Posted by Lyal on April 26, 2002 at 17:32:35:
Just had a situation dropped in my lap and having a brain cramp on how to proceed…
The handyman that does mobile home work for me came to me and asked if I knew what to do about the house he rents. He rented it about 6 months ago from an out of state owner. (He’s in Kansas we’re in MN). Just an aside, the previous renter is in the picture as some kind of “caretaker” for the previous owner. He had rented the place from the owner for about 10 years. Not completely sure of his status in the deal if any. Suddenly a few months ago, my handyman’s rent checks start getting returned unopened. He can’t get hold of the owner by phone or mail. Previous renter says the owner is very sick (had a stroke) and in the hospital. Last week the handyman is served by the sheriff with foreclosure docs. Sale set for May 31rst. I do a little background work, get copies of the “Notice of Tenancy and Power of Attorney” for the foreclosing attorney, copy of morgtage etc. (taxes are current by the way.) Place was refinaced in '98 for 40K. Balance due at sale is 35K plus change. FMV is 95K to 100K.
The handyman guy and I have agreed that if I can buy the place, he’ll buy it on a CD for a price that lets us split the equity in the place now minus my expenses. (We’d have an appraisal to get a snapshot of the value).
Long story short. What’s my best play here?
I tried the phone number for the owner, no answer, no machine. Obviously can’t get in touch with him by mail…
I guess my thought would be to just buy it at the sale and wait out the redemption period (6 mos). Bidding by investors at sheriff sales here is rare so I might have a shot. I’d get a title opinion first just to be sure there’s nothing lurking in the shadows. My banker will lend me the money and I’m sure I could set up a note with interest only payments for 6 months so the holding costs won’t kill me (just did this last fall for a rehab I did that he financed). Also, my buyer would sign a CD prior to the sale contingent on me being able to buy the place that I could use to make it an absolute no brainer for my bank. My buyer has no money for a down (haven’t discussed a separate note for one yet) so there wouldn’t be any big up front cash but I could set this up for decent cash flow. He’s mature (53 years old)and reliable, he has plans to fix the place up so if he’d bail on me I’d still have a nice house with a ton of equity to resell (his work quality is excellent).
What more can I / should I do to contact the owner? Is there a better approach that I’m not seeing?
PS: If I buy the place at the sherriff sale, can I collect the rent until the redemption expires?