Success stores for inspiration please!
Hey I'd love to hear a synapsis on a pre-foreclosure or foreclosure that worked out! What were the numbers, how did the deal come about, what came up that was unexpected, and what was the payout? Looking for inspiration and a sense of the types of situations that work out in the end. Thanks!
Here's a pre-foreclosure deal I closed two weeks ago (Arizona)...
Seller slipped into foreclosure in 2021 - did a loan modification with his lender (big mistake). His monthly payment jumped from $1,300 per month to $2,100. He couldn't make this payment so lender set a new auction date for 1/4.
I gave the seller 10K cash at closing (plus 90 days to move out), reinstated his loan (42K) and took title subject-to. The seller will get another 20K when he is moved out.
My all-in with the underlying loan is 275K - house value is 400K. It was built in 2012 so not much work needed, mostly cosmetic (paint and carpet). I should clear about 85K in profit.
The alternative for the seller was losing the house at auction, a nasty foreclosure on his credit report, receiving NO cash and getting thrown out by the county constable within 2-3 weeks.
@Marty Boardman awesome thanks! how did you find the situation in the first place?
Quote from @Hannah Joy:
@Marty Boardman awesome thanks! how did you find the situation in the first place?
You're welcome!
I market specifically to homeowners in foreclosure. Here in Arizona they have 90 days to bring their loan current, or pay their loan off to stop the sale. I wait until there are less than 30 days until the auction date, by then the seller has run out of options and I can lock up the best deals. Less competition that way too, not many investors can get a foreclosure stopped this quickly.
Quote from @Hannah Joy:
Hey I'd love to hear a synapsis on a pre-foreclosure or foreclosure that worked out! What were the numbers, how did the deal come about, what came up that was unexpected, and what was the payout? Looking for inspiration and a sense of the types of situations that work out in the end. Thanks!
1) Last year we took a property back via deed in lieu of foreclosure from the heirs of a deceased borrower who didn't want the property due to its condition. Ended up doing a full rehab on it and selling to a retail buyer. All in costs approx $110K, sold for $192K for approx profit of $68K.
2) Recently had a property sell to a 3rd party bidder at a foreclosure auction for much higher than anticipated. All in costs were approx $55K, sold for $90K and profit approx $30K. Best part is we never had to touch the property.
Nice! Would you say foreclosures/auctions are better for more experienced investors? I'm only 2 properties in but I feel like I can figure it out!
We purchased a property in pre-foreclosure in May 2022. Seller fell behind on payments and simultaneously was in a bad living situation and left the house and state abruptly. The house was vandalized, all utilities shut off, etc. We tried multiple angles to find the best solution for the Seller which ended up being us buying it as-is. Seller avoided the foreclosure, was able to get about $15,000 in cash and we helped coordinate shipping all of the belongings out of state back to the Seller.
We were able to get the property cleaned, rehabbed and back on the market very quickly and closed on the sale in July. Our rehab was under budget (HOW?!?!) and our sale price was about 20k higher than our ARV (yay Sellers market). Purchased the property for $205k (using hard money) and sold for $320k. We made approx $80k in profit on that flip.
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Real Estate Agent Arizona (#SA675903000)
- KAIN Real Estate Group
- Podcast Guest on Show #254
Quote from @Hannah Joy:We buy the actual mortgage prior to foreclosure, definitely a more experienced method to acquire real estate.
Nice! Would you say foreclosures/auctions are better for more experienced investors? I'm only 2 properties in but I feel like I can figure it out!
Quote from @Jake Kain:
We purchased a property in pre-foreclosure in May 2022. Seller fell behind on payments and simultaneously was in a bad living situation and left the house and state abruptly. The house was vandalized, all utilities shut off, etc. We tried multiple angles to find the best solution for the Seller which ended up being us buying it as-is. Seller avoided the foreclosure, was able to get about $15,000 in cash and we helped coordinate shipping all of the belongings out of state back to the Seller.
We were able to get the property cleaned, rehabbed and back on the market very quickly and closed on the sale in July. Our rehab was under budget (HOW?!?!) and our sale price was about 20k higher than our ARV (yay Sellers market). Purchased the property for $205k (using hard money) and sold for $320k. We made approx $80k in profit on that flip.
Right on Jake, thanks! That is super cool that you helped get them their belongings back! When in your real estate career did you start finding hard money accessible?
Quote from @Hannah Joy:This was the first time I had used hard money. It really doesn't matter how much experience you have, since they vet the deal more than you as an individual. Your experience level certainly does help (esp on the rate) but more importantly is understanding how the entire process works. I am a Realtor and used to traditional transactions and traditional forms of lending. So trying to figure out the process was the only challenge. It wasn't necessarily as simple as "go get hard money".
Quote from @Jake Kain:
We purchased a property in pre-foreclosure in May 2022. Seller fell behind on payments and simultaneously was in a bad living situation and left the house and state abruptly. The house was vandalized, all utilities shut off, etc. We tried multiple angles to find the best solution for the Seller which ended up being us buying it as-is. Seller avoided the foreclosure, was able to get about $15,000 in cash and we helped coordinate shipping all of the belongings out of state back to the Seller.
We were able to get the property cleaned, rehabbed and back on the market very quickly and closed on the sale in July. Our rehab was under budget (HOW?!?!) and our sale price was about 20k higher than our ARV (yay Sellers market). Purchased the property for $205k (using hard money) and sold for $320k. We made approx $80k in profit on that flip.
Right on Jake, thanks! That is super cool that you helped get them their belongings back! When in your real estate career did you start finding hard money accessible?
-
Real Estate Agent Arizona (#SA675903000)
- KAIN Real Estate Group
- Podcast Guest on Show #254
This was the first time I had used hard money. It really doesn't matter how much experience you have, since they vet the deal more than you as an individual. Your experience level certainly does help (esp on the rate) but more importantly is understanding how the entire process works. I am a Realtor and used to traditional transactions and traditional forms of lending. So trying to figure out the process was the only challenge. It wasn't necessarily as simple as "go get hard money".
Got it. Anything you'd be willing to share about figuring out the process?