Is there any deals to be made on pre foreclosure with no equity?

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

3y

it would be rare that you could talk to the lender once the house is taken back.

The lenders have protocols to follow and once they take it back they will then list it with their Pet REO broker thats the person U want to snuggle up to

A great OREO broker is a great contact.

JLH Capital Partners51 Review

2 Reply

OP

Scottsdale, AZ · Member since 2008 · 24 posts · 18 votes

3y

Quote from @Jay Hinrichs:

it would be rare that you could talk to the lender once the house is taken back.

The lenders have protocols to follow and once they take it back they will then list it with their Pet REO broker thats the person U want to snuggle up to

A great OREO broker is a great contact.

This is a smaller hard money lender on this particular property. Not some big bank. That's why I was thinking maybe they keep the REO in house. Being that it is a hard money lender I'm sure there are plenty of flippers they work with that they could Re market the property to as well.

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

3y

Quote from @Joey Chrisman:

Quote from @Jay Hinrichs:

it would be rare that you could talk to the lender once the house is taken back.

The lenders have protocols to follow and once they take it back they will then list it with their Pet REO broker thats the person U want to snuggle up to

A great OREO broker is a great contact.

This is a smaller hard money lender on this particular property. Not some big bank. That's why I was thinking maybe they keep the REO in house. Being that it is a hard money lender I'm sure there are plenty of flippers they work with that they could Re market the property to as well.

in that case offer to buy the note right now. I used to do this as much as I could back in the day.. I had a pipe line to one of the Thrifts and they would sell me their forclosurse about 30 days before it went to sale. They did not want them on their books.. and I would either get paid at the court house steps or I would end up owning it.. either way was a win deal.. Call them and ask them if they will sell you the note.

JLH Capital Partners51 Review

2 Reply

OP

Scottsdale, AZ · Member since 2008 · 24 posts · 18 votes

3y

I'm confused. Why would I want the note when the original mortgage balance that is owed is more than what I believe the property is worth. I don't want the property for the price the trustee paid. Or you're saying buy the note for a discount? I doubt the foreclosure process is that expensive in Arizona and they likely have already spent a decent amount on the process already.

Chad U.

Investor · Boca Raton, FL · Member since 2012 · 1k+ posts · 1k+ votes

3y

Quote from @Joey Chrisman:

I'm confused. Why would I want the note when the original mortgage balance that is owed is more than what I believe the property is worth. I don't want the property for the price the trustee paid. Or you're saying buy the note for a discount? I doubt the foreclosure process is that expensive in Arizona and they likely have already spent a decent amount on the process already.

Buy the note at a discount. However I've seen numerous defaulted fix and flip loans, and the lenders are holding out for par. They are still in disbelief, like many sellers are, that house prices have come down and not willing to budge much. AZ is non-judicial so the foreclosure cost is relatively quick and inexpensive

2 Reply

OP

Scottsdale, AZ · Member since 2008 · 24 posts · 18 votes

3y

Quote from @Chad U.:

Quote from @Joey Chrisman:

I'm confused. Why would I want the note when the original mortgage balance that is owed is more than what I believe the property is worth. I don't want the property for the price the trustee paid. Or you're saying buy the note for a discount? I doubt the foreclosure process is that expensive in Arizona and they likely have already spent a decent amount on the process already.

Buy the note at a discount. However I've seen numerous defaulted fix and flip loans, and the lenders are holding out for par. They are still in disbelief, like many sellers are, that house prices have come down and not willing to budge much. AZ is non-judicial so the foreclosure cost is relatively quick and inexpensive

Yeah so there really isn't much of a deal then on these properties is what it sounds like. The lenders aren't going to be that motivated to get them off their books at a discount. I'm just searching for any kind of fix and flip properties now and it is very tough to find anything that gives margin right now.

1 Reply

Doug SmithPro Member

Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes

3y

When I first left banking in 2007 right before the crash and we created this company, it was to do 2 things: 1) Make commercial bridge loans to businesses that would not be getting refinanced after the crash and 2) to buy the bad real estate-backed loans out of banks. We started only doing that with commercial loans. We would buy the loan and become "the bank", then go to the borrower/guarantors and say "hey, you're upside down on the loan and you're 12 months past due. Sign the property over to us and we'll waive that deficiency balance for you." We built a good business on that and eventually branched out into more conventional lending and investor lending, but it's how we started. Here's what people don't understand though...if you go to the bank and say "I want to buy the loan on 123 Main Street, they are going to want the payoff", but if you go to them and say "what loans would you be willing to give rid of?' they'll be more likely to sell them at a discount off of the market value of the collateral. This has become what we now know to be the NPL space. If you are flexible about the properties and locations you're willing to buy, then there might be some opportunity for you there. That's how we started.

3 Reply

Eliott Elias

Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes

3y

Properties with no equity invite subject to financing. The terms of the loan have to be good for this to work.

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

3y

Quote from @Chad U.:

Quote from @Joey Chrisman:

I'm confused. Why would I want the note when the original mortgage balance that is owed is more than what I believe the property is worth. I don't want the property for the price the trustee paid. Or you're saying buy the note for a discount? I doubt the foreclosure process is that expensive in Arizona and they likely have already spent a decent amount on the process already.

Buy the note at a discount. However I've seen numerous defaulted fix and flip loans, and the lenders are holding out for par. They are still in disbelief, like many sellers are, that house prices have come down and not willing to budge much. AZ is non-judicial so the foreclosure cost is relatively quick and inexpensive

yes I bought them all at a discount depending on the property but there was always a nice spread if it went to sale and sold for the balance and if not I bought it with a steep enough discount that I had a great buy win win is how that works.. NO you dont pay par for a mortgage that exceeds value that would not be to prudent.

JLH Capital Partners51 Review

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

3y

Quote from @Joey Chrisman:

Quote from @Chad U.:

Quote from @Joey Chrisman:

I'm confused. Why would I want the note when the original mortgage balance that is owed is more than what I believe the property is worth. I don't want the property for the price the trustee paid. Or you're saying buy the note for a discount? I doubt the foreclosure process is that expensive in Arizona and they likely have already spent a decent amount on the process already.

Buy the note at a discount. However I've seen numerous defaulted fix and flip loans, and the lenders are holding out for par. They are still in disbelief, like many sellers are, that house prices have come down and not willing to budge much. AZ is non-judicial so the foreclosure cost is relatively quick and inexpensive

Yeah so there really isn't much of a deal then on these properties is what it sounds like. The lenders aren't going to be that motivated to get them off their books at a discount. I'm just searching for any kind of fix and flip properties now and it is very tough to find anything that gives margin right now.

you dont know that until you ask.. bottom line.

JLH Capital Partners51 Review

Marty Boardman

Real Estate Investor and Instructor · Gilbert, AZ · Member since 2010 · 303 posts · 332 votes

3y

Quote from @Joey Chrisman:

Quote from @Chad U.:

Quote from @Joey Chrisman:

I'm confused. Why would I want the note when the original mortgage balance that is owed is more than what I believe the property is worth. I don't want the property for the price the trustee paid. Or you're saying buy the note for a discount? I doubt the foreclosure process is that expensive in Arizona and they likely have already spent a decent amount on the process already.

Buy the note at a discount. However I've seen numerous defaulted fix and flip loans, and the lenders are holding out for par. They are still in disbelief, like many sellers are, that house prices have come down and not willing to budge much. AZ is non-judicial so the foreclosure cost is relatively quick and inexpensive

Yeah so there really isn't much of a deal then on these properties is what it sounds like. The lenders aren't going to be that motivated to get them off their books at a discount. I'm just searching for any kind of fix and flip properties now and it is very tough to find anything that gives margin right now.

Finding below market deals in Arizona is definitely a challenge. I get wholesalers sending me properties here daily that don't pencil out and wonder who is buying these homes?

I like to target homeowners in foreclosure with less than 30 days until auction. At this point they're out of options and the big iBuyers can't help, nor can a Realtor. My last two deals (fix and flips) I acquired directly from the homeowner 24 hours prior to the auction.

Your best bet Joey is to source your own deals through marketing, networking, etc. Trying to make a deal with a HML buying paper, short sales, etc. is high-hanging fruit. Good luck!

OP

Scottsdale, AZ · Member since 2008 · 24 posts · 18 votes

3y

Quote from @Marty Boardman:

Quote from @Joey Chrisman:

Quote from @Chad U.:

Quote from @Joey Chrisman:

I'm confused. Why would I want the note when the original mortgage balance that is owed is more than what I believe the property is worth. I don't want the property for the price the trustee paid. Or you're saying buy the note for a discount? I doubt the foreclosure process is that expensive in Arizona and they likely have already spent a decent amount on the process already.

Buy the note at a discount. However I've seen numerous defaulted fix and flip loans, and the lenders are holding out for par. They are still in disbelief, like many sellers are, that house prices have come down and not willing to budge much. AZ is non-judicial so the foreclosure cost is relatively quick and inexpensive

Yeah so there really isn't much of a deal then on these properties is what it sounds like. The lenders aren't going to be that motivated to get them off their books at a discount. I'm just searching for any kind of fix and flip properties now and it is very tough to find anything that gives margin right now.

Finding below market deals in Arizona is definitely a challenge. I get wholesalers sending me properties here daily that don't pencil out and wonder who is buying these homes?

I like to target homeowners in foreclosure with less than 30 days until auction. At this point they're out of options and the big iBuyers can't help, nor can a Realtor. My last two deals (fix and flips) I acquired directly from the homeowner 24 hours prior to the auction.

Your best bet Joey is to source your own deals through marketing, networking, etc. Trying to make a deal with a HML buying paper, short sales, etc. is high-hanging fruit. Good luck!

Yeah I contacted the lender but no idea on how motivated they are to sell it. The home owners you're talking about have equity I would assume otherwise there isn't really a deal for a pre forclosure I assume. And yes I have been checking the mls and wholesalers and most the properties I see don't really seem like they are that great of deals. Trying to find even crappy properties that are priced right is difficult. Like the discount given for a place that needs a lot of work often isn't enough to make it a profitable endeavor.

1 Reply

Marty Boardman

Real Estate Investor and Instructor · Gilbert, AZ · Member since 2010 · 303 posts · 332 votes

3y

Quote from @Joey Chrisman:

Quote from @Marty Boardman:

Quote from @Joey Chrisman:

Quote from @Chad U.:

Quote from @Joey Chrisman:

I'm confused. Why would I want the note when the original mortgage balance that is owed is more than what I believe the property is worth. I don't want the property for the price the trustee paid. Or you're saying buy the note for a discount? I doubt the foreclosure process is that expensive in Arizona and they likely have already spent a decent amount on the process already.

Buy the note at a discount. However I've seen numerous defaulted fix and flip loans, and the lenders are holding out for par. They are still in disbelief, like many sellers are, that house prices have come down and not willing to budge much. AZ is non-judicial so the foreclosure cost is relatively quick and inexpensive

Yeah so there really isn't much of a deal then on these properties is what it sounds like. The lenders aren't going to be that motivated to get them off their books at a discount. I'm just searching for any kind of fix and flip properties now and it is very tough to find anything that gives margin right now.

Finding below market deals in Arizona is definitely a challenge. I get wholesalers sending me properties here daily that don't pencil out and wonder who is buying these homes?

I like to target homeowners in foreclosure with less than 30 days until auction. At this point they're out of options and the big iBuyers can't help, nor can a Realtor. My last two deals (fix and flips) I acquired directly from the homeowner 24 hours prior to the auction.

Your best bet Joey is to source your own deals through marketing, networking, etc. Trying to make a deal with a HML buying paper, short sales, etc. is high-hanging fruit. Good luck!

Yeah I contacted the lender but no idea on how motivated they are to sell it. The home owners you're talking about have equity I would assume otherwise there isn't really a deal for a pre forclosure I assume. And yes I have been checking the mls and wholesalers and most the properties I see don't really seem like they are that great of deals. Trying to find even crappy properties that are priced right is difficult. Like the discount given for a place that needs a lot of work often isn't enough to make it a profitable endeavor.

Mostly high equity yes to fix and flip, but also sub-to deals with newer homes that don't need much work and have low interest rate loans. There are opportunities to hold these for cash flow with little cash out of pocket.