All Forum Posts by: Robert Steele

Man, I don't know what I'd do if I was starting out now. For most of my investing career here in DFW I used to have several REOs that I could look at my leisure, pick one, put 5% down, cash-flow and poo poo the rest.

No more.

I stopped buying rentals in 2012 and have been slowly selling into this market. 

There is a way to avoid depreciation recapture without doing a 1031.

It's call Section-8 housing.

From pub 544:

Low-­income housing includes all the following types of residential rental property.

Low­-income rental housing held for occupancy by families or individuals eligible to receive subsidies under section 8 of the United States Housing Act of 1937, as amended, or under provisions of state or local laws that authorize similar subsidies for low-­income families.

The applicable percentage for low-­income housing is 100% minus 1% for each full month the property was held over 100 full months. If you have held low-income housing at least 16 years and 8 months, the percentage is zero and no ordinary income will result from its disposition. 

@Wayne Brooks Hmmm.. "unjust enrichment"? Sounds like pinko commie crap to me ;)

@Wayne Brooks I know the banks are powerful but I wonder on what basis they do that when the law is quite clear "will be sold to the highest bidder for cash in hand". Do you have any more information?

Yeah it's not a loan mod or there would be a public record of it.

I've heard someone say that when you stop paying your mortgage and get foreclosed on that it can had $30K-$40K to the loan balance. Fortunately it's never happened to me or anyone I know.

To give you perspective what I saw was a $240K loan go up to $320K by the time of auction.

@Bruce Lynn I think you are confusing a trustee foreclosure auction with what I am talking about - a judicial foreclosure. I've been to the latter and the bidding starts at whatever price the first bidder picks. The bank's lawyer will then bid it up to the amount of their judgement (loan + taxes + lawyer costs, etc). I.E. a full credit bid. Same outcome but different process. So you see in this process if the banks lawyer was not present this could happen.

I heard this story and was wondering if anyone had actually experienced anything like this?

A guy goes to a judicial foreclosure auction and manages to pick up a house worth hundreds of thousands for $1K.

The lawyer representing the bank was supposed to show up and make a full credit bid but he got stuck in the court restroom.

The law firm and/or the bank are screaming at the county constable to do something but the law was followed and they are out of luck.

I don't know how the story ends but I imagine that either;

a) the bank made him an offer to good to refuse wrapped in a thinly veiled threat of legal action

b) they got a temporary restraining order and then buried him in lawsuits

c) being the easy going fair minded people that they are, they cut their losses and moved on

Check out this thread.

Update: I offered all those solutions to the owners. They completely ignored me. So I retained a lawyer for $5K a couple of months back and filed a suit for partition.

As the defendants stuck their heads in the sand (surprise, surprise) we are now at the point of asking the court for a default judgement. It should be smooth sailing from here on in. I expect myself and the other two owners to get $25K each from the sale. 

Not a bad little investment.

Sometimes you've just got to be open minded enough to pick up that bag of gold sitting in the corner that everyone is ignoring.

I know it is not possible to get the mortgage balance without permission/info from the borrower.

I also know you can get a rough estimate by pulling the mortgage doc from public records, lookup the prevailing interest rate at the time, and plug it into an amortization calculator. But..

I've been seeing judicial foreclosures with balances that are almost 50% higher than the original loan amount. I know there are some legal costs in there but does that explain most of it? Can being delinquent on your mortgage really rack up that much in fees!?

In another context if I am buying subject to the existing mortgage it is pretty damn important to know what the loan balance is. If I can be off by that much then it is a very risky proposition indeed.