All Forum Posts by: Mike Neubauer

I do not see a legal problem and it is basically 2 separate transactions that are kind of a package deal. 1 deal you are just taking over payments, the other you are basically buying for $88k.

I don't know your numbers, I would suggest getting a few bids from contractors until you can walk through a home and just have a feel of what it will cost to rehab. Most any contractor will give a free estimate, and they may even have some good ideas that you didn't think of. I'd also have a realtor take a look at what they believe the ARV is. They will also do this for free if you ask the right way (maybe they will get the listing when the project is complete). I would do these things with your first few just to confirm your thoughts on ARV and rehab.

Also, on your plan to focus on House 1 first. If you do this, you will have a home that is underwater by 60k plus you put $50k of your own money into rehabbing. When you sell it at $90k you will still be 60k short so someone has to come to closing with $60. Just make sure your relatives either apply those funds of $80k you gave directly to the principal when you give it to them, or maybe devise a different plan to do House 2 first. Maybe use the $20k you save in rehab costs by doing house 2 instead of 1 to pay the monthly payment on the subject to mortgage of house 1. Do house 2 first, then you will have $70k in profit. That way when you are ready to resell house 1 you have $70k in hand to bring to closing.

I know they are relatives, but when someone gets an $88k check in their hand sometimes they make questionable decisions. Or if something comes up, they may need to use that money for something else. By doing house 2 first you are more in control

Just some food for thought on a different way of looking at it. Good luck with your first project whichever path you choose !

I agree with @carlos f. I would pick a more official and general real estate name for your LLC. Then you can file a DBA name with something flashy fore wholesaling like Phoenix Cash Solutions. You never know where this business will take you, and if you move onto other types of deals or just outgrow the DBA name you have chosen you still have the LLC, without having to change its actual name. If you file a DBA, you can still treat that as your main business name (ie accept checks to that name, use it in marketing, etc).

Statement just says Mtg Ins payment. Guess I'll just wait until the negotiator gets into talks with the bank.

Just the 1 mortgage. No other liens on it. He is actually current, but will be getting laid off. The borrower found a new job, but will be making considerably less ($60k less). Owes $197. House is worth about $125k. It doesn't appear to be Fannie or Freddie according to the online lookup (which I know are sometimes not accurate). He does pay MI however. I'll have to check to see if it is is PMI or FHA MIP. May give me my investor answer. Off to check on that now.

Curious if anyone has had any recent experiences with Wells Fargo short sales. I know the cooperation of the banks changes over time. I am just getting started on a Wells one and curious if I am in for a fight or not.

I have not run into a scenario where someone ever had to remit the deposits. Typically a deposit is forfeited to cover missed payments if they were to break a lease early. A bankruptcy is set up to discharge or reorganize debts, so I could see that through bankruptcy you wouldn't have ground to pursue a deficiency for a broken lease or missed payments. Typically, though it isn't worth pursuing anyways. I have paid non-paying tenants to leave before, which is completely opposite of pursuing them for missed payments. I now only do lease options. I feel like I get a higher quality of tenant, people that treat it a little more like their own home. Sometimes they stay, and sometimes they don't, but either way they typically take care of it along the way.

As far as bankruptcy or short sale on their credit, that is going to be quite typical of most people that are looking to rent. Anyone that has great credit will not be renting, or will be for only a short time. The last few years hit a ton of people causing wildly high amounts of bankruptcy, but it doesn't mean these are necessarily bad people or poor at paying their bills. Many were mislead and just got in above their heads.

One thing I do with all my tenants, which are all potential tenant-buyers is put in a clause that they must sustain a credit repair program throughout the lease. People that truly got dealt a bad hand of cards, and are trying to "right the ship" will be perfectly fine with this.

I know there are mixed reviews on credit repair, but I did it personally for clients as a mortgage broker before the amount of people got too overwhelming. Now, I refer them to a credit repair company. We have almost always had positive results. It won't clear up foreclosures and bankruptcies usually because those are public record, but lates and paid collections are almost a given.

Sorry to digress, hope this helps.

No, you cannot go over the owners head. If it has not been through the foreclosure process yet, the owner still owns it and the bank has no right to sell it. If you have the owner's info, contact them directly and explain to them the benefit of doing a short sale vs. letting it go through foreclosure. I am not sure the laws in that area as I am from Chicago, but on the county recorder website you should be able to find the lis pendens filed by an attorney on behalf of the bank. You can contact that attorney office and find out where it is in the process. If the sale date is coming up you will know how long you have to wait before you can deal directly with the bank or buy it at the sale. If there is still a while for the sale date, or one hasn't been set yet, your best bet would be to track down the owner (phone, email, facebook, linkedin, skip tracing) and explain the short sale benefits. Then you can negotiate a sale price with the bank.

Very helpful. Thanks. I hate to lose so many leads, but it is way more frustrating to pursue the wrong deal.

And I can definitely see the FMV part with the trustee being an issue. We haven't had that problem previously, but I'm sure some do a little more digging than others. And that could end the deal right at the end, even after getting the bank to accept.

Thanks again.

Thanks for all the replies though. This is a very useful forum, and everyone is very quick to answer questions. There just may not be any great selling benefits to offer someone in this position.

Cash for keys are starting to go by the wayside, and any of the programs that are still available have set specific guidelines. I have never seen a cash for keys program that would allow a person to discharge all their debts in bankruptcy and then receive thousands of dollars on top of it.