Default, Pre-Forclosure, Foreclosure

4 Replies

Originally posted by @Gordon Michael Porter :

What are the pros and cons of buying foreclosure or pre-foreclosure? Looking into buying for srt and vacation rental.

I've done pre-foreclosures and foreclosures for 25 years. That's a loaded question you ask. First the laws vary by state. Second there are mortgage foreclosures and Deed of Trust foreclosures, they are very different. Third some states have redemption periods and some don't. Fourth the only way to find out how much is owed on a property in foreclosure is to get the owner to ask the lender for a payoff and to order a Title Report as well. Fifth you can't inspect a property unless you have the owner's permission but you are always fighting the clock as to the sale date. Sixth most homes in foreclosure have a lot of deferred maintenance. Seventh depending on who the lender is and what type of loan (FHA, VA, Conventional, USDA, Jumbo, HELOC, Reverse, Hard Money, Private Lender, etc) and how long it's been delinquent and if this is the first time they were delinquent or they've been delinquent before and why the borrower is delinquent, it takes different routes. If the borrower is in bankruptcy, previously in bankruptcy or contemplating bankruptcy, it takes a swift lurch into a rabbit hole. And if the borrower is cooperative or unrealistic or in a "protected" class, or whether they've tried a loan modification, all of those play a role. Or if there are two people on Title and only one of them can be located or only one will sell, you've wasted a great deal of energy and again fighting the clock.

Could I mentor a class on the subject? Yes, I could.

Will I mentor? No, I won't, not on this because It hurts my feelings when people yawn and fall asleep when I'm trying to explain this stuff to them. ;-) In fact it makes me yawn and fall asleep, too.

 

Originally posted by @Gordon Michael Porter :

@Mike M. I appreciate your expert opinion on the matter! Do you think buying in that market has a distinct advantage in Florida? Or would that be subject to change as well?

I don't know the laws in FL, sorry, You need someone with local knowledge that has done them for a couple of years and has been through the bumps you run into along the way. Join a local real estate investment group and team up with someone on the first couple.

@Account Closed

Hi Mike, I'm also in interested in buying a foreclosure in WA to turn into an investment property. I'd love to talk to you more about how to go about turning this into a real deal. I've done some research and I've done the basic number crunching, and I think everything will work out with this deal to be a cash flowing rental, with my investing partner being paid back 120% in 6 months. I'd love to get your insight on this potential deal if you've got the time!

Thanks, Max