All Forum Posts by: Brandon Bohland

Thanks guys!  To give a little more background, I don't think this is a house where the bank wants it back.  The seller purchased the house with two mortgages (senior and junior).  Senior was for  around $100K, junior around $30k.  The senior lendor began foreclosure proceedings on the house around 2010.  It turns out, the senior lendor never followed through with their foreclosure, and instead completely divested themselves of the property.  Their lien was actually released from the property, now only leaving the second.  The seller confirmed the senior lendor jumped ship by going to an attorney. 

Now we're only left with the formerly junior, now senior loan.  My thought was that if the senior lendor jumped ship being owed $100k, why wouldnt the junior lendor do the same?The condition of the house is terrible.  By the time the lendor forecloses, lists the property, they would probably be losing money anyway.  

I'm going to try calling the only lendor regardless, just wondering if anyone else has been in a similar situation?  

I have a house under contract where the owner has been notified by the county that they will begin the tax foreclosure process since he has not made any tax payments in years.  In the state of Ohio, once the county forecloses on the property, it will wipe out any other lien that exists on the property.  Essentially, the government always has the 1st lien.

There is a mortgage on the property that the owner has not paid on in roughly 3-4 years.  Has anyone had success negotiating with these lien holders in this scenario?  My pitch would be that I can either buy it at the tax deed sale for what he owes in taxes, or they can write down the lien to pennies on the dollar to cover their processing costs.  My thought is that if I can get it off market before the tax sale, I'll be paying less than when it gets bid up at the auction.

Has anyone had any success negotiating in these scenarios?  If so, please share.  Thanks!

Thanks for the mention @Sam B. 

 @Brandon McCraney , always good to see another Brandon on here! I'm a wholesaler in the Toledo market.  My Washington Local inventory doesn't last very long, but if something comes up, I'll be sure to get in touch with you.  Are you ever in the area?  It would be good to meet up and do coffee so I can understand what your model is and exactly what you're looking for.  Maybe I can assist.  Feel free to PM me.

@Jim Zatko Great question.  I'm a wholesaler in the Toledo market and have been buying homes that give my end buyers a 30%-50% profit (in one recent case a 100% profit).  These are all in good school districts (Anthony Wayne, Sylvania, Perrysburg, Maumee, Springfield), and in the better parts of Toledo. One option to consider to reduce risk is to do your numbers by planning to sell them doing a lease-option with 20% cash flow for 2 years, and a balloon profit of 30%-50% at the end.  

You mentioned that you have two houses on one lot.  Are these on the same parcel of land?  Or are they in two separate parcels you just happened to buy all at once?  If they're on the same parcel, you could add even more value by splitting it out into two parcels.  Something to chew on.  

Home equity or selling, you're in good shape.  Just make sure you have enough room in the investment for an inflating interest rate if you decide to go the home equity route.

Brandon

Hi Mark,

You're right, it really doesn't matter what city it's in.  My thoughts are that as long as you're cash flowing $200-$300/month, you're in great shape for the long-term.  You're in even better shape if you recycle that income back into paying down that mortgage faster, or building up a reserve for the next down payment.  

My rule is to multiply your total monthly income by 50 and that should be your total, all-in cost.  So if you have repairs that need done right away in order to get the $1,000/month ($5k in this example), the total purchase price should be $45k.  If you don't think any repairs are needed right now and you can still get the $1k/month, you should be willing to go up to $50k then build your capital reserve.

This rule of thumb works in a lot of cities across the US.  They usually have the benefit of appreciating over time as well.  Anything more than the 2% rule (3% and above) seems to not have the appreciation benefit (GENERALLY speaking).  Of course there are always those behind the scenes deals that you can find to capture all of the above.

Good Luck! -Brandon

Ryan, what's your vacancy rate you're using in Toledo?  I only have a few units, but I'm using 8.3% (on month).  I'm guessing that number is lower once I scale to more doors.  Although I haven't had any problems filling lately. 

Hi Dustin,

Welcome to BP! I'm a wholesaler in Toledo. Get in touch with me and let me know what you're looking for specifically, and I'll be happy to find you the best deal. By the way, I've had a lot of seller financed deals come across my plate recently, so you may not necessarily need the 20% down on every deal here. People seem to be motivated to sell here.

Brandon

@Jon Holdman I really appreciate the input. The wrap, it sounds like, is a security for the seller.

@Bill Gulley I appreciate your input as well. I'm the new guy to BP...I appreciate the kind words and welcome.

@Account Closed The best advice I've seen yet! I'll be taking the options laid out above, and present them to my attorney to get his thoughts.

Thanks for the response Bill, I think. I don't know if some of those comments were jabs at me or not, some parts were hard to follow. But just to clear the air again, I have absolutely no intention of ever hurting anybody, even if it costs me. I'm involved in real estate to help people with their situations, not hurt them or take advantage of them. The only guru book I read is God's, the Bible. That tells you everything you need to know about how to make money the right way.

Jon mentioned that the seller is no longer obligated, I would not want to make the contract uneven, and would still require that my attorney write that if I'm late on my payment for greater than 10 days, the seller can take back his asset...including all of the equity I've paid down over that time period. That shows that I definately have an incentive to pay that mortgage. Which still leaves me with the question of how do I address his question about if I stop making payments in the middle of my $10k renovation. Is it just a risk he needs to take on? Bill, do you have a post you can refer me to about having the seller wrap his mortgage? By the way, there is no realtor involved in this, just A and B and our attorney's.