Posted by Mike on January 11, 2003 at 24:31:07:
JT, I don’t think this will work well here in Portland. I have already been outbid at the auction block twice by lenders in 2nd position. They were not only prepared to cover the full balance due on the note but also go over and beyond it.
I wish banks were bigger suckers here.
Foreclosures with too many TDs - Posted by Brad (OR)
Posted by Brad (OR) on January 10, 2003 at 09:18:14:
There are tons and tons of foreclosures here in the Portland area. The problem I am running into is that it has been incredibly difficlut to find one that has any real equity in it. At least not enough to turn a decent profit.
The TD being foreclosed is either nearly all (90+%) the value, or they have a monster second.
Other than short sales, is there any way to turn some of these into profitable deals? There has to be a way.
Re: Foreclosures with too many TDs - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on January 10, 2003 at 16:19:07:
Brad–(OR)------------
I spent some of my childhood in Portland, but I was not buying foreclosures then.
You say: “Other than short sales, is there any way to turn some of these into profitable deals? There has to be a way.” How do you know that? Or are you a-hopin’? Typically, I would say, over 90% of properties getting to foreclosure sale are not good enough to bid on. The exception is when you have rapid appreciation, as Nate(DC) reports. Other than REO status, why should there be some other way to make money with these properties? It is a law of the universe: “Brad of Portland must be able to make money on properties, because they are in foreclosure.” Now, if only I can find the reference to that quote in the universal laws so you can enforce it.
What professional foreclosure buyers do is ignore most of the properties coming up to foreclosure and concentrate on the few good deals.
Good Investing*Ron Starr
Re: Foreclosures with too many TDs - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on January 10, 2003 at 16:18:05:
Brad–(OR)------------
I spent some of my childhood in Portland, but I was not buying foreclosures then.
You say: “Other than short sales, is there any way to turn some of these into profitable deals? There has to be a way.” How do you know that? Or are you a-hopin’? Typically, I would say, over 90% of properties getting to foreclosure sale are not good enough to bid on. The exception is when you have rapid appreciation, as Nate(DC) reports. Other than REO status, why should there be some other way to make money with these properties? It is a law of the universe: “Brad of Portland must be able to make money on properties, because they are in foreclosure.” Now, if only I can find the reference to that quote in the universal laws.
What professional foreclosure buyers do is ignore most of the properties coming up to foreclosure and concentrate on the few good deals.
Good Investing*Ron Starr
Re: Foreclosures with too many TDs - Posted by Mike
Posted by Mike on January 10, 2003 at 12:21:49:
Hey Brad. As we both know, this is a hot market. I am running into the same problem in Portland. And contrary to what some experience in other places the bank won’t consider playing ball with you (with REOs) until at least 60 days after a property has been sitting unsold.
The thing is, there are a few good properties out there that make to auction, it’s just a matter of being patient.
buying foreclosures with small equity - Posted by George
Posted by George on January 10, 2003 at 11:39:06:
There are some solutions,
Short sale is a great way, but you have to know what you are doing, Ron Legrand teaches this topic.
You may be able to get the deed and lease option for 1-3 years to a third party, as long as of course you can structure a cash flow and a higher future price. You do not need much equity on this technique.
You can wait for the bank to foreclosure, the only problem is that in most cases they will want a full price because the property is fresh, they may be open to negociate if they have too many REO’s.
As always, make sure you work with professional advise to make sure you are follwoing the right steps,
george
Re: Foreclosures with too many TDs - Posted by Sean
Posted by Sean on January 10, 2003 at 10:22:14:
If the bank isn’t willing ot discount the mortgage, wait until the bank formally takes them back, then buy them from the bank for well under retail.
Works for me, and others in my area, regularly. Of course if your market is red hot and a bank can get top dollar and move it quickly they’ll do that. Here, in the neighborhoods I operate that just won’t happen. So .50 or less on the dollar is not uncommon, particularly if the house needs fix up.
Given the ease of mortgages, and the low down payments of the last decade or so… there will be a plethora of foreclosures with little to no equity over the coming years, IMHO.
Over encumbered 2nd TD’s… - Posted by JT-IN
Posted by JT-IN on January 10, 2003 at 10:01:02:
Brad:
These properties that you are referring to with high LTV 2nd’s on them are in many cases a real opportunity, instead of a problem/nightmare.
Of course this segment of the business is not a No Money Down deal, but you can often negotiate directly with the Lender to buy the paper at huge discounts. Obviously there are exceptions to this, as some Lenders do not play the game. Negotiating with them does not involve the homeowner, as does a short sale. You simply imform them of their tedious position, being a 2nd TD that happens to be in foreclosure, and what you can do for them is offer them XX cents on the dollar. Make these offers in writing, faxed to the Loss Mitigation Dept… and you might be surprised.
You should have something worked out with the Homeowner in advance, or be prepared to bid on the property at the Trustee Sale, if you are contemplating pursuing this approach… or else you could be buying worthless paper.
Bottomline is, this can make you as much money as almost any other approach out there, if you learn to negotiate with these lenders and buy the right ones at a decent discount.
Just the way that I view things…
JT-IN
Re: Foreclosures with too many TDs - Posted by Brent_IL
Posted by Brent_IL on January 10, 2003 at 09:34:47:
Ask the owner to defer receiving any money until some point in the future. A tough sell. The ratio of rent to market value must be adequate to cover expenses. You also need to be confident that the rental range is going to stay that way for a while.
I’ve always done quick resales, but I’m starting to get leery of selling on CFD. I won’t make an offer that depends on the long-term income from a L/O or L/P, either. I don’t believe the sky is falling, but I think I can see some faint crack lines.
Re: Foreclosures with too many TDs - Posted by Nate(DC)
Posted by Nate(DC) on January 10, 2003 at 09:31:02:
Wait for them to go back to the lender at auction, then buy them from the bank.
I would say that probably half or more of all foreclosures here have no equity. And the only reason it’s not more, is that we have had incredible appreciation the last few years in most of the DC area, so if you bought more than 2 years ago and didn’t take out a second, you almost definitely have some equity now.
NT
Re: Foreclosures with too many TDs - Posted by Brad (OR)
Posted by Brad (OR) on January 10, 2003 at 16:41:01:
The original intent of my post was to try and see if I was perhaps missing something obvious. I understand that most foreclosures are not ripe for investing.
I am relatively new to this side of RE, (after years of right-of-way acquisitions, condemnations and land surveying). I just didn’t want to miss out on an opportunity because couldn’t see it.
Short sale the property and get it over with! - Posted by Chris
Posted by Chris on January 10, 2003 at 18:09:01:
That is gonna be the easiest way for you to make some of those highly leveraged houses into a deal.