  Your thinking is correct, but like I said I never heard the resolution to this one, unfortunately there wasn't a clear path to a good resolution.  Worst case, which this one might have been if they had a lender policy, would be the owner is reimbursed up to their "loss," but again I'm no insurance attorney so I'm not sure what would come of it.  Even with auto insurance, you know people who hated the process of getting a new car after theirs was totaled; the lesson here is that insurance at least gives some recourse, without it you have none :-(

@Lisa Eckman

I agree with @Don Scott in that if you're lending on a property it is wise to have a lender policy, especially if you intend to make this a way of doing business on into the future.  Just remember, insurance is protection for what you don't know, not what you do.  After 9 years working in a title office I've seen enough horror stories.  Another title company in town once closed a seller finance deal (read: seller is now the lender), and the title company missed checking for federal tax liens on the buyer (a blatant oversight).  Buyer takes title, federal tax liens attached to the property, buyer eventually goes into default, and now seller ("lender") foreclosed and resumed ownership to the property, with the tax liens.  I didn't hear whether it was ever resolved, it would have been an ugly mess WITH title insurance, and a complete loss of any value without it.

You'll never see a big bank lend without title insurance, and it's almost always a cost born by the borrower (read: "you want our money, you pay to protect us")