New To The Game ... Need Some Guidance.
This is such an incredible site! I have learned so much in the past two weeks by absorbing everything I could read on these forums. I am trying to come up on the learning curve quickly to see if I can take advantage of what appears to be an incredible opportunity.
Found a recently filed Notice of Foreclosure Action against a waterway property (it may even have a boat dock on the Intercoastal) ... according to tax roll records, the land is valued at $205K and the building is $85K. It's a nice enough house in a quaint neighborhood ... MLS says it has a pool too! (The comps are between $300K-$400K, depending on the type of house.) Did my research and learned the owners are almost 4 months in arrears on a mortgage balance of $158K. (They faced foreclosure proceedings 2 times before in the past 3 years, but apparently saved the property.) From what I can tell, this was a family property that was deeded to them in 1999.
I'd like to write these owners a letter (before I knock on their door) ... and I'm sure they're being bombarded with lots of investor letters. Do I disclose my actual offer in my letter or is it just an invitation to deal?? I was thinking to maybe offer $180-$185K.
If they jump at it, I would obviously like to try to close it quickly. Here is my concern ... I have a high income to debt ratio because of my student loans (my ONLY debt) ... I have an excellent credit score (approx. 770) ... and I have a mortgage on my primary residence. What is the best way to secure financing for this??? I am not pre-qualified (and I know I had to put my student loans in forbearance to qualify for my mortgage in the 1st place 4 years ago.) Could I get 100% financing or even 90% LTV for this deal? Do I do a hard equity loan and refinance later? I don't have a lot of cash in hand.
I'm not sure how I would structure this ... my goal is to extinguish the owner's debt, pull some equity out of this investment for myself ... obviously enough to float myself until it could be rented or sold again ... and maybe even enough to throw on my student loan (HARK!). I've also been trying to get a handle on these "subject to" deals ... not sure if this even qualifies. (John Locke's program may be my next investment.)
Sorry so long ... but any help would be GREATLY appreciated!!
Ekoc1908 
Am I correct to infer that the property is listed for sale and on MLS? If so, ask yourself this question:
"Why would the homeowner, only 4 months into foreclosure, consider accepting an offer of $185,000 when the home is probably worth twice that amount?"
I would agree that if the foreclosure process continues and approaches a forced public sale, the Homeowners will discount their asking price.
I would certainly approach the Homeowners. Pull up to their dock by boat and strike up a conversation... and casually observe that you noticed that the home is for sale, and, may possibly
have an interest. Get as much info about their situation and the property before you even broach the possibility of making an offer.
Good Luck.
Actually, I probably used the wrong term of art when I said I viewed an MLS listing ... I merely asked a friend who works at a mortgage co. to pull up the property for me. (The document he printed out looks a lot like an MLS listing to me.)
You make a good point ... I really have no clue what these people would consider an acceptable offer for their property. The area is filled with older homes (the subject one built in 1957) ... the land is more valuable than the actual structures, but the houses are still decent looking. All I know is they are in risk of losing their property because their mortgage is 4 months in arrears ... my only hope is that they are desperate to find a solution and/or they don't realize the gold they're sitting on. Realistically, it's probably more of the former.
Pull up to their dock? What, on a jet ski? I gotta get this monkey (i.e., student loan) off my back first.
If you don't have alot of cash, it's going to be tough!
Many times with foreclosures, there isn't enough time for you to get financing.
Have you thought about birddogging this deal? In other words, securing the deal and then putting an ad in the newspaper to sell the house to an investor. I'm guessing an investor will pay 65% of the value of $300,000. That would be $195,000. Of course, if the house needs any repairs, you'll need to subtract that amount from the $195,000. Then subtract any profit you want from the deal.
Once the owners agree to sell to you, put an ad in the newspaper stating that it's an "Investors Special".
I'm impressed, this is actually a great deal! Good Job! And if the people don't agree to sell to you, it's OK. This business is a numbers game. If you don't get this deal, you'll get the next one!
Hope This Helps!
Mrs. Meltzer
I have thought about possibly birddogging it, but how does that work? I get a fee just for referring the property information to an investor or only if the owner bites and agrees to sell to my investor?? And what would I charge? I've read on this site about fees ranging anywhere from $500 flat to 1% of purchase price to as much as $3-$5k.
In the meantime, I slightly modified a good form letter I got off this site (maybe by someone named Tania?) and mailed it to the owners last week. I can't find a phone number for them, but I'm working up the courage to knock on their door this week ... just don't know what reaction I should expect to find on the other end.