Pre Foreclosure, Taking Over Financing,

13 Replies

Hey guys, I have the rights to buy a pre foreclosure (the sherif sale is on Wednesday). It’s located near Zimmerman Minnesota, just north of Minneapolis and St Paul by Elk River. It’s in a great neighborhood on two acres. I can get it for 27,000 down and take over the remaining loan of $178,000 at 4.5%. It’s a 1979 3bed/2bath/2stall attached garage and Zestimated at $245000. It needs a huge clean up, a new front door, some light fixtures, a couple new windows, and some paint. Is this a good deal? Should I buy? Wholesale? It hasn’t cost me anything yet.
Thanks in Advance!

The bank likely won’t do a reinstatement at this point. Not enough spread to flip or wholesale.....if the zestimate is close, which is doubtful.

Are you looking at it as a buy and Hold ? 

(612) 940-8711

I don't think you'd be near the 1% rule for a rental property with that deal.  What is your estimate on rehab costs?

@Dominic Ruegemer What is the property actually worth? I'm not talking about the guesstimate from sites like Zillow, What are the recent sales comps? What are your minimum of 3 rehab estimates coming in at on the cost? This information will determine what your options are with the property.

Charles, I figured 20 k for rehab , more if the plumbing freezes. It’s not an ideal buy and hold by any means.

@Dominic Ruegemer It would be 1/10,000 that a lender would allow you to "take over" the first mortgage in default.  Have you gotten an indication in writing that they will welcome this structure? in the other 9,999 scenarios your only option would be to pay off the first mortgage in full, or if you have a short sale agreement you would need to close and pay off the short sale lender before the Sheriff's sale.  This means you would need to pay cash or have a fast hard money lender.  Once the Sheriff's sale happens the short sale agreement will become null and void.  You then may be able to buy out the owner's redemption rights and payoff the Sheriff's sale payoff.   Since the sheriff's sale is Wednesday you only have one day to execute and do not have your full due diligence complete.  This is is how bad deals happen.  Let the property go to sheriffs sale and see what the payoff is, then if it's a good deal you can purchase the redemption rights and then the sheriff's certificate.

Tim Swierczek, Lender in WI (#103522) and MN (#103522)
(651) 772-9000
Originally posted by @Dominic Ruegemer :

Hey guys, I have the rights to buy a pre foreclosure (the sherif sale is on Wednesday). It’s located near Zimmerman Minnesota, just north of Minneapolis and St Paul by Elk River. It’s in a great neighborhood on two acres. I can get it for 27,000 down and take over the remaining loan of $178,000 at 4.5%. It’s a 1979 3bed/2bath/2stall attached garage and Zestimated at $245000. It needs a huge clean up, a new front door, some light fixtures, a couple new windows, and some paint. Is this a good deal? Should I buy? Wholesale? It hasn’t cost me anything yet.
Thanks in Advance!

 It's not clear what you mean by "rights to buy a pre foreclosure". But, you could buy the property, taking over the loan if you bring the arrears current. You'd want to get a title report and close through an attorney. The bank doesn't need to be involved other than getting a reinstatement amount.

Due to the fact that you have to complete this deal by tomorrow and you don't know how to price out comps in the area I think you should stay away from it.  I also agree with Tim in that this isn't likely a scenario where a lender will let you assume the loan.

Zillow estimates vary widely, they may be close in some areas however they are way off in others.

Spend some time learning the areas you want to invest in.  You have to know a deal when you spot it or you have to figure out a way to quickly analyze properties to make any kind of money flipping or wholesaling properties.

Thanks for the input guys. When looking at comps, do you guys prefer to compare the price per sq ft, bed and bath count, year, or anything else?

Originally posted by @Dominic Ruegemer :

Thanks for the input guys. When looking at comps, do you guys prefer to compare the price per sq ft, bed and bath count, year, or anything else?

 Yes, yes, yes, and yes

When utilize comps analyze the PSF. I’ve done a few subject To’s I can offer some personal advice with my deals if you want to reach out.

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