An Interesting Scenario.

2 Replies

So, let me start off by saying... I'm not a Real Estate Investor, and this is definitely is not my main expertise. Although, I've been trying to read up and have been reviewing BiggerPockets for several months. 

A very good friend of mine... is in a particular position, where he has access to a lot of data on home mortgages. Without going into too much detail, he is currently in the particular position... where he can identify borrowers that are delinquent - long before they have been formally sued by their lender and everyone knows about the default. He has the ability to see when someone is just 30 days behind, or 60 days from data. He can also follow, and see when that loan becomes 90, 120, and if the loan enters into a modification or mitigation status. 

While he can't see every single home in America, he personally can see a lot of them, and this is where I am curious. He has shown me scenarios where... 

A borrower purchased a two bedroom condo with a Zero Down home loan in 2007 for $783k. The property is now worth $1.2m and has no other liens, but the borrower has not made their mortgage payments since March. They are sitting on a decent bit of equity. 

One very fascinating tell was a  borrower who owns a $20mm property and is delinquent on a $4 Million Interest-Only mortgage in a very vibrant, big city. Not only this but that same borrower is delinquent on payments for two other properties in that same area. All of which have significant & sizable equity stakes in the properties.

Now... while someone could be hopeful that the above borrower would be interested in listening to a purchase offer. I don't feel like they'd personally be receptive, and would consider any other option. But it's intriguing none the less. I feel as though if someone approached people like this, you could have a wholesaling opportunity. 

My main question... I guess, and the reason I'm posting here, is I want to ask. Am I missing something? Can we just approach the homeowners and send them letters in the mail offering to purchase the property? Is there anything I should know, before trying this? Or... is it as simple as trying to purchase something, and then offering up the deal to someone else? 

@Lisa Wright that's an interesting scenario indeed. First off, don't do anything illegal or unethical. Your friend should also be cautious especially if he's sharing people's personal information with someone outside the company. He might find himself getting sued by his current employer or most likely unemployed. 

Typically speaking, most people don't wholesale property contracts at that price range for a variety of reasons. I'm not saying it's not possible, its just not where the majority of the activity happens. 

One of the main benefits of wholesaling is the speed of transactions: people typically work with wholesalers because we can get deals done in days/weeks instead of months via other methods. The difficulty in trying to do that at that price range is that it's a much smaller pool of people who can make those kinds of purchases in the kind of time you'd typically need to get a deal done. 

Regarding your main question though, yes you can approach property owners and offer to buy their property. In many cases, you will buy their property and then concurrently re-sell it to another investor. I want to reiterate not doing this with your friend/colleagues information on mortgage delinquencies and statuses from work because it is likely either unethical or illegal. 

If your friend's ability to access this information and share it is against the law, I would be seriously cautious about becoming a party to this. Since you don't want to say how/why he can access this information, I am guessing that his divulging this information is at best unethical and at worst illegal. 

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