First Foreclosure Deal - Need Help!
Ok - I love this business now (Just purchased an apartment complex with zero out of pocket and 2K per month positive cash flow) and I have stumbled upon a pre-foreclosure property in my area. Here's the scenario: ARV - 225K, Loan balance, 150K PLUS 14K in arrears plus I estimate 6K in attorney fees.... but there's a tenant in the house who is not paying and who won't leave. The home is in New Jersey.
What's the very best way for me to approach this deal if I should approach it at all?
By the way - the best education I've received in this business has been on this site. Thanks to all of you who have helped me get started - now I feel like I can really do this!
You said ARV is 225k--what are the estimated repair costs?
Before you take into account the repair costs, you're looking at a profit of 55k. Deduct from that the repair costs.
Now is the effort of the eviction worth the amount of profit? If so, buy the property and evict the tenant. He'll leave if the courts order him to--even if he has to be escorted out by the sherriff.
[addsig]
Off topic...
Do post a brief version of the apartment deal. Send me a PM or email so I can find the article when you post it. Sounds like it would be a good read.
John
Quote:
On 2004-06-04 12:20, tmpringle301 wrote:
Just purchased an apartment complex with zero out of pocket and 2K per month positive cash flow.
By the way - the best education I've received in this business has been on this site. Thanks to all of you who have helped me get started - now I feel like I can really do this!
[addsig]
Repair costs are minimal, maybe $500 to $1000 for cosmetic repairs.
My struggle is knowing how to structure this for maximum profit. I can get bank financing for 80% of the current appraised value to pay off his note, but what I don't have is holding money until I re-sell it, PLUS take the time to evict this tenant.
I've never been through an eviction so I don't know exactly how long it takes (In NJ) what is might cost, etc....
Also - I'm not sure what BPO would show but I considered trying to negotiate with the bank for a re-cast of the loan, or perhaps a discount.
I'm just not very experienced in the pre-foreclosure market but this seller is completely desperate so I feel he'll do just baout anything to get out of the obligation.
Do your home work. Find out about the eviction process, by calling a local eviction service. Tell them that you are looking to buy "a" property, but you have a tenant that is not willing to move. They will usually be helpful and you will get your time frames, cost and topics to watch out for. One thing to watch out for is that the notice given to a dead beat tenant must come from the person who completes the eviction process.
I would look into having title transfered, once you review the prelim, take title subject to the loan, quietly. This way all you do is come up with 14K instead of 20% down. The acceleration clause is seldom used by lenders, worst case cenario is that you will have to refinance it. By that time the tenant is out.
The plus side you will help the owner avoid a foreclure on his credit.
Do your homework, get creative.
Good luck.
That would work if I had 14K!
I want to do this without or with very little cash out of pocket.
Is it reasonable to contact the lender for a short? Like I said I'm not sure of the BPO so I don't know if they know the value yet but I'd assume 14K in arrears they know where they stand. Any advice/????
Okay, my last advise. Ask the seller if they are willing to let you assume the loan for 3 months, so that you can evict the tenant, clean up the place and then sell it. In return they will get only the current monthly payments, and put the arrears on the backend, a forebarence (I may have mispelled)
Other wise, borrow the 14k, and offer some one some nice returns, you have 55K to work with. Something is better than nothing.
Good Luck
Well its a tough deal if you are that cash short but here's a suggestion.
Go to the lender (or even better the lender's attny if this is in foreclosure court already), explain that the prior owner got in trouble because of the deliquent tenant. Offer to take over the loan, keep it current during the eviction if they will add the $14K on the back end of the deal.