Unusual Short-term Cash Flow Strategy; Anyone Ever Tried This?
I came across a bird dog today suggesting an interesting strategy. He finds pre foreclosures, gets the deed, gives the owner a few bucks to move out, and then rents the house at a discount to short term tenants.
He lets the bank go ahead with the foreclosure. In CA it takes several months, maybe more depending on circumstances. During the process he is collecting rent.
So I would like to solicit the group for input. What do you guys see as potential pros, cons, legal pitfalls of doing a deal like this?
Thanks in advance, Brian
Plan on spending your profit (if any) and a lot of time at the Gray Bar Hotel.
John (LV)
The lease runs with the property, no matter who winds up owning it or how they get title. They cannot kick you out before the expiration of your lease- which is why they are trying to pay you to leave.
Chris
Thank you for your feedback.
A local real estate attorney told me this morning that the lease ends with the sale, and that they are not under any obligation to let us stay in the property.
I suppose they could have some unusual law in MO...
I suggest a second opinion. That certainly is not true in the few states I have lived in.
Chris
In FL, a foreclosure auction terminates any lease.
To my knowledge, a foreclosure extinguishes a lease in ALL
states. Most states have laws regarding how much time a tenant of a foreclosed property (generally 30 days) has before getting evicted. Somes states such as NY have longer and more lenient tenant vacating timelines.
"In most states possession rights are very strong. A leasee in possession, even with an unrecorded lease, would have priority over a subsequently recorded deed or mortgage".
So the above posters are correct- a prior mortgage has priority over a subsequent lease, unless state law provides otherwise.
For some reason I recalled this differently...
Chris
Email me and I will send you the name of a very good tax sale investor who is a doll of a person...
Depending upon the lender, you may need a complete offer, but you will probably need to prove that the property is or has been listed for sale with a realtor.
Fill out the purchase offer for the price you are willing to pay. If the lender does not approve your offer, then they will tell you how much they want you to pay.
Thank you both for the info!
I agree with tbird. Occasionally one of the pros may bid you up beyond their comfort level just to keep a new face out of the game, but certainly not often.
The pros may pay more occasionally than you think the property is worth... but they may also have an inside track on real value that has escaped you.
We have a local investor who we nicknamed Tag-a-Long, and he occasionally shows up and bids only when two of the regulars bid against one another for a choice property. He usually wins the bid, for $100.00 more than one of the pros was willing to pay. He keeps coming back, so he must be making money!
There are a handful (or two) of games that can be played at a foreclosure auction, but for the most part, the guy willing to pay the most buys the property, no matter where the auction is held.
[addsig]
Thanks, good to know!!
Quote:
On 2007-11-13 20:40, bargain76 wrote:
I agree with tbird. Occasionally one of the pros may bid you up beyond their comfort level just to keep a new face out of the game, but certainly not often.
The pros may pay more occasionally than you think the property is worth... but they may also have an inside track on real value that has escaped you.
We have a local investor who we nicknamed Tag-a-Long, and he occasionally shows up and bids only when two of the regulars bid against one another for a choice property. He usually wins the bid, for $100.00 more than one of the pros was willing to pay. He keeps coming back, so he must be making money!
There are a handful (or two) of games that can be played at a foreclosure auction, but for the most part, the guy willing to pay the most buys the property, no matter where the auction is held.