Basic Preforeclosure Deal
here's the situation:
let's say I find a property in PFL status with approx. 50k in equity. owner wants out, is 4.5k in arrears and rehab is in the 10-15k ****Must Reach Senior Investor status before posting URL's*** My offer to owner is to bring loan current, pay for rehab, u-haul money, etc., and the title is clear. I get the grant deed signed over(recorded).
questions:
I assume the property should be listed immediatly or should i list after rehab is underway?
since the owners still have their original debt to the lender, will they continue to have to make mort. payments if the property is on the market for an extended period?
once the property does sell, (forgive me i'm new at this) will the profit automatically go to the holder of the deed?
is this considered a sub2 deal?
finally, which type of deed better suits my purpose, grant or warranty?
as mentioned i'm getting my feet wet, thanks in advance for all us rooks out there.
Get the owner out asap with some U-haul dough, do this deal Sub-2, YOU make the mtg payment for him, transfer title to your TRUST so no red flag is popped to the bene of the 1st. List it right away, begin rehab, SCHEDULE showings, but don't show until it's farther along on the rehab,
OR... If you're willing to stick to your guns, show it during rehab and quote the rehabbed price, but be firm on the fact that you WILL complete the rehab and sell for full price/FMV, don't accept any "we'll buy it now for $20K less and fix it ourselves" offers, that's YOUR profit.
Cliche' but true...
Buy it, FIX it, Sell it, PROFIT
-MakoShark
Ken at KenFleming dotcom
Mako-
thanks for the reply. Could you explain what you mean by "transferring title to my trust"? If it is in my (or my companys) name, is'nt it in my trust?
you are going to have tomake those monthly payments, so each day costs you money: the sellers are already in the red, so there is no way that they are going to pay anything....this is your house now....i would handle according to your cash reserves...consider what your financial situation is and go from there....you will be shelling out quite a bit of cash from what you say....plan ahead, make sure that if your home stays on the market too long that you will ahve it covered....
my first deal, the new buyer got a heck of a deal..he made $18,000.00 at closing(in equity), but we knew that we needed to re-sell the home quickly to keep our heads above water. Limit your re-hab expenses, if you can, make some calls and get these companies to compete for your business, introduce yourself as an up and coming and let them know that you are looking for a team for all future projects(that should get the numbers down)...
you mentioned listing the property? check your area, i have a broker who lists for me for a flat rate of $100.00 (instead of the standard commission)-if the house is in a traffic location, you might just need to really put signs up everywhere....
burn the midnight oil and get the work done quickly and put it up for sale once your nearing completion,unless you are thinking of selling it somewhat as-is....