My friend lost his house, I want to buy it and make $17,000 - Posted by Tony James

Posted by Michael Morrongiello American Note on November 27, 1999 at 23:50:09:

Depeding on our exposure into the property and your credit background, we would have interest in funding a deal like this if the exposure level can be kept to 65% +/- of the home’s true FMV.

You should deterime IF you foreclosed friend is OK with you buying out his rights of simply selling you the home?

Call our office toll Free 800-659-2274 to speak to Skip Blair x 29 or Drake Dawson x 21 who are both in our acquistions Dept. and we can see if we can assist you further.

Michael Morrongiello
Operations Manager

My friend lost his house, I want to buy it and make $17,000 - Posted by Tony James

Posted by Tony James on November 27, 1999 at 11:19:20:

I have a buddy who lost his house. It is a 4 Bed room with a Garage. After Fix-up, it will be worth at least $85,000. He is not the sharpest knife in the drawer, and he wasn’t making his payments $50,000 mortgage, and lost it at an auction.

He knows it was sold, He believes it was Sept 10. But doesn’t know exactly when, and to whom. He just told me he has a redemption Period of 6 months. If so, he has 4 months left to buy it back. I want to enter a purchase agreement with him for $85,000. I have a 85% Loan to Value. That would be…

$85,000 Purchase Price
85% Loan to Value
$72,250 1st Mortgage
$55,000 Pay off his old mortgage

$17,250 Left over for me After closing cost I will make at least $13,000. I’ll rent the house out and keep it.

#1) What my question is… How do I find out if he is still in Redemption?

#2) How do I find out who bought his house at the Auction?

The seller doesn’t know much of anything…so I have to find this info out myself.

Checking titles is usually quite easy. - Posted by John Behle

Posted by John Behle on November 27, 1999 at 12:37:04:

You can check the title and see exactly who bought the house or whether it went back to the bank. It is just a matter of going down to the county recorder’s office and doing a title search. The people there can help you with that.

Depending where you are, that can mean searching through the records, books and microfiche and might take as much as 45 minutes. In some areas, it can take seconds on the computer. Some county recorder’s records are now even internet accessible - for free. In one county in my state, I can have a complete title search on a property in seconds for free - right from my desk - any time, day or night.

That would answer your questions about who owns it. Now, as far as his redemption period, that depends on the state laws and the type of document. In your title search, you can actually pull and get a copy of the “mortgage” and read the terms. I would also place a quick call to a title company or knowledgeable real estate broker or investor for a quick run down on your state laws and procedures. A real estate licensing school or instructor could also tell you. Of course a real estate attorney could - but might charge a few bucks.

I would HIGHLY recommend taking the real estate licensing course to learn more about your state laws and procedures. That doesn’t mean you need to sit for the license exam and get your license. That is another decision and there are pros and cons.

As far as how you structure the deal, if you buy it at the price you mention and then look for an 85% loan, then you have one of three possibilities. One is you pay that price to your buddy. That would mean you need to put down the amount required by the lender. If your plans are to “say” you put down $12,750 when you didn’t - that is loan fraud.

Another option is that you have a lender that will make an 85% loan with no cares about price or downpayment terms. That is highly unlikely. Yet, if the lender (not just a loan officer - that will get a commission on the deal) knows everything you are doing and agrees and there is no form of mis-representation in any way, that’s fine.

A third option of course is to get your buddy to deed the property to you - or his rights - and then try to find a lender that will do an 85% refinance with little or no “ownership seasoning” meaning they’ll refinance you immediately.

My approach and I think the easiest and safest one would be to work with an investor with capital or a hard money lender to buy the property and then refinance later. That way there are no potential problems with lenders.

How do I find an investor with Hard Cash? - Posted by Tony James

Posted by Tony James on November 27, 1999 at 13:52:42:

How do I find investors willing to put up the cash? Should we create a note for the property and sell it?

Re: How do I find an investor with Hard Cash? - Posted by John Behle

Posted by John Behle on November 27, 1999 at 14:41:56:

I look for the cheapest money possible. My approach would be to talk with investors at local REI groups that might have cash or equity that they would like to invest at a higher rate.

A more expensive form of capital would be the hard money lenders. The “money to loan” section of the paper should have some or there may be some at the REI group.

Creating a note and selling it might be a possility here. Many will shy away from the fact that it is no down or that you are looking to get cash back. Some might go for it if you can convince them that the values are there. A local paper buyer might be a possibility if one of the national buyers isn’t interested. Look for a local buyer - not a local broker (that would just be brokering to the same national institutions).

I don’t broker notes so I don’t keep abreast of who buys what or under what parameters. It might be that American Note would be interested in this one. Try them first.

A couple other possibilities are that you might find a lender that would loan the $55k needed to pay off the loan without any strict requirements. You then might be able to get a second for the needed fix up costs and to cash out a little. The same would work with creating and selling a smaller first (65% LTV) to a paper buyer. You could then refinance or get a second later. Many times a second is easier to get than a first and some do not have any “seasoning” requirements for the length of time you have owned the property. IE - close with a new first and get a second a week or two later. Totally legitimate with no lender tricks needed. An equity line of credit may be possible if it is owner occupied. Also, there may be some state “HIP” loans available. A HIP is a home improvement program. There are usually some in every state.

Some HIP loans are for targeted areas that they want to see improved. Some are at low interest rates and others - don’t even need to be paid back. Usually those are based on owning the property for 4-5 years and/or owner occupancy.