Posted by JoeKaiser on March 23, 2002 at 14:52:34:
How can you make money on zero equity pre-foreclosures (which describes most foreclosure situations, btw)? You probably can’t.
Sometimes, it’s best to keep looking . . .
Joe
Preforeclosures, vacant with no equity - Posted by Tim
Posted by Tim on March 23, 2002 at 13:26:01:
I am mailing out postcards to homeowners who are about 6 weeks away from sherriff sale. I just received back a handful of cards that were undelivered because the property is vacant. According to the case on file, the money owed is very close to the retail value of the property in most cases. How can I make money in these types of situations or should I just keep looking for deals going to foreclosure where there is some decent equity?
Re: Preforeclosures, vacant with no equity - Posted by Rich[FL]
Posted by Rich[FL] on March 25, 2002 at 22:25:43:
First of all, you need to get to the tax records for the most current address of the person paying the taxes on the property. Even though the owners have moved away, their most current address is usually listed in the tax roles (not always - they may not want to be found!)
As with the no equity stuff - this is exactly what Dwan Bent and Sharon Higgenbotham spoke about as the last speakers at the convention. Their method is to get permission (written) from the owners to talk to the lender about the property and attempt to get them to do a short sale. If the lender agrees, they put the property under contract and then flip it to another investor or potential homeowner. (I really can’t see giving up all that equity after doing the work to create a short sale.) So, another variation on that theme, which I’m working on, is to actually negotiate then purchase that property in a short sale. Problem is you need the cash to do that; sometimes it may be possible to get an even better deal with the bank if you can close in a few days so this is not for the lite-hearted (or shallow pockets as opposed to the deep pockets, etc.)
As another variation on that theme, you could actually purchase the MORTGAGE at a discount then foreclose or do a deed-in-lieu-of foreclosure to gain possession of the property. You still need the cash in this case. I almost did that once, but the bank wouldn’t discount enough to make it work. I’m also in the middle of working that again on another deal. We’ll see how that goes.
In short, there are several possibilities in these cases, some are easier than others, and some require lots of cash. You’ll just need to figure out what will work for you.
Hope this helps.
Rich
Re: Preforeclosures, vacant with no equity - Posted by Kris(wa)
Posted by Kris(wa) on March 23, 2002 at 22:20:44:
We don’t deal in preforeclosures, but we have an agent who seeks out HUD repos. After we find a home that mathes our criteria, she watches it. After 40 to 55 days (it varries), she will start bidding 20 to 30% below asking price. In doing this, we have lost some deals (becuase someone bid closer to asking price) but we also win some and can in-turn either resale outright or on a contract. This can also be done with VA repos. You just have to have an agent who is willing to watch them and muddle through the paperwork.