Sitting on a gold mine, how should we exploit?

Question

I'm just getting started and I'm networking heavily.  Recently I noticed a current client of mine wearing a shirt with a house on it.  I asked about the company...

He owns the business and it's a property maintenance company.  He explained that he has contracts with banks and his company in responsible for "Securing" the property when the foreclosure process starts.

Besides the neighbors, he is the only one with eyes on these properties.  He secures 20-25 properties per week.  We both have profitable businesses and cannot justify large amounts of time away from our bread and butter.

We are sitting down later today to discuss how to go about exploiting these leads.  Does anyone have any suggestions/advice/guidance on how to utilize these leads effectively?

Thank you in advance!

(Keyword alerts:  DC, Baltimore, Annapolis, Catonsville, Dundalk, Curtis Bay, Pasadena, Maryland, Severna Park, Severn, Bowie, Columbia, Virginia, Wholesale, Wholesaling, Finders Fee)

Brian Tome · Answer

Also, I would recommend removing the term "exploit" from your vocabulary.  It has too many negative connotations to be useful in negotiating.  Instead, use capitalize, develop, cultivate, etc. and always focus on the potential benefit for the other person.  People will be happy to see you make money when they know you cared about their needs first.  That does not mean you have to work for charity, it just means transparency, honesty, integrity, and kindness will get you far more deals than cunning strategy.

Travis Lloyd · Answer

By the time the Bank secures a property manager, they have usually already sold that note and are acting in the capacity of a Servicer. Part of their arrangement with the investors to whom they sell the note: they will secure and protect the underlying investment (the property), list it on the open market to obtain the highest possible cash price, etc.

So once your friend gets the call, that property has already been fed into the machine. There is a regional asset manager who has received a file on it, a listing agent not long from being assigned it, and the bank won't throw a wrench into their system to "get an offer soon". They've learned quite well from their mistakes in 08/09.

Wayne Brooks · Answer

You have no real advantage, other than Maybe the ability to inspect, but that's likely to put your preservation guy business at risk.  All active investors will be bidding at the foreclosure auction, and any REO's will get listed.

Brian Tome · Answer

Denny,

I would encourage you to develop a referral relationship with this guy because he is a professional in the industry and may come across some deals that could help you.  However, I would stress that you only want to do what is completely above board.  If the bank that trusted him with the keys does not know or intend for him to give you the opportunity to inspect ahead of the auction, don't do it.  There are plenty of investors who will.  There are also plenty who will crawl through windows, pick locks, etc. to get early access to a presale/auction foreclosure.  If I were you, I would not be one of them.  It is a shady practice and you will likely get a reputation if you do.

Instead, focus on finding great deals that are not in the process yet.  If you are the only investor looking at a home someone inherited and no longer wants, your negotiating strategy just got a whole lot simpler.  It may take you a while to find the first one, but be conservative in your numbers and once you make a little money, put it into marketing for your next three.  The more you do, the more people will know and refer you, so start with a good one, then repeat.

You seem conscientious so I have little doubt that you will be successful in no time at all.

Best regards!

Jay Hinrichs · Answer

not sure that gives you a leg up ... this is usually the first step towards a foreclosure.

So unless you can buy the paper.. or find a semi private lender who is hiring these folks and may sell paper... other wise it will be a short matter of time when its all public record

Account Closed · Answer

Lenders pay these folks to board up, drive by, take pictures of front and rear of properties of houses of owners not paying their mortgage and when there is a foreclosure pending.

What I do is offer to pay them for every address they refer to me that I buy. I have a lady that has give me over 100 address.

These could be great leads, but you need to track down the owners and negotiate with them. You could buy, make offers, refer to agents or auctioneers.

You could really do well if you work this resource. Be careful not to violate any foreclosure laws.

Charles Parrish

Jeff B. · Answer

@Charles Parrish

fine and good and I hope that works for you, but in Calif and to me, that just doesn't make sense.  I can get NODs and NTS for free and bid to buy them.  Where's the magic, the secret that leads to a better purchase price?  Guess I'm a dumbbell.

Jeff B. · Answer

• "contracts with banks and his company in responsible for "Securing" the property when the foreclosure process starts"

That make make sense to some here, but not to me.  What does that mean?

Done REOs, Short Sales, NODs and auctions, but this one is new to me!

John D. · Answer

One of my guys in Reno runs a company that secures properties, and cleans them out, before these REOs are about to be marketed.  I've joked about getting him stickers that look like water stains, mold, etc. to apply to these properties to scare off other investors.  I should probably proceed with that.

Jay Hinrichs · Answer

@Denny Kisner   yes most small local banks if they have OREO will either have them on their website or will send you a list pretty easy really

Sitting on a gold mine, how should we exploit?

Most Popular Reply