preforeclosure note buying thought

[yveskleinsky]

So let's say you buy the 2nd--then what? (Speak slowly and use small words.)

 

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[WildFlower]

Kwerner,

We partnered on many, many deals with REIPro ….. Hi David, tell Stacy I said hi.

Several things:

1) Is the note performing? If it is you won’t get it for 10 -20%.
2) Is the 1st position foreclosing? When was the NOD (Notice of Default) filed and/or NTS (Notice of Trustee Sales? If you want the 2nd then you must know how much they are behind on the 1st and you may have to reinstate to save your position. That amount rolls over into your position, so you won’t lose
3) DO NOT WAIT until after the house is under contract… it can take sometimes a few weeks to get the bank to sell and by then they will know it is under contract because the title agency will have to contact them for a payoff statement.

I’m sure I have more.. but, I had a long day running errands… I rediscovered the library today!!! LOL

 

[WildFlower]

Yveskleinsky,

If he buys the 2nd mortgage at a discount, at closing the title company will issue him a check for the full value of the promissory note (the backing of the mortgage). It’s easy money…. Those are the best deals!

 

[kwerner]

So let's say you buy the 2nd--then what? (Speak slowly and use small words.)

LOL, you always make me laugh Yves.

Okay, since I'm looking to buy 2nds when they're going under contract / getting ready to be sold, when the house sells I get cashed out on the full amount of my 2nd mortgage amount.

Let's say there's a property that I'm looking at that has a 1st mortgage of $80,000, a 2nd of $40,000, and a FMV (fair market value) of $150,000. And it's listed for sale with a Realtor for $150,000. My strategy is to buy the 2nd as soon as the property goes under contract, for $4,000 - $8,000. Then IF the property sells (before the foreclosure sale / auction), my position as the 2nd mortgage holder gets cashed out for the full amount of the note - $40,000!

I should probably add a word of warning for those that are inexperienced in this area - KNOW YOUR FORECLOSURE LAWS! They vary state to state, and although this strategy may work well in my state, it may not in yours. For example, Georgia has a foreclosure process of something like 21 days (correct me if I'm wrong) and there's no way that I would attempt this strategy there! Typically, JUDICIAL foreclosures have a LONGER timeline than non-judicial foreclosures and, in my opinion, it would be less risky to attempt this strategy in a state that enacts a judicial foreclosure process.

Hope this answers some of your questions...

 

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[kwerner]

Kwerner,

We partnered on many, many deals with REIPro ….. Hi David, tell Stacy I said hi.

Several things:

1) Is the note performing? If it is you won’t get it for 10 -20%.
2) Is the 1st position foreclosing? When was the NOD (Notice of Default) filed and/or NTS (Notice of Trustee Sales? If you want the 2nd then you must know how much they are behind on the 1st and you may have to reinstate to save your position. That amount rolls over into your position, so you won’t lose
3) DO NOT WAIT until after the house is under contract… it can take sometimes a few weeks to get the bank to sell and by then they will know it is under contract because the title agency will have to contact them for a payoff statement.

I’m sure I have more.. but, I had a long day running errands… I rediscovered the library today!!! LOL

I agree on #1 and #2.
I didn't think about it taking the bank a few weeks to sell it to you.... hmmm, now I may have to change my strategy...

Anyways, thanks for the input! I would love to talk with you more about this subject, maybe I'll shoot you and David PM's with additional questions when I think of them.

 

[Sparlin]

I wasn't going to say anything yet Kasey, but since you posted here I will brag about you a little. This dude knew nothing about real estate 3 years ago. He read a ton of book and posts; then talked to people. Now he has very good chance of making some money. Good Job Kasey. Speed +++++

 

[WildFlower]

Kasey.. please do.

Sparlin.. After I posted I went back and read the thread. Good job Kasey!!

 

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[andviv]

We partnered on many, many deals with REIPro ….. Hi David, tell Stacy I said hi.

Are you still doing this? If not, why not?

For how long you did it?

What is/was your average profit per deal?

kwerner, glad to be on the same wavelength here. I consider this thread a wealth of information for those that read it and pay attention to the details.

 

[WildFlower]

Are you still doing this? If not, why not?

For how long you did it?

What is/was your average profit per deal?

kwerner, glad to be on the same wavelength here. I consider this thread a wealth of information for those that read it and pay attention to the details.

I'll send you a pm..

1) yes and no I've been working on a different venture .. that's my website.
2) since 2003
3) 50% ROI total average (including those we broke even on or lost) - over 75 deals.

 

[andviv]

I'll send you a pm..

1) yes and no I've been working on a different venture .. that's my website.
2) since 2003
3) 50% ROI total average (including those we broke even on or lost) - over 75 deals.

Thanks! :icon_super:

 

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[ryanpal]

wow talk about a blast from the past.

i'm still interested in this type of investing.

wildflower,

when you were starting out, how did you fund these deals? i'm a bit weary of having to shell out money to reinstate the first, or purchase the 1st mortgage in the event it goes to FC to save my position.

ryan

 

[WildFlower]

wow talk about a blast from the past.

i'm still interested in this type of investing.

wildflower,

when you were starting out, how did you fund these deals? i'm a bit weary of having to shell out money to reinstate the first, or purchase the 1st mortgage in the event it goes to FC to save my position.

ryan

I would say that most deals had partners… sometimes they were the money partner and sometimes we were and sometimes both/all partners put money in (more often than not) . But… first starting out.. I think we got a note really cheap and did it ourselves… then we had a partner on the next one which was really good.. and we kept partnering and working with others. I posted something about how we started in the cruise thread… it probably shouldn’t be that thread. (my post was regarding the P&B breakfast event).

Very rarely did we purchase a 1st mortgage. There really is no need unless they are going to give you a killer deal…. Let me rephrase that …. Very rarely did we purchase a big 1st mortgage.

A lot of people in the circles made lots of money… some made very poor choices, some are in prison today or will be soon. Make sure you have your head on straight when you start making money… especially if that money comes fast! It’s not the money… it’s the greed.