What Can I Do With This Property?
Got a call from a landlord that has a property that he wants to get rid of. He owes $166k and the house is worth $185k. He wants 3k to pay for medical bills. He is currently getting $1300/month from a renter.
Any creative way to make money on this?
Thanks all for all the good advice :>
Sounds like the general consensus is to deal with the listing agent. This will insure I am in the running for the purchase.
1. How do I get fair representation from the listing agent to get the best possible deal for myself?
2. What do I do when the listing agent refers me to a buyer’s agent in his office?
wow just spent memorial holiday down there with family, after seeing all the construction work to the roads and so forth, i think your in the right market. my suggession is to look for a rehab that would be a great resale, use some of your funds or partner up with someone to stretch the risk, combine with hard money and I think you might make a little money. i know of other partners who would be interested in it.
When I am buying, and I know they are not going to credit the buy-side commission, I use an agent.
It is very difficult to snag a property after foreclosure and before broker assignment.
Cj, Credit the buy-side?
What is the best technique to get these properties through a buyer’s agent?
I have made several cash offers on different properties and a few days, to a week later, my buyer’s agent tells me the bank took a better offer. I check the mls and the properties remain active for a month.
I asked my agent about it and he says sometimes they leave it on mls longer than they should without listing it as under contract.
I am wondering if they are just ignoring my agent’s offers to take someone else’s offer.
My agent says he knows of no agents that do that kind of thing, including hip pocket listings.
I have vastly improved response and lots more buys when I use the listing agent as the selling agent too.
I would say the listing agent controls rthe deal and he really wants both ends of the commission if he can get it. Unethical behavior? What would you do under the same circumstance?
[addsig]
Thanks all for the advice.
Got any advice on steam-lining my bids? I think my agent is getting weary for possible small commissions on low-end REO properties.
1. Search MLS
2. Find house
3. Find comps
4. Tax records
5. Inspect house
6. Draw up contracts
7. Send in contracts
8. Wait a week or two
9. Get informed they have 2 better offers
My agent told me on one house that they received my offer and that the property was going to be a hold and wait situation. And for me to turn in my best offer. I held pat at @90 BPO a month later check it out and they still have not closed on the house. The listing agent said they were closing in on the closing and if it did not close they would contact all the interested parties to make another offer. I tried to get more information but he did not want to reveal anything.
On one house I called the REO listing agent and he referred me to a buyers agent in his office.
On another REO property I called and they referred me to a buyers agent. I like this agent, he is good listener, returns phone calls, good at meeting me to look at property and draw up contracts, supplies comps etc. I am limited to cash only offers and limited on cash.
My offers have not been strong enough, 90% of BPO.
I have been trying to stay in areas that I would feel reasonably comfortable sleeping at night.
[ Edited by cycledog on Date 06/01/2007 ]
Cjmazur,
On this, $239k might be a strong offer, How good of a deal did it turn out to be? Was this property a REO. and what percentage of FMV was the $239k. Did you make any money?
Go directly to the listing agent. They will get 6% commission and you will have a better chance of getting the deal. Also, ask the listing agent what else they have coming on the market. If you can get them before they go to the MLS that will be your key to success!
Jeff Adams
This was my primary residence in LA.
In 89 the place foreclosed w/ 476 in debt on the place.
I paid 239, put a 100k into it and sold it 4 yrs later for 398. Oh, and it was my home in the mean time.
It was a great deal.
cjmazur,
Wow, You Go CJ
Are you still able to find REOs like that.
Are you still using the same agent?
What other kinds of deals are you working?
cycledog
CJ, I could not take the negative cash flow that the properties in CA produce.
I hope for the dwellers sake, that the rent market never catches up to the mortgage payments or all the renters will be on the street.
LauraLee,
Obtaining financing might be the first question.
I was told you need to hold a business license for at least 2 years to qualify for a No-Doc Loan.
Setup your business while employed and spend about a year transitioning. I say that because when my partner and I decided to be self-employed full time even with flips things were sometimes very slow and he really missed that steady paycheck. My saving grace was that I had set aside 18 months of all my living expenses - mortgage, electric, etc.
Make surr you set that aside separate from the money for investing in the business and resist the temptation to use it. It wills save you some sleepless nights.
The year of transition should allow you to setup business credit and get well placed for business loans and lines. I have found Bank of America to be a great bank for this. We have several credit cards and loan line swith them none of which reports on the personal credit.
Another option is to buy a 2 year old company....oldie but a goodie as far as tricks go.
[addsig]
has she tried to sell the house with an agent? if not why?
Okay, I’ll play devil’s advocate and show another side of the coin.
$345,000 – Market Value
$ 17,250 – 5% Discount
$327,750 – Offer Price
$ 19,665 – 6% Realtor Fee
$308,085 – Gross
$ 9,832 – 3% Seller concessions and/or Repairs
$270,000 – Existing loan balance
$ 16,000 – Arrears/Default Amount
$ 8,600 – 4 months holding (90 days to sell / 30 day escrow)
$ 3,278 – 1% closing costs
$307,710 – Costs
$ 375 – Net Profit
And this scenario is assuming you take over her existing loan, or do a double-close, or something along those lines where you have no new loan costs.
Granted…this is not necessarily the way it would actually go, but you do need to run all kinds of different scenarios to determine how much risk you’re actually taking.
As others have indicated, it could be a whole lot better than this. But it could also be a whole lot worse.
The other thing you need to be familiar with is CA Civil Code 1695. It can have a significant impact on how you deal with people in foreclosure.
http://info.sen.ca.gov/cgi-bin/displaycode?section=civ&group=01001-02000&file=1695-1695.17
Please understand, I’m not trying to discourage you. I’m just trying to point out that it’s not always as rosy as it might first appear. And when you’re first starting out, it’s easy to overlook some critical areas.
Just my 2¢[ Edited by mcole on Date 06/02/2007 ]