All Forum Posts by: Sean OToole

Hi Derek,

Not sure there is a deal, unless you are looking to buy subject to and be underwater to start. Looking at the numbers above the default amount really stands out. That amount, on the NOD, is the amount that they are behind in payments.

In PropertyRadar, our "total loan balance" is actually just the total of the loans that we believe are still open on the property, based on their original amount. We wish that it was the actual current balance, but that is credit data, not public records data, so we don't have access to it. As such you need to be careful to adjust that loan balance up or down accordingly.

While I don't know what property you are looking at, so I can't be exact, let me make some assumptions based on what you provided above.

It appears the 1st mortgage was likely originally for $508,000, and given our total loan balance, then there is likely a second for $104,900. Now on the first we now know that as of the default date (10/9/2014) the borrower is behind $218,960. That is an awfully lot to be behind, even on a loan from 2006. like perhaps they haven't made a payment in 5 years. As such I doubt the balance ever was paid down much, so to get a rough estimate on the balance of that 1st mortgage, I'd just add the $219k to the $508k - so its likely around $725k. Pretty good chance they haven't been making the payment on that 2nd too. It's only $105k loan, but it wouldn't surprise me if they were $30k behind in that too. So if I had to guess, I'd put there real debt on the property at around $850k, and that assumes the mortgage company has been paying the property taxes (you can check using the link to the county under tax and assessment in PR).

Of course, this could be completely off - they might have paid the 2nd off, they might have paid the 1st down before getting in trouble, etc. Public records data is awesome for narrowing the field to find potential deals, but as you can see above its not as simple as just taking the data as fact. The guys that make a killing with it, really dive in and not only get to know the limitations of public records, but take advantage of them. 

On that front, be sure to read the disclaimer (caution triangle at the top of the page), and the tooltips for each data item (hover your mouse over the label) - as they will explain exactly what is provided, and the limitations of some of these public record data points. The more familiar with that you are the better.

Public records are super powerful, and can really help you hone in on deals, you just really need to pay attention to the details, and always verify everything before making a purchase.

Best Regards,
Sean

Hi @Taro Lynn 

One thing that a number of our customers are successfully doing is targeting non-owner occupied homes, purchased between 2009 and 2010, that have substantial equity. The strategy being that many of the folks that bought in that time period have seen substantial appreciation, and are now 4-5 years into the reality of being a landlord, and some want out.

Taking that idea up a notch, is to focus on out-of-the-area owners, as being a remote landlord is harder.

Up a notch further, is to drive by a handful of those every day looking for ones which are vacant or in dis-repair. Often an out of area owner won't know their tenant is destroying their property. A simple note, perhaps using LinkedIn InMail, letting them know that you are local, thought they should know and would be happy to help, with a picture of what's going on, is a great way to get a foot in the door. You have to give to get.

@Sean Hurwitz Yes, that's the plan.

Thanks Morry!

I have a few thoughts on comps... 

Sources:

1. Active Listings - give a good sense of competition. Doesn't necessarily tell you what prices are though, as at least some listings will be overpriced - which is while they are still listed. MLS is best source, but Redfin, Zillow, etc. work in a pinch.

2. Pending Listings - give a better sense of what is actually selling, and the list prices that attract an offer. That said, they don't tell you the actual selling price, so you have no idea if they were overbid with multiple offers, or the seller excepted something far below asking. MLS is best source.

3. Solds - These are the most important, and the basis of appraisals. Here I strongly recommend public records. MLS is ok, and can be a little faster for the most recent sales, but MLS is incomplete and reliant on the agent that enters the information. Public records will include off-market sales that aren't on the MLS, and will reflect actual sales prices. Prior to this month not all sales had prices, but starting 2015 you can no longer hide the tax stamps, so prices will be shown for all sales.

4. New Homes - If there is ANY new home activity in your area it is super important to keep tabs on their pricing. I learned this one the hard way when I found out one of my listings was sitting because of a new home development down the street that was undercutting the resale market. Unfortunately this was back in 2006 when market was changing rapidly - its a mistake I won't make again.

5. FSBOs - Yep you are competing with those two. Doesn't hurt to keep an eye on craigslist and yard signs.

6. Rentals - I like to look at rental pricing vs. payments as another form of comp. Especially if I'm in a low end or first time buyer market. That's competition too. 

7. Foreclosures - the data is available so there is no reason to be surprised by an REO popping up next door. Foreclosures are way down, but they are still at levels 5-10 times higher than they were pre-crash.

8. Neighbors - The final comps I like to look at is the neighbors. You know the old saying - buy the worst house in the best neighborhood. How do you know if you don't compare the property you are looking at to the neighborhood. I've made the mistake of buying a house that is overbuilt for the neighborhood. Appraisal wasn't a problem, but finding a buyer was.

Online vs. In Person:

The next thing I'll say about comps is that after you pull them on your computer, get the heck out of the house and go look at them! I don't care who the source is, nothing beats seeing the property in person. Getting a feeling for the traffic, the street, the neighborhood, the street appeal, and if you can get it the floor plan. These are the things buyers will pay attention to. If you want to be good in this business you'll know your markets by personally pounding the pavement, or by having trusted team members doing it for you. Don't rely on pics - you know that they can stretch reality. If you are not willing to do that, then find a super hard working agent to do it for you. Preferably one who tends to have buyer after buyer in their car all day - they'll know what a buyer wants, and what they can pay.

Pretty sure @Kou Vang meant "convenience check", not "confidential check". Almost all credit cards offer convenience checks as a way to use the available credit with vendors that don't accept credit cards.

Hi Jennifer - definitely some red flags here. The 50/50 split between the operational partner and the money partner isn't bad in and of itself - that's the way a lot of operators got started, and even some experienced one's work that way.

A $4900 bidding fee sounds pretty high. County Records Research offered that service for a while (maybe still do) in So Cal at I think around half of that price. We considered offering it, but decided to stick to just being that database you referred to.

Secret club thing is BS - these are public auctions, and while there may still be some folks who try to play games and scare off newbies, there is no reason for you not to go and watch. You don't need to explain to anyone why you are there or what property you are interested in, and if you use this person you won't be bidding anyway, so there is not really any game anyone could play - at least not legally, and if it is an illegal game, you really don't want to play anyway.

I'm also a little concerned because you mention two things that are at odds with each other. You mention bidding on HOA liens, and then say "We plan to find a buyer as soon as we win the bid and sell it AS-IS." But that really isn't possible. HOA liens have a 90 day right of redemption in CA and there is no chance you are going to get a title company to insure a sale until that time period is up.

Finally, while your potential partner is right that many 1st lienholders are happy to keep getting checks, there are a couple of caveats. First, they won't likely talk to you, or provide you payment info as you are not the borrower. You may be able to get the borrower to work with you in making the payments (helps their credit), but you certainly won't want to do actually make a payment until the redemption period is up. In the mean time, the HOA sale does trigger the due on sale clause in the loan, and that mortgage holder doesn't have to accept your payments and can demand payoff in full. They can't just take the house, they'll have to foreclose, which gives you time to get it resold, and as such you'll probably be ok. But these are things an experienced partner should be making you aware of.

I'd demand the operator be a little more forthcoming if you are going to continue doing business them. I'd also get a list of past deals, and past money partners as references before doing business with anyone. They may be great, and if they are, they shouldn't have any problem answering all your questions.

Hope that helps.

Sean

@Jay Hinrichs collusion is pretty unlikely in the bay area at this point. The FBI and the DOJ really got aggressive there, in fact there were just some more indictments last week (for activity mostly back in 09). Using Pacer is a great tip. Not only useful for seeing what not to bid on, but also for looking for granted motion for reliefs from stay to see what might finally come to sale.

@Mark Vieira  - on collusion the key thing for you to know is that if someone approaches you about working together on a property, just say no. I think your approach to trying everything is probably ok. My guess is that unless you are building a large practice you'll end up leaning towards one or another after a while. I myself like trustee sales, and in the past managed volume / margins by adjusting target properties / markets. I have friends that pretty much only mail, and others that door knock. All successful, but it isn't a get rich quick story for any of them. This business rewards hard work. 

@Mark Vieira - pm me and I can put you in touch with a title company that will provide non-guaranteed verbal title in exchange for your escrow business. They are used by many of the pros throughout the state, and do hundreds of titles searches for top trustee sale buyers every day.

Getting title insurance is possible, but not really economically viable in most cases. Happy to discuss that with you as well.

Note that the county recorder typically only abstracts Grantor, Grantee, Doc #, Recording Date and Document Type. So those will be the only things you can search by at the county, though in a few counties you can also search by APN (assessors parcel number).

To get more info than that, you'll need to view the document and write it down.  If you also want beds, baths, sq ft and other property characteristics, you'll need to take that APN and go to the assessors office, the recorders office doesn't have it. If you want equity, you will need to search the county recorder for all loans on that property, determine which ones are still outstanding, and then total those up. Once you have the loan balance you'll need an estimated value - that's pretty much impossible to get at the county unless you take every recent sale from the recorder, and combine it with characteristics from the assessor. No worries though, you can get an estimate using an AVM (automated valuation model) like Zillow's Zestimate, or by getting comparable sales and calculating it yourself from Redfin, Zillow, etc. Once you have value and debt, you can calculate equity.

If you want to see parcel boundaries, try the counties GIS office, many counties makes those available, sometimes in combination with assessors data (beds, baths), for free.

If you value your time, there are other options.

Hi Patrick,

I don't think you will find one thing. For farm lists, other than foreclosures, I'd suggest ListSource - expensive but you'll find lots of good reviews on them here. For foreclosures finding local providers is always best, but if you need national then I'd say RealQuest or RealtyTrac - both of those will be notices only though, no sale updates. For listings and sales, probably Redfin, Zillow, Trulia or Realtor.com, on the plus side, they are all free. For property profiles, perhaps RealQuest again. 

Best,

Sean