All Forum Posts by: Hal Thompson

@Nancy Bachety Make sure you talk to the HOA and figure out if there are any upcoming special assessments/major repair work to the property. Sometimes hoa foreclosures with no other liens is an indication that the owner has given up on the property, usually because they would have to pay a lot of money to keep it and there is no way to sell it with major repair work on the horizon. I've seen hoa units go for $20k that had previously been sold for $300k. A great deal, except for the minor issue that the builder had converted an old apartment complex, done a bad job, and then the entire complex molded out. The low price reflected the likely $200k+ per unit in repair work to make the building livable.

@Wayne Brooks Do the outstanding hoa dues suppress values at auction for first mortgage foreclosures? The Florida safe harbor seems to be a giveaway to the banks, since a regular purchaser must cover all outstanding dues, but the bank can claim the safe harbor benefit. However, it does seem like it would bloat bank reo portfolios with hoa properties.

@Harsh Dangaria As screw ups go, $5000 is pretty cheap. I saw one guy who spent $51k on hoa foreclosures and then probably another $20k arguing it all the way up to the state supreme court, where he lost. Don't be that guy.

Throw on your overalls, do whatever cosmetic work is necessary to make the place rentable (keep it cheap, keep it quick). Get a renter in there ASAP, on a month to month lease. You should be able to make your $5000 back in a few months.

When the bank comes back for it, offer to buy the note at 50% of face value for cash. Tell them the property needs work, is in disrepair, and it's probably better for everyone if they just settle it now by selling the note.

@John Moon So I found the property you're talking about. Price is nice, 1/4 of what the previous owner paid in 2007. Honestly, this house gives me a "haunted house" vibe from the pictures. I'm worried it's been abandoned for a long time, and that the real value might be in the land. And the assessed value of the land is only $25k...

If you've done a thorough inspection, and are sure there isn't a lot of maintenance in the house itself, it might be an ok buy. However, when I look at the other properties available from Fannie Mae in the same town, you can get a lot of house in the same town for $120-130k, with gorgeous yard, nice kitchen, and no haunted house vibe. That pool looks disgusting, and yeah it probably needs to be filled in. Demoing a pool can cost between $3500-$10,000 (i.e. up to 1/4 of the price of the house itself).

Keep in mind that really cheap houses are a double edged sword. A really cheap house in an amazing neighborhood, where you can eventually tear it down and build new and sell for a big profit is great. A really cheap house in a town or neighborhood where there are other pretty cheap houses is not a great buy, because the cost to tear down the house and build something new is way higher than buying an awesome house in the same neighborhood. So just keep in mind that tearing down the current structure and building something new on this lot would be a lot more expensive than just buying a huge, relatively modern house in the same town.

That means you're stuck with the current house. And the current house is small and not that desirable. My guess is rents aren't that high in this town. So I would say if you think you can turn this into a rental without a ton of investment, you'll probably do fine. If it's going to take a lot of investment to bring it up to snuff, you might be better off investing your capital elsewhere for better returns on sale.

@John Moon If you don't trust your agent to actually make the offer, then time for a new agent.

Typically, a rejection is not in writing or formal. Offers require mutual acceptance, but there is no requirement for a formal rejection. The offer is only binding if both parties accept.

I have bought a number of Homepath homes. Generally, they will not make major price concessions. There is probably a 5-10% price negotiation window for Homepath homes, depending on how long they've been on the market. Anything over that and your offer will almost certainly be rejected.

One of the tricks of the trade for Homepath homes is that they drop the price every month or two. So if there isn't a lot of interest, keep waiting and eventually you'll get to a price you like. We've bought some insanely cheap stuff from Homepath this way, but that was 5 years ago. The market is different now.

@Dan Mackin @Wayne Brooks There seems to be 0 case law on this, as far as I can tell. Seems like there hasn't been much activity in Colorado regarding foreclosure of HOA liens. Not sure why.

@Wayne Brooks Yes, but a plain read of Florida law makes it clear that the first mortgage can't be primed by the hoa lien. Colorado law, on the other hand, appears to allow it. There are some potential "gotcha" requirements, like a vote of the board to foreclose the lien.

http://www.ccioa.org/ccioa-statute/38-33-3-316-lien-for-assessments/

@Wayne Brooks Colorado is a super lien state. There is the possibility of taking clear title, no?

Also, I just looked at the recorder of deeds of orange county, florida. You can search by Section/Township/Range, Lot/Block/Week/Unit (my guess is Week refers to timeshares...haven't seen that one before personally). Also by Parcel # or Case #. So the answer to your question is you don't know what you're doing, and shouldn't buy this property without getting a lot more help.

@Lucky B. You're trolling, right? The nanny told you? Why don't you ask the local dog catcher and Starbucks barista, while you're at it?

Investing is about researching FACTS. Facts come from the public record, not hearsay from people who don't know what they're talking about.

If you didn't know the nanny, you would just walk away from this property? SINCE the only research you have apparently done is on the word of the nanny, you should DEFINITELY walk away from this property, post-haste.

In normal HOA foreclosure scenarios, you can be playing with fire, because there are lots of gotchas. What you are doing is like the gas fight in Zoolander:

https://www.youtube.com/watch?v=ZnZ2XdqGZWU