Driving for Dollars Nightmare

16 Replies

I look for properties while driving around town. I came upon one that was very obvious that it had been vacant a while. I jotted down the address, mailed the owner a yellow letter and got a call within 3 days. After talking with the owner for a couple of days, I made him an offer 80% below ARV. He gladly accepted. This home is in a very desirable neighborhood and needed very little repairs. I knew there was $970 of past due taxes. No big deal right!? Well, something told me to get a full title search. I'm so glad I did. I found out that there are $340 of late HOA fees, $2,200. In past due taxes paid by another RE investment group. AND to top it off, here's the big doozie, there is a lien on the property for $202k. Yep, that's 6 places past the decimal point.

I honestly don't know how to help this owner. There is so much debt attached to this house. I can't imagine how overwhelmed they feel. No wonder they just up and left.

I want to live up to our company's name as much as possible...Winning Solutions. I know not every vacant property can not be turned into a deal.

This maybe a far fetched question, but is there anyway to help this owner? Can I create for them a winning solution?

What are your thoughts?

"Never give up. Never surrender"
-Dee Dee Huey
Winning Solutions Real Estate Investing

@Dee Dee HueyI just read from @David Dey about something similar. Read his latest post and it might give you some inspiration on how to navigate through your situation...How do you eat an elephant? One bite at a time.

Deal with the biggest lien and work your way through each one subordinate.

Much success,

John

I don't see why you consider that a nightmare. Did the owner not tell you about the money owed when you talked to them? Seems like a lien on the property that big can't be a surprise.

You can't win them all, I'd take it as a lesson learned and move on. Good job on sending out the mailers and getting a response.

@Account Closed , what's its after-repair value?

Do you regularly offer Sellers just 20% of ARV? That's hardly helping THEM, is it? I'm not having a dig at you, but please be honest with yourself - it's your COMPANY and you that you are helping. Cheers...

@Brent Coombs, I actually offered him $8k more than he asked. I think that is pretty fair. I didn't have to do that. 

The owner didn't know about the $202K lien. I had to break the news to him. We are both still willing to move forward in hopes we can get to the bottom of this lien. Maybe, just maybe this is a false judgement. We won't know until we try. 

Not giving up yet!

Thanks for the replies!

@Account Closed   what's the lien for ?  that's the big question. and what's the property worth anywhere near that.  Negotiating debt is one of the things you have to learn to do  and do well. I have coffee tomorrow with one of my partners in fund here in Oregon he is hands down the best I have seen at it.. its not easy and he is very versed through years of learning all the inns and outs.. but he gets some smoking deals that way.. many were other wholesale type buyers just walk away because its too hard.. the hairier the deal the tougher he gets LOL... good luck.. you need to understand what the liens are and what can be done with them then attack them.

Originally posted by @Account Closed :

@Brent Coombs, I actually offered him $8k more than he asked. I think that is pretty fair. I didn't have to do that. 

The owner didn't know about the $202K lien. I had to break the news to him. We are both still willing to move forward in hopes we can get to the bottom of this lien. Maybe, just maybe this is a false judgement. We won't know until we try. 

Not giving up yet!

Thanks for the replies!

Do you feel the seller is being honest with you? If he was willing to accept 20% ARV then I assume he knew that something was going to come out of the woodwork.....especially if it just needs light repairs

"Never give up. Never surrender." I believe this was Winston Churchill, not Dee Dee Huey? 

I think your situation is far from a nightmare. My guess is if the owner gladly accepted an offer of 20% of the ARV he knew about the lien. Most people aren't glad about that. However depending on what the lien is for, and if it can be negotiated down to a manageable figure, you might end up being in great shape before all is said and done. It sounds like the owner will do what it takes to get the deal done, and you should have plenty of spread to work with at your purchase price.

@Nick C. , "Never give up, Never surrender" I didn't know that was Winston Churchill. It just came to me one day when I was feeling down. I believe it was the Holy Spirit encouraging me to keep going. Regardless, it's my current moto! 

The owner said the only thing he could think the lien could be for is a house he sold in north Alabama and the title co. Holding the title went bankrupt. And something went array with the bank. The lien is from a security title company. We are both looking into the lien.  And yes, he may not be being honest with me. 

So basically what y'all are saying is the lien can be negotiated down? And this is done with the one who filed the lien? The security title co.?

And to answer your question @Jay Hinrichs , the property is appraised for $106k. So no, the lien is greater. 

Thanks for all comments and advice. You really have been helpful.

Sincerely, 

@Dee Dee Huey if you follow through and get the lien reduced, can you post how the experience went and how you negotiated it down? Hope you and the seller make out okay on this one!

Update

The owner is willing to Lease this house in order to make the money he needs to pay his debts. Now I just need to figure out how to get this lien balance down. I do not have any experience in this area. I plan on meeting with the title co. And their legal department in hopes someone there can help me. 

Are there any pitfalls I should be aware of? 

Am I moving in the right direction?

Any advice?

Originally posted by @Account Closed :

Update

The owner is willing to Lease this house in order to make the money he needs to pay his debts. Now I just need to figure out how to get this lien balance down. I do not have any experience in this area. I plan on meeting with the title co. And their legal department in hopes someone there can help me. 

Are there any pitfalls I should be aware of? 

Am I moving in the right direction?

Any advice?

You'll have to find who the lien holder is, why the property was liened and what it would take to satisfy the lien or reduce the amount owed.

Thanks @David Dachtera for the advice. I'm working on getting info about the lien holder.

I'm not sure how far I'm gonna go with leasing this property it does have a pool and to be honest, I think that's a little more than I want to hassle with.

BTW, I really like your quote about Success and failure!

Hi Dee Dee, my company is often in your position of having to help sellers negotiate massive debt to make deals work. This is our niche and it's one of the primary ways we win deals.

That being said, we're in a similar situation, albeit, we found the lien before we even made an offer, and it looks like we're going to have to walk away, because outside of a short sale, there's no way to get the numbers to work. If the lien holder seems reasonable, maybe you can work something out, but your numbers are really far apart.

Be careful to not chase the unicorn. As someone else said, some deals just wont work.