Newbie to Foreclosure

16 Replies

Hi all my name is Toan Nguyen one of my friend McNew introducted me to this Biggerpockets. And I am new to buying Foreclosure houses and recently won a bid on the house in PA Allentown. Looking for some guidance and which lenders to help Renovation Fund for the house. Need some recommendations on which lenders to use (looking around 9% interest or below). I'm currently using the BRRR method. Already owe 4 units but neither are auctions house. Any guidances would help :) Thank you

Hello Tony!  Where do I start?  First of all I would never buy acoproperty that’s out of driving distance over an hour unless it was a Turnkey product and that company also manages.  Was that the first auction you went to?  You need to go at least once just to watch and not bid. 

Probably a local bank his your only will get that kind of loan fruit a bank who gets more into your ability to pay and put 20% down but usually a longer term.  There’s probably something terrible about it’s condition and why you got it.  Did you look at it first and know what year it was built?  Was your win involve an”educated” guess or was it physical knowledge you had?

Good luck to you!

Originally posted by @Tony Lee :

Hi all my name is Toan Nguyen one of my friend McNew introducted me to this Biggerpockets. And I am new to buying Foreclosure houses and recently won a bid on the house in PA Allentown. Looking for some guidance and which lenders to help Renovation Fund for the house. Need some recommendations on which lenders to use (looking around 9% interest or below). I'm currently using the BRRR method. Already owe 4 units but neither are auctions house. Any guidances would help :) Thank you

Not to be a buzz kill but you really need to be able to fund foreclosures in cash. Very difficult to get tradition loans on properties that are so beat up that they'll work for the BRRRR method. You can always try a HML but as a newbie that's also going to be an uphill battle.

@Tony Lee You may be a slight bit ahead of yourself on bidding before knowing how to fund it. I won't be as harsh on you as the last two comments. In PA you should have about 20 days to fund the purchase? It will be close but it is possible. I've know people who were able to get it done in less time. The critical thing for you to do right now without any delay is get your presentation together to show your potential lenders. If the numbers work, and your plan is thorough and complete you should be able to get it funded. HML may be your fastest option unless you know someone who would like to partner with you. The problem you may run into is that HML will not usually fund and owner occupied project. You may have to complete the rehab, rent it out through a seasoning period and then once you are able to refinance out of the HML, then you could move in if you still wish to do so. If you like, I can send you a Hard Money Lender Profile sheet. That should help you learn to get to know how HML works.

@Michael Lewis Lee

his wasn't my first auction. I've been here watching the auction almost 4 months. Therefore, I decided to give it a try. I won the bid and got the house using HELOC. I did the walk through with multiple different contractors and the price range of 

New Flooring, new paint, 3 new sinks, and permit for all the work = nearly $30,000 - $40,000. The house I got is $75,000. But the ARV is $190,000. In the area I'm currently in can rent the house up to $1,800/month. The location is near by Lehigh Valley Mall, Supermarket and restaurant, these are walking distance. I like to buy and hold using BRRR method.

If you have any Private Lenders that you've been used before to share with. That would be awesome!

@Jan Kerr  

Hi Jan, thank you for your kindness. I already got the house using HELOC money. I'm currently looking for Private lenders to help fund the Renovation. If you have any Private Lenders that you've been used before to share with. That would be awesome!

Slightly different take here, I actually think it's immoral to take a foreclosure. It's just not right. You're profiting off of someone else's misfortune. It's almost as bad as selling drugs. I'd recommend not going through with it. Keep your soul clean

Originally posted by @Jacques Hebert :

Slightly different take here, I actually think it's immoral to take a foreclosure. It's just not right. You're profiting off of someone else's misfortune. It's almost as bad as selling drugs. I'd recommend not going through with it. Keep your soul clean

@Pat L. LOL! 

@Jacques Hebert I am sure you have a big heart and do not want to see anyone lose thier home. Neither do we. However, Investors who purchase foreclosed homes at auctions are not being immoral. Those investors did not cause the hardship that caused the person to go into foreclosure. Whether an investor buys those homes at the acution or not, the lender is going to go through with the foreclosure. Then the lender is going to collect on any mortgage insurance policies that may exist and turn those properties over the the insurers such as HUD, Fannie Mae, Freddie Mac ro VA. Those insrureres will then list those houses for sale on the MLS through real estate agents using an offer and bidding process. If no Mortgage insurance policies exist for them to collect on, those original lenders will still foreclose and then list those proeprties with agents and get them sold through traditional means using the MLS. Refusing to buy properties at foreclosure auction will not stop the process. Please don't blame the investors. it is not their fault. If you have bought properties off the MLS using agents representing any bank, HUD, Fannie mae, Freddie Mac or VA, you to could have bought a foreclosed home and just didn't know it. It is a sad reality. If investors do not take advantage of the opportunity, someone else will.

We try to deal with the home owners before any foreclosure sales and buy it before it goes to auction to help them preserve their credit and sell their way out of the debt that they can no longer manage. That helps them move on and recover more easily while protecting their credit from the damage that a foreslosure will cause. I've met many home owners who just wanted out from under the debt and are happy to sell and move on with their lives. 

Most of the foreclosures we had seen were trashed & by the time the banks released them they were in dire need of a total rehab or should just be torn down. I bet any bleeding heart who feel it's immoral to subjugate a foreclosure hasn't lived next door to one & watched their own property value take a dive & then watched rodent infestations multiply or have local hood rats break in to further trash the home & use it as a den to pursue nefarious deeds. 

Then you have the foreclosures of the 2008 era whereby the owner maxed out the mortgage & absconded with the funds leaving the loan in default & in most cases seriously underwater. We have acquired a number of those for <25% of mortgaged value, the last one we got for $35k had defaulted on a loan of $140k. So whose immoral now???

Hi @Tony Lee I am in the Lehigh Valley and do hard money lending in the area. Although since you have a heloc, you should definitely use that as the interest rates will be less. Once it is renovated it you can do the "R" of the BRRR or flip it. @Ralph Trinidad is a mortgage broker in the area. You can give him a buzz too. 

Originally posted by @Jacques Hebert :

Slightly different take here, I actually think it's immoral to take a foreclosure. It's just not right. You're profiting off of someone else's misfortune. It's almost as bad as selling drugs. I'd recommend not going through with it. Keep your soul clean

LOL!

 

Originally posted by @Dave Lin :

Hi @Tony Lee I am in the Lehigh Valley and do hard money lending in the area. Although since you have a heloc, you should definitely use that as the interest rates will be less. Once it is renovated it you can do the "R" of the BRRR or flip it. @Ralph Trinidad is a mortgage broker in the area. You can give him a buzz too. 

Where are you currently located? I'm looking for HML for the first "R" Rehab. Any insight would help. Thanks Dave

 

Originally posted by @Jacques Hebert :

Sorry if that's offensive. Just calling it like it is

You aren't calling it like it is, you are calling it like you see it, which isn't the way it is. That's a preposterous position. Don't buy a foreclosure because it's immoral? What, you would propose waiting until the lender forecloses and then sells it for more later? How is that more moral? 

 

No, I'm saying you shouldn't participate in the foreclosure process at all. Obviously. That doesn't seem like a complicated idea to me. Is a house being sold as a result of a foreclosure? Dont buy it. Buy a different house. You do not need to own that particular house. 

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