Multiple Liens Negotiated Down to Make the Numbers Work

[Michael Miller]

Investment Info:

Single-family residence wholesale investment in Sacramento.

Purchase price: $141,000
Sale price: $181,000

While this property doesn’t look like much since it is a burned out husk, this turned out to be a great deal that we flipped quick. 10th Ave was riddled with title problems and multiple liens. We were successfully able to get the primary lender to apply the insurance proceeds to the total payoff and negotiated 3 subsequent liens down a significant amount in order to make the numbers work.

What made you interested in investing in this type of deal?

Complicated deal that an average investor could not do because of multiple lien holder negotiations

How did you find this deal and how did you negotiate it?

Found through preforeclosure. Having an auction date already set made it easier to negotiate junior liens because if it went to sale they would get nothing. We used this as leverage to get a discount on the total purchase price.

How did you finance this deal?

We assumed the primary loan and paid cash to all other lien holders

How did you add value to the deal?

Got the insurance proceeds from the fire applied to the total payoff of the loan allowing us to not have to go through the collection process when purchasing the property. Additionally all junior liens were negotiated down due to foreclosure risks

What was the outcome?

Very quick as is resale

Lessons learned? Challenges?

EMD is really important, get that in ASAP. Insurance funds can be applied to loan payoffs if you know what you are doing. Foreclosures are great leverage for negotiating non-primary liens. Find out if we need reconveyances on each lien before we can close. Learned how to be aggressive on offers to non-primay liens