Help with potential deal on lien/note/loan - apartment complex

[Joe Crupi]

Situation:

There's an apartment complex that due to some severe mishandling, was about to be foreclosed. Someone came in and loaned them the money to pay the back taxes and fees, charging hard money rates.

- Loan amount is @ $600k, which covers back taxes, fees, etc

- Appraisal, based on current market rental rates (property is not charging market rates), is over $7,000,000

- current understanding is there are NO other liens on the property

Here's my question.

If I were able to offer the complex a better loan deal, one that would get the other lender out of the way, what are my ways to profit off the deal?

- Obviously, the first benefit would be the interest earned and a lien against the property

- If they defaulted, would I get direct ownership of the property, or would it go to Sheriff Sale?

- If it went to Sheriff sale, is my profit limited to what was lent to the property, or would I get to set a reserve price and get to collect all monies received?

- If I set a reserve price and its not met, then what?

Thanks for help!

[Jay Hinrichs]

you make a loan in first position like the other HML did.. you replace them.

in a default scenario you would have a few options.

1. Deed in Lui   However you would probably have to pay them millions to get that.. they are not going to just deed you a 7 mil property for 600k.

2. they default you go to sheriff sale.. your the first your entitled to your principal interest and fees thats all . any amount of money bid up above that will go to the owner of record..  and a 600k or 700k opening bid on a 7 mil property will have plenty of bidders.. 

these are just good safe loans.. rare will you take ownership and end up with the equity.. might happen for some low balance unsophisticated situation.. but highly unlikely in this one.