All Forum Posts by: Account Closed

I could not let this go.  If not done correctly, it could be a total loss.

1)  You need insurance to cover the loss of the property as soon as you buy the lien.

2)  The lien could be ruled invalid in Federal or State court.

3)  You must have the ability to pay the first lien in full when the note gets accelerated.

4)  The property could actually be worth much less than you pay for it.

5)  It could take years with little or no money coming in before you get a dime.

Don't get me wrong, I am not saying this is a bad deal at any price.  You just have to know there is risk.

Since you are not a creditor, I would suggest contacting the property owners directly.  You might be able to find out what they have in mind and possibly work a deal out with them.

I think the first post was about buying the second mortgage while the first is in foreclosure.

You are exactly correct.  It is based on purchase price and no LLCs.

One more thought... look for another hard money lender to split the loan into two.  Then get the conventional loans.  The fees for that will not be cheap.

I would consider that my last resort. 

I forgot to mention you might have to pay a fee for a partial release that you would not have to for a full release.

I think your first step should be to read your current loan documents.   Then talk to the people that gave you that loan.  They can tell what to do.

If the loan documents were drafted by a lawyer it should be clear if a partial release of collateral is possible.  In the documents I have seen the payoffs would be preset based on a percentage of value at time of loan origination...  OR  based on new appraisals with approval of the lender. 

So... I would talk to them about it.  Of course expect every penny from any new loan to go directly from the title company to pay down your current loan.  In some loans that would reduce your current payment.  If you had that type of loan you would probably already know that.  

Once the first house is done the second one should be easy.

PS  I think it might be impossible to get two conventional loans if partial release of lien is impossible.   As mentioned you would need two payoff statements.  Both of them would need not to mention the other house.

I think you might have been able to do a "delayed financing" based on the purchase price in order to get part of your money out.

It is not a bad idea, on contractors that do not have to state license.  For example, electricians and plumbers are simply more expensive if you go with Home Depot.  The state already requires them to do most of what Home Depot would require.  Carpet installers on the other hand might be ok at Home Depot.

Make sure you always tell Home Depot employees you are working on a flip.  They have lots of methods to reduce the costs.  For example, you normally want carpet with a two week wait because it is about four times better value. 

In North Texas, I would not buy wood or fixtures at Home Depot.  Wood should come from a real lumber yard.  I like to get fixtures from Restore.

I know as many rich people as I do poor people.  Believe me both classes have their crazies.  I know rich people that have removed walls and even a swimming pool in rentals without asking permission.

Do not assume, because someone is rich they will take care of your property.

In short, money does not keep meth or cocaine from screwing up someone's mind.

Also do not assume rich people will just write you a check to cover damages. 

This might sound like a stupid question but have you inspected the property?  You mentioned that none of the tenants know the property is being sold.  You also mentioned all of the deposits have been used up, and none of the tenants have been late.

If you have not inspected EVERY unit I would expect more damage than the deposits would cover.