All Forum Posts by: Mike Neubauer

If they are willing to do a deed in lieu, they are surely willing to do a short sale. Besides referring them to a realtor, ask around at a REIA. I am sure there is an investor that would be happy about a new short sale lead. If they are underwater, there a very few options beneficial besides a short sale, unless you are in a quickly appreciating market.

You need to spend time networking to find investors interested in short sales so you can make some referral (bird dog) fees on these. I pay referral fees of $2500 to people in this area if I close a short sale deal, but short sales are my main focus as an entrance strategy to fix and flip. A realtor can't pay you a referral so find an investor.

Also, if someone thinks a deed-in-lieu is a good idea, explain to them that it shows in public records deed transfer the same as a foreclosure. The only benefit is usually a deed in lieu will take away the banks right for a deficiency judgement. Their best option is a short sale because you can still negotiate the deficiency judgement (automatically waived if HAFA), and public records show a normal warranty deed transfer.

If a home is way upside down, there are not many benefits to assuming the mortgage.

Lake county. I just didn't see too much work in the deal. At first glance, I thought I'd just pay the reinstatement fees and have a semi easy deal. I do know the owner can request a loan mod within 15 days of the auction and the sale would have to be postponed.

I guess you are right, that it may not be worth pursuing. It just seemed like there would be a way to make it a deal that I was missing, and if there is a way to make some money while helping someone avoid foreclosure, it seems like a good deal to me.

I just posted another question about this. You are right. I am glad you brought that up. It is in Indiana, but I was confusing redemption period with reinstatement period.

You don't think a bank would rather allow reinstatement than take back a break even (after commissions) property?

True, I would be the actual owner subject to the existing mortgage. I may have used the phrase in a confusing way, but what I meant by equitable interest is I actually own equity in a property. I would own a home worth $145k subject to a mortgage of $100k so I have an equitable interest of $45k.

I don't know why I didn't think of this, brain fart I guess, but I didn't mean wrap around, more less sub 2 and I just pay the mortgage pay,met per month. No need for wrap around.

So my question is more sub 2 or lease option?

My thought is having equitable interest with my name on the deed is more beneficial.

Looking for a quick rundown on wrap around mortgages and my potential deal.

I had a seller call from my short sale marketing. He has am upcoming sheriff sale on March 1.
Judgement is $110k ($100k mortgage and $10k in fees)
CMA shows the house value at $145-155k

My thoughts are to pay the fees to bring the mortgage current, take a seller financed wrap around mortgage from him, do some quick cosmetic rehab and relist. I'll have 20k into it and be able to sell for $35k profit minus selling costs.

What are your thoughts. Would paying the lates fees and taking a lease option be a better bet?

Can I market the home for sale (after the cosmetic rehab) by contract if I only have an option on the property?

A short sale can be done on a commercial property. The process is almost the same, but the difference is you aren't dealing with the same residential loss mitigators. Typically, the execs of the bank will directly negotiate the short sale on commercial properties. I would put a post out looking for someone on BP that has done a few to get some advice. If there are some big commercial investors on here, I am sure they will at least know someone that can help.

Problem still remains of getting the owner to cooperate, but if you can get a hold of him a short sale would be a good starting point in trying to acquire it. Start trying to get a hold of the owner. You can do skip tracing if you really need to track him down.

Congrats on the quick flip!

Quick question... Are you doing these in an LLC or your personal names?
If LLC, are you flipping and selling in the same one as you are holding your rentals?

Sorry just noticed the update of loan at $100k. But looking again at basic numbers. House 1 ARV 90, they owe 100 so -10. House 2 ARV is 150 so they are up $150k for a total equity of $140k. You are going to pay $88k plus 50k in rehab plus 30k in rehab totaling $166k in total costs for $140k in total equity. Are you sure ARV (after repair values) are correct or are those the as-is value. I'm looking at it rather quickly, but the numbers don't seem to work.

I do not see a legal problem and it is basically 2 separate transactions that are kind of a package deal. 1 deal you are just taking over payments, the other you are basically buying for $88k.

I don't know your numbers, I would suggest getting a few bids from contractors until you can walk through a home and just have a feel of what it will cost to rehab. Most any contractor will give a free estimate, and they may even have some good ideas that you didn't think of. I'd also have a realtor take a look at what they believe the ARV is. They will also do this for free if you ask the right way (maybe they will get the listing when the project is complete). I would do these things with your first few just to confirm your thoughts on ARV and rehab.

Also, on your plan to focus on House 1 first. If you do this, you will have a home that is underwater by 60k plus you put $50k of your own money into rehabbing. When you sell it at $90k you will still be 60k short so someone has to come to closing with $60. Just make sure your relatives either apply those funds of $80k you gave directly to the principal when you give it to them, or maybe devise a different plan to do House 2 first. Maybe use the $20k you save in rehab costs by doing house 2 instead of 1 to pay the monthly payment on the subject to mortgage of house 1. Do house 2 first, then you will have $70k in profit. That way when you are ready to resell house 1 you have $70k in hand to bring to closing.

I know they are relatives, but when someone gets an $88k check in their hand sometimes they make questionable decisions. Or if something comes up, they may need to use that money for something else. By doing house 2 first you are more in control

Just some food for thought on a different way of looking at it. Good luck with your first project whichever path you choose !