All Forum Posts by: Marty Boardman

I use QuickBooks. For my fix and flips I use the class designation (each property is it's own class). On my balance sheet I have to assets: 1. The property and 2. Capital improvements (I call this my WIP, which stands for work in progress). I went into my accountant's office about 10 years ago and set it all up with her. It works great and we've never had any IRS issues. At the end of the tax year I just send her my P&L, balance sheet and settlement statements.

Congrats Konstantin for jumping in with both feet on your first fix and flip! It takes a lot of self-belief and motivation to do this alone. When I first started out I thought I could figure it out watching how-to videos online, reading books, asking questions in forums, etc. But I quickly learned there's a huge value (and no substitute) in working with a mentor that's been through it all before.

You may be able to find a local investor to help you through this deal, but that could take more time than you can afford. There are a lot of people here on BP that can mentor you, some may do it for free, others will likely require you invest in their program. Regardless, there are 2 main criteria I use when seeking out coaching: 1). Is the coach getting results for themself? and 2). Is the coach getting results for their clients?

That said, where are you at with the project? What is your #1 need right now?

Quote from @Shenell Caldeira:

How do I reach the owner if itʻs only showing the bank on the tax information?

You're looking for the NOTICE OF FORECLOSURE SALE. These are kept on file in the county where the property is located, and are usually published in a newspaper. This notice contains the homeowner's name, auction date and in some cases a description of the property/principal loan balance. Here's an example:

https://hawaiisclassifieds.com...

Hawaii is a judicial state so the proceedings are handled by the county courts. This means it can take several years for the borrower to lose their home to foreclosure. Keep in mind the more difficult it is to find this info the better! Less competition for you!

Quote from @Shenell Caldeira:

Aloha!  I am looking at a pre-foreclosure now in Hawaii, how do you contact the bank or what would be the first step?

In the pre-foreclosure phase the ONLY person you can talk to is the owner of the property. That's who you contact to make a deal. As @Chris Seveney noted, the bank won't provide you any info. You're not the borrower and you have no vested interest in the property.

The FIRST step is to verify that there is still an auction date scheduled and the case is active. You don't want to waste time contacting the owner if they're not in foreclosure anymore. You do this by calling the foreclosing attorney (or checking their website). If the case is still active the next step is to make contact with the owner. Write them a letter, track down their phone number to call and/or text and knock on their door. But I recommend waiting to do any of these things until there are 30 days or less left before the sale. By this time the seller is running out of options and will be more willing discount their price.

Good luck Shenell!

Quote from @Reginald Clark:

Quote from @Marty Boardman:

Hey Hunter! I've been buying pre-foreclosures and at the auction (Trustee's Sales and Sheriff's Sales) since 2002 in Arizona, Illinois and Wisconsin.

Each state has a unique set of rules for how the process works (judicial and non-judicial states). Utah is a non-judicial state, which means that the procedure is governed by state statute.

As a beginner, I think it's best to focus on pre-foreclosures. As a Realtor you will need to be careful and disclose that you're a licensed real estate professional when negotiating with sellers in foreclosure. You may also want to notify your broker.

I've found it's best to approach homeowners in foreclosure when their auction date is 30 days (or less away) because they have limited options at this point. Here's a link to Lundberg and Associates, they're one of the top foreclosure law firms in Utah: https://www.lundbergfirm.com/f...

Are you looking to do foreclosure deals for yourself, or for your clients?

Hi Marty! One of my friends is interested in a foreclosure, but my MLS only lists pre-foreclosures. How do you find foreclosures for your clients?

I'm going to assume these pre-foreclosure listings you're seeing on the MLS are properties that sellers chose to list for sale there (and that your MLS does not contain the full list of them in your county).

The best source for finding foreclosures is going directly to your county court (either their website or their office). Here's the link to the Harris County (Houston) courts website. I found 525 active foreclosures for January. These notice of trustee's sale documents include the auction date, time, location, as well as the name of the borrower, their address and original principal balance.

https://www.cclerk.hctx.net/applications/websearch/FRCL_R.aspx#

Lots of leads here! Go get them Reginald!

Foreclosures are very state/county specific so difficult to estimate any of these statistics Bruce. To get this type of granular data would require diving into foreclosure notices, tax assessor websites, etc where you live.

For example, I buy foreclosures in Arizona and Wisconsin. Arizona is a non-judicial state so the process is dictated by state statute. Once the lender files the notice of trustee's sale the borrower has just 90 days to bring their loan current or pay it off. Wisconsin is a judicial state, so there are numerous court hearings that can drag out the process 2-3 years or more.

When you see a foreclosure re-posted every month it's most likely because the borrower is in a loan modification or loan forbearance agreement with the lender. As long as the borrower is making their payments the sale gets postponed in 30-day increments. The lender won't cancel the foreclosure proceedings until the loan is brought fully current. This saves them the time/hassle of re-starting the entire process over again if the borrower misses a payment.

This would be a very risky investment Patrick. As others have pointed out, you'll still be responsible for the 1st lien and it may be very difficult to contact this lender for payoff information after you win the house at auction.

Not to mention dealing with current homeowner. If they don't want to move out you could be in for a long fight (especially living in California).

About the only way I'd consider doing this is if I had a relationship with the current owner, including a signed loan authorization statement for the first mortgage. With this you can make contact and get the payoff info after the sale.

Being an investor looking for deals is like being a fisherman...you want to have as many lines in the water as possible.

As @Tyler Fontaine pointed out, networking is one "fishing hole", also paid ads like @William Harvey suggested is another.

That said, you'll want to have a "go-to" hole where you know you can almost always get a catch. Deciding what your go-to acquisition strategy is will depend on your skill set. @Jonathan Greene talks about fortune in the follow-up. He's right. Part of being a good investor is honing in your sales skills. You can get leads from a variety of sources, but if you don't have the motivation/negotiation skills it won't matter.

If you suck at sales/follow up you're better off networking with wholesalers/Realtors that can provide you deals. Just understand they'll be adding their commission/fee which will reduce your profit margin.

My primary acquisition strategy is pre-foreclosures and auctions (sheriff's sales in WI, trustee's sales in AZ). Pre-foreclosures require follow up, which I can't stand, so I JV out for that. For auctions I also JV, but all that requires is paying someone to bid on my behalf.

Best of luck in 2023 and beyond Nick!

Quote from @Claude Diamond:

Quote from @John Slater:

I’m learning some states have laws against door knocking pre-foreclosures/distressed homeowners. I see a lot about “equity skimming” which is very specific and doesn’t mean every investor is looking to skim because they door knock.

Which states can you not door-knock? How do agents get around this? And, are there any exceptions around door knocking pre foreclosures on those states?

Hi John, I was just thinking to myself why anyone would want to door knock. I love direct sales but it seems to be door knocking for leads or sales is the proverbial  "needle in the haystack" style of marketing. I personally like to use attraction or content marketing; better use of my time, less rejection (which takes a psychological toll on you) and higher quality leads. I get fresh leads everyday by posting quality, non commercial contemporary content on a daily basis.  

If you're door knocking pre-foreclosures this is NOT needle in the haystack. As long as you scrub your list and confirm the homeowner still has an active foreclosure pending, you are knocking on the door of one of the most motivated sellers on the planet. I prefer that over direct mail, text message blasting or bandit signs. I'd rather talk to 5 motivated sellers per week than 100 unmotivated sellers.

I have a 30-day marketing plan for active foreclosures that includes a combination of personalized letters, text messaging and door knocking and I attempt to make contact with the homeowner up until 24 hours before their auction date. I call the last 7 days before the auction date "hell week" for a homeowner in foreclosure. They're out of time, stressed out and have few options. If you know what you're doing and can stop the foreclosure you'll close a lot of deals.

I live in Phoenix and own SFH/2-family rentals in Milwaukee and Green Bay. When I chose these markets (about 10 years ago) the primary metric I used was foreclosure discount. At the time the discount was about 55% (compared to 11% in Phoenix). Basically there were a lot of distressed properties I could buy, fix up, rent and refi. The job market there was stable with large employers like Harley Davidson, Caterpillar, Aurora Healthcare, Fiserv and Johnson Controls.

Another deciding factor for me was being able to fly non-stop from Phoenix. I can get from my home front door to my rental doors in about 5 hours.

Unfortunately, there's not much of a foreclosure discount in any market these days. So my starting point is median rental income/median price. The higher the median rental income (and lower median price) the more attractive the market for cash flow. This isn't a perfect science, but it's helpful for weeding out a lot of areas. From there, I look at the job market and as @Nathan Gesner mentioned, whether it's a landlord friendly state.

Good luck Yitzhak!