Foreclosure Just Fell Into My Lap--Now What?? - Posted by Hugh James

Posted by Chris Hall on May 07, 2000 at 18:40:03:

Take the property “subject to”, (be sure to check title and make sure no liens or judgements against it). Pay the arrears of apprx. $4-5000. This stops foreclosure, then put the house in a trust (you create), and market the house to your landlord guys or wholesale it to other investors.
If you go the landlord or wholesale route, go for $135K (makes you somewhere around 25K) after paying 104+K mortgage plus your 4-5000 arrears $ less closing. They can come up with 50K to fix property and still be 40-45K below market value. You get in for a small amount of cash and quickly get out with a nice amount of cash. The bank is happy cause you keep them out of the Real Estate biz, current owner is better off for not going into foreclosure on credit report and you get to smile big at closing! You can do it! There is room in this one!

Foreclosure Just Fell Into My Lap–Now What?? - Posted by Hugh James

Posted by Hugh James on May 07, 2000 at 15:46:49:

Here’s the short version of a rather long story. I’ve done some reading over the last few years about foreclosures but never taken the business seriously. Today a former sub-contractor of mine asked if I’d be inbterested in listing his house for sale (I’m a broker).

Two unit brick and frame in a Chicago neighborhood that is rapidly gentrifying. Lots of deals and speculation. Purchased on an FHA loan in September 1999. Never lived in. (I suspect fraud, because there is no way this property should have ever passed an FHA appraisal, but that’s another story.)

Mortgage balance–$104,500.
Behind in payments now 4 months and heading into 5.
Current “as is” value proably about $135K…$150K tops.
Cost to rehab and make real pretty–about $50K.
After repaired value about $225-$235K.

I really don’t want to get involved in a rehab on this one, but my son and I are thinking we might just have the owner quit claim to us, we’d bring the existing loan current, and/or assume it from FHA and then resell it. Will simply bringing the loan current stop the foreclosure? Is there enough of a spread here for this type of deal? I have no doubt I could sell it to one of my landlord guys tomorrow for $125-$130K. If there’s not a safe, quick deal here, I can always take the listing and get an equally quick sale, but the commission would be considerably less money to me after all the splits.

Your ideas appreciated.