All Forum Posts by: Daniel E.

Having a very hard time finding a lender who will finance distressed note acquisitions. 

Has anyone been able to achieve this? Do you structure a line of credit or do they lend a percentage of your purchase price? Do you use a bank or private lender?

It seems that everyone in this business is paying 100% cash for deals. 

It is very difficult to tell you if this is a good deal or not. Some $60k houses are fine, others, no chance. 

One strategy I use to immediately disqualify npns is to go on Zillow and look at recently sold and potential listings. If you immediately see multiple $5-20k sales and a bunch of foreclosures, I'm out. There might be multiple $60-80k sales in there too - but very low likelihood you are one of them (without significant rehab). And frankly, you could get one of the $15k houses vacant and with clear title, so why go npn?

If all of the sales are $60-80k, with zero tear-down trades, and you are near a college campus or park or something, I would take a harder look. 

Finally, the #1 issue here is the mortgage and/or note statue of limitations. This was mentioned above, but if it has passed you cannot foreclose. Look it up for this state. 

One of the biggest pitfalls is a 5 year statue that starts at debt acceleration or the maturity. All is good until you get your full collateral file and see the debt was actually already accelerated and the statue has ran. If the seller guarantees the debt was not accelerated, write it up in your loan purchase agreement. 

There are ways to get creative with this, too, but you rely more on Supreme Court decisions. For example, in Ohio, the note may be unenforceable but the mortgage can be separately foreclosed. 

Appreciate the responses. 

I agree vinyl plank / tile sounds great, but quotes are coming in $3-5k higher than carpet (which is already a $5k expense). On an affordable flip the economics are not there, especially for this market.

It would be great to find a local guy, but we are out of state and it's very tough to know the quality of the material from a phone call. Therefore, we are trying to make Home Depot / lowes work. 

Does anyone have a Home Depot / lowes recommendation?

Have a ARV $100k house that needs carpet in the bedrooms. What is a good affordable option?

Most of the BP posts focus on the rental strategy (i.e. go with vinyl plank for durability), however, we just need this one to present well. 

I have looked at the Thoroughbred II at HD ($0.88/sf), but do not want to install and it ends up looking TOO cheap / terrible.

I am thinking along the lines of new-build apartments / builder grade equivalent carpet?

Thank you for your guidance!

Took a property back as REO. We were the lender, and plan to do a fix/flip.

When we entered, the basement had experienced flood damage, probably 2-3 months ago. The drywall and carpet needs to be replaced (at a minimum).

We were carrying force-placed insurance. Should we submit a claim?

My concerns are as follows:

1) Insurance claim will take a bunch of time and they will deny it since they do not know the origin, when it occurred, etc. 

2) In their review process, they will determine an 'overkill' level of damage that I will need to repair, and then deny the claim anyways for whatever reason. Since i have knowledge, ill need to repair absolutely everything.

Does anyone else have experience handling this? Are there risks involved in submitting a claim, or should I definitely submit a claim an I am overthinking this? 

Thank you!

Thank you all for the guidance. 

For reference, we are talking about the min bid accepting as the foreclosing note holder.

As mentioned above, in the end I think this is a strategy discussion. We have other opportunities and need max capital to re-deploy. If we were up and running, I think we would take the easy pay-out. At this stage we need the reward that comes with the increased risk.

@chris Seveney 

Why not hire someone to deliver a pizza to the house and take a quick peek at the inside for you ?

Interesting idea. How would you approach this? Hire someone on craigslist to fake deliver a pizza?

Always a risk.

So you would take the $10k? At what point does your risk/reward meter take over?

This is a 15-30 days on market subdivision with 30 nearby sales in the last few months (none distressed) that support, on the low end, the estimated value.

Wondering how people treat this scenario:

- Good looking asset and well maintained exterior

- Appreciating area (+$3k-$5k per month in zillow value)

- Currently owner-occupied, owner has been 100% unresponsive through FC

Potential Profits:

Scenario 1: Interior in good condition for area, but still needs some minor work: $25k profit

Scenario 2: Interior updated and no real work needed (have been told by a realtor who was in the property in 2012 that it was updated and 'very nice' (granite, etc.): $45k profit

Scenario 3: Interior needs a lot of work / other issues come up: $10k profit

Where would you tie your auction profits? I am struggleing accepting a $10k profit at auction, when, I think there is a ~50% of scenario #2.

I think that in this business, when you find a quality asset, you should get everything you can (because there will be many you really hope sell at auction).

Thank you all for your responses - very much appreciated.

The purpose of the email is largely to encourage the borrower to contact us to work out a cash for keys / DIL. I do not intend on offering anything in the email, just to potentially open a communication line that the borrower is more comfortable with. Something along the lines of "we understand the importance of knowing who you are working with and wanted to personally introduce ourselves and see if we can schedule (the key being schedule) a time to talk.

I have found that people are so used to email/text, that not only do they not want to call because you are the lender, they actually do not know how to really use a phone.

@andreas mirza 

Really took your post seriously. I have been on the fence about reaching out. However, after several unsuccessful calls from the servicer (including them erroneously marking the number as disconnected), I reached out directly and the borrower has responded. Playing phone tag now (unfortunately) but certainly moving in the right direction. I understand the risks, but also believe that borrower risk is part of this business. Thank you for your contribution.

Wanted to know if it is legal to email a borrower. I have the work / personal email (borrower is an unaffiliated realtor) and have not been able to get a hold of the borrower. 

Wanted to try email, just to get the dialogue going. Has anyone done this before with success?