Can I wholesale a preforeclsure home?

7 posts by 4 users

No avatar medium Steven Pierre
Miami, FL
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Steven Pierre

from Miami, Florida

Feb 05 '13, 07:23 PM


Hey I was reading up on wholesaling lease options to buyers/tenants. And I was wondering, is it good idea to wholesale a lease option on a home that is in pre foreclosure ?



No avatar medium Wayne Brooks
Real Estate Professional from West Palm Beach, FL
9209 Posts
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Wayne Brooks

Real Estate Professional from West Palm Beach, Florida

Feb 05 '13, 07:37 PM


Assuming the owner can't make up the back payments to stop the foreclosure, what do you think will happen in 6-12 mo.s?



Medium 1399346400 avatar justinm Justin McClelland
Wholesaler from Houston, TX
74 Posts
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Justin McClelland

Wholesaler from Houston, Texas

Feb 06 '13, 02:32 AM


Like Wayne Brooks was hinting, it's not the best idea to do that. If the house is behind on payments and tomorrow a lease/option tenant is placed in the house, chances are it will not be a good outcome for the tenant.

Preforeclosure is a sign that the owner is in financial distress. Once they start receiving monthly rent payments from the property, there's a possibility that the income won't go towards satisfying the delinquent mortgage.

There's a high chance that the house will be foreclosed upon prior to the tenant having the option to buy.



Medium 1448388223 avatar carolina1 Carolina E.
Investor from Chicago, IL
531 Posts
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Justin McClelland

Wholesaler from Houston, Texas

Feb 13 '13, 01:14 PM


Carolina E I'm not certain I've heard of that before. I'm interpreting your mention of a 3rd party service, as a company that assists the property owner in some capacity to make payments? Please explain more about such a service.



Carolina E.

Investor from Chicago, Illinois

Feb 13 '13, 02:13 PM


@Justin McClelland maybe this is only used for subject to deals, but I remember reading somewhere that a company makes the payments to the mortgage company. This way both seller and buyer are safer. The buyer sends money to company and they pay loan. I believe some title companies can handle this.



Wayne Brooks

Real Estate Professional from West Palm Beach, Florida

Feb 13 '13, 02:52 PM


[s]the issue is that the owner is at least 4 months behind on payments. Assuming the owner is behind because they didn't have the money, who is going to make up the late payments? Also, once the loan is accelerated, catching up on the payments is not an option. This all assumes that there is some equity to begin with.



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