Found pre foreclosure property I want to invest in!

[Matthew Diana]

I'm a new investor, I have done my due diligence and research for over a year now on real estate investing. It's time to gain some experience, and I've been looking at properties everyday and night for over 6 months. My niche is small multi-family homes (1-4 units) and I'm interested in using the BRRRR method. Now what led me to making this post is that I need help with an idea I have for a pre foreclosed condo I found. The condo is completely bare so it's a blank canvas for me to do whatever I want as far as rehabbing it and it's in a great location. I've gotten estimates from contractors and was quoted around 50k. After running numbers by using the BP tools, I could potentially raise the capital I need to invest into a bigger (quadplex) multi-family with this property if...executed correctly. I've also been able to find the owners contact information but haven't reached out yet because I was hoping to get some guidance on how to do this whole process correctly and capitalize on it as much as possible. The auction date is over a month out so I have sometime to figure out what to do. Any help/suggestions would be appreciated, thank you!

[Marcela Hoag]

Hi Matt,

This sounds super exciting! I suggest identifying people within your existing network of friends/family who invest in multi-family, or to ask your friends if they know anyone who does to pick their brain. Best case, they invest in the area. Best best case -- they can partner with you on the deal and help guide you through the whole process so you can do it on your own next time. 

[Marty Boardman]

It's great you've done so much research already Matthew. Congrats!

I've been flipping pre-foreclosures and trustee's sales in Arizona for 20 + years. Your TOP priority is to make contact with the owner and get the property under contract ASAP. Otherwise another investor (like me) could swoop in and snatch it up right from underneath you. You can always ask for a 5-10 day inspection period to get financing/rehab estimates sorted out.

With a pre-foreclosure you want to make sure title is clean and that the foreclosing lender is in first lien position. Also, if there are state/federal tax liens it could be an issue selling or refinancing.

What is it specifically you need time figuring out what to do with this property?

[Caroline Gerardo]

Condo generally not a cash cow

What is on title? 1st 2nd HOA liens other liens back property taxes...

Meet inside the unit with seller.  

Yellow notepad agree in writing to your terms, sign and date.

Get the mortgage bills.

Open title report find out what seller didn't tell you.

You have enough money to bring it current and pay the arrears before the auction?

[Chad McMahan]

Quote from @Matthew Diana:

I'm a new investor, I have done my due diligence and research for over a year now on real estate investing. It's time to gain some experience, and I've been looking at properties everyday and night for over 6 months. My niche is small multi-family homes (1-4 units) and I'm interested in using the BRRRR method. Now what led me to making this post is that I need help with an idea I have for a pre foreclosed condo I found. The condo is completely bare so it's a blank canvas for me to do whatever I want as far as rehabbing it and it's in a great location. I've gotten estimates from contractors and was quoted around 50k. After running numbers by using the BP tools, I could potentially raise the capital I need to invest into a bigger (quadplex) multi-family with this property if...executed correctly. I've also been able to find the owners contact information but haven't reached out yet because I was hoping to get some guidance on how to do this whole process correctly and capitalize on it as much as possible. The auction date is over a month out so I have sometime to figure out what to do. Any help/suggestions would be appreciated, thank you!

That time to get financing will fly by, and before you know it, you will be bidding with cash only at the auction- so plan ahead :)

[Jordyn Scholer]

What area is the condo in? That can really determine ability to capitalize. Working with a blank canvas is always the most fun. 

[Matthew Diana]

It's in downtown phoenix and absolutely agree. 

[Eliott Elias]

Reach out to the owner, Determine the market value, Secure financing, Choose a reputable contractor. 

[Mike Hern]

Quote from @Matthew Diana:

It's in downtown phoenix and absolutely agree. 

Some parts of downtown Phoenix have crime rates higher than are tolerable, so be careful. 

[Matthew Diana]

Thank you Mike, appreciate the insight!