How-To Guide for Pre Foreclosure

[yellowclaw]

Good morning everyone,

Could someone please put together a step by step how to guide for investing in pre foreclosure homes. Also, please recommend books or links for further reading.

Thanks a bunch!

[Dan Auito]

Good morning everyone,

Could someone please put together a step by step how to guide for investing in pre foreclosure homes. Also, please recommend books or links for further reading.

Thanks a bunch!

Welcome Yellowclaw, One place to start would be to stop by www.purpose.4T.com This is Randy Lee's site and he has an excellent book called SHORT SALES (The Secrets & Strategies of Pre-Foreclosure Investing)

Randy really knows his stuff and makes it very easy to understand, I guarantee you will like this book or I'll buy it back for you. It's that good!

[Randy Lee]

:SM128:
WOW! Thanks for the vote of confidence Dan! I do appreciate your kind words and think your friends and associates will find my book just as you've described it!

I've been crazy busy trying to close out over 3 million in deals before the year's end! Opportunities abound! I hope as the year winds down we can put together a chat session or study group on your site.

As of this writing, I know there is at least one great on-line Short Sale Study Group taking place at a Yahoo group called "Short Sales Study Group". They are meeting weekly to discuss the subject and, I am flattered to say, they are utilizing my book as their text.

I hope your year ends with a bang too! All the best, -Randy Lee

[Dan Auito]

Randy, every time we get a visit from a giving and caring individual, I get a bang! Life is one big bang when you have good friends and good intentions along the way! Thanks for dropping by, I'll tap you if we have a direct need for a reply. Again folks if you want to convince banks to sell you the properties before they go through a foreclosure process, Randy's book will show you how to do it in easily understood and practical ways. No bull! :thumbsup:

[yellowclaw]

Randy, every time we get a visit from a giving and caring individual, I get a bang! Life is one big bang when you have good friends and good intentions along the way! Thanks for dropping by, I'll tap you if we have a direct need for a reply. Again folks if you want to convince banks to sell you the properties before they go through a foreclosure process, Randy's book will show you how to do it in easily understood and practical ways. No bull! :thumbsup:

Thank you for the reply and the advice. I'll be reading and will come back with more questions soon.

[Dan Auito]

Thank you for the reply and the advice. I'll be reading and will come back with more questions soon.
We'll be here my friend! :SM128:

[yellowclaw]

Dan,

I’ve done some reading this weekend about pre-foreclosure negotiation. I was excited and couldn’t wait to start reading. After reading a few chapters, I was even more thrilled, this feeling continued to the last page. I took a day to digest the reading and went over it in my mind. My conclusion is I should let this be handled by wholesalers. It’s funny how I came to this conclusion. As I went over the scenario of meeting the seller in my mind, I pictured myself as a small Vietnamese guy at the footstep of the seller’s home. I’m a confident person, but I also don’t want to look for trouble.

Looking for advice…

More information on me. I’m in my early 30’s, have an average paying fulltime job and had recently been pre-approved for a 300K loan. My wife and I currently own a small townhouse that we purchased a year and a half ago. Other similar townhouses in our community have sold for 40K more than purchased price.

My wife and I found a preconstruction SFH in a new neighbor hood that we predict will appreciate well over the next few years. The value of this SFH is 386K. The total including closing cost will be around 402K. We have already put a deposit of about 20K. Now what we need is an addition 82K to bring to the table for closing.

How do we come up with 82K in 10 months?

Should we sale our townhouse for the needed money or hold onto it as a rental? We currently have about 43K in equity and 10K in the bank.

Buying and selling fixer uppers? I have a friend that I’ve known well for over 16 years that has experience in home renovation and remodeling. I’m also a handyman and believe that anything can be done when you put your mind to it.

Please give me some advice as to how to approach this situation.

Many thanks in advance!

[Dan Auito]

Oh man YellowClaw. I'm looking at this with some serious caution! I hope for your sake that this 402k whopper does in fact go up in value and coming up with serious additional hard cash for the closing is another concern.

You'll want to presell that monster before the closing date comes due when you have to lay down the cash, I would find someone to assign this contract to and get out as soon as I could with my 20k plus a few bucks if your lucky.

With 50K you can do a lot of creative real estate, in this case all your eggs and then sum are riding on one huge deal, if this thing goes south, it won't bode well for ole yeller.

What do you know that we don't Claw, is there some serious demand in the neighborhood, is the development all sold out, are prices climbing for some reason where this home is at? What made you decide to go with such an investment like this?

I guess we need to know more and we can go further in looking at it from a more informed position.

[yellowclaw]

Thank your for the reply Dan.

We have been looking for a new home in this area for a few months now. The neighbor hood is close to downtown, airport, and highways. The area is starting to grow with reports of increase jobs. Many high end stores and super markets are within minutes away. We previously wanted to purchase a preconstruction home in this area about 3 miles from this one. Unfortunately, they were sold out. Next to this sold out lot was a lot of 1 years old homes. These homes had appreciated 50-70K in a year. We felt pretty bad for missing this deal.

As for the New house that we had put the 20K deposit on, a group of real estate investor had informed us that the prices of these homes will be increasing by 15K by that weekend. We called the home builder and they confirmed the increase. We were able to make the deposit before the increase deadline. At that time there were only 10 or more lots that were sold and 35 or so remained. A week after the deposit, I made a return visit to the lot and found that there were only 12 lots left. The home that we look to purchase has 5 bedrooms 3 bath and a huge activity room and a 3 car garage. The total heated square footage is 3,502. The neighbor hood is surrounded by protected cypress trees. I know the builder and this will be the 3rd home that I’ve purchased from them. Before the deposit, my wife and I drove around the surrounding neighbor hood. There were many homes priced well over 300K. There were also homes new homes that were being built in these neighbor hood ranging from 400-500K or more. On the other hand, there were also some homes that were just plan bad looking and need much handyman work. Hmm… wonder if they would be interested in selling? I’ve only started looking into buying, fixing and selling or hold and rent, in the recent weeks.

I’ve done lots of research about buying and rehabbing. This was when I ran into one of your article on another forum. I enjoyed your stories and am impressed with your willingness to help beginners such as myself. I’m seen critics try to put you down, but you hold your ground in a very honorable manner. I like what you stand for and want to be like you if not more. But fist off, let me get started in the right direction first, hopefully with your help and the help of others, I will be making my first moves in the right direction.

As for the 87K that we need to come up with for closing. If we behave, I think that we can come up with 34-38K in savings. The rest would need to be borrowed from equity, unless we start to look for other ways to earn it. As for assigning the property, I’ve looked at the contract and didn’t see any mentioning of Assignment of disallowing it. Should my next step be to see if the builder will allow Assignment?

Thank you again for all your time.

[Dan Auito]

We'll Yellowclaw, you may just do O.K. Myself, I would definitely see if the contract is assignable, absent any verbage that says it isn't you should have no trouble doing the assignment, again a little real estate attorney advice is a good investment. What really has my attention is the fixers that are located in the surrounding neighborhood! This is a potential goldmine if you start doing the research and digging into ownership records.

Start contacting owners and see what they would sell for and run your numbers, sounds as though you and your spouse are doing alright as far as finance goes, so you could really do some improvements on the older properties to take advantage of the surrounding new construction and its higher values.
Often the older homes have better locations as well, not to mention mature trees and so forth.

Again if your not going to live there, ensure assignability and find a buyer and from what you said it appears you can make a profit while doing so. Then start digging into the real junkers to see if you can pick up a COUPLE!

Again, I'm not there to see where values are actually going on the new construction so you will be well served by getting hard numbers as to what the 400,000 home will actuallly bring when complete.

I would like to hear a few others views on this as well, the more viewpoints and insights the better. Feel free to speak up folks, yellowclaw has a lot on the line here> no pun intended.

[yellowclaw]

Thank you Dan. I will look into the assignment.

Yes, please feel free to comment on this everyone. I will need as much advice as possible.

Just to share a thought I had today while driving to work with everyone. Because trafic was really bad and everyone was moving slowly, I took a quick glance at the almost motionless, calm ocean water with a light layer of fog hovering above the water. The only thing that interupted this peacefull moment were schools of bait fish breaking through the surface with splashes of water. I was thinking to myself, "Wow, what a perfect day to go fishing!" One of these days! For now I have to go to work, but one of these days. It is these thoughts that keeps me going. Thank you everyone for all your post, I've read many of them and have learned so much. Keep them coming.

[kingston]

Based on the given information it looks like you have options
You can use your other property and borrow funds above the appraised value if you choose at fairly decent rates. you can also put a lease agreement behind it rent it out and still borrow money against the property to maximize cashflow there. I would say it is a matter of evaluating your options and seeing what direction you would like to take it. Is the ideal situation to keep both properties as far as you can tell they will both continue to be appreciating assets. You can also reorganize the debt of your existing home by doing interest only right now to reflect more income if necessary for qualification parameters. Even so you said the house is still appreciating in value so you may not need to borrow as much as you may think especially if you find a buyer who contracts to buy more than what is due at settlement. I would also suggest some heavy marketing campaign if you desire to sell for quick profit. In any case I should probably stop brainstorming and offer some assistance if you want it. I need to get a full picture of exactly what you want to do in regards to structuring your deals and I also need to know ideally how you want to obtain the financing as I told you there are many options. Email me at kingston111@netzero.net and leave your contact information or I will send you my contact information. Excuse the lengthy reply but I am trying to stay active to burn these calories Happy Thanksgiving.

[Vanmathy]

Finding, researching, inspecting, negotiating, buying, and reselling pre-foreclosure properties is a lot of hard work. But it can be very lucrative for investors who know what they're doing, are well organized, and have the persistence it takes to succeed. What about the Pre-Foreclosure Property Investor's Kit? Does it make sense in this process??? Need Advice... :confused:

[Dan Auito]

Freebie: Foreclosure secrets http://www.realestateprofitsnow.com/ebookdownload/

[Realestate4life]

I bought John Michaels courses but lost them when my hard drive crashed. Do anybody know how I could get them again. They was real helpfull

[Dan Auito]

I never bought them and old JM is on the run these days.

[Debbie]

I bought John Michaels courses but lost them when my hard drive crashed. Do anybody know how I could get them again. They was real helpfull

RUN! RUN AWAY from JM! Seriously!

[Joe124]

Good morning everyone,

Could someone please put together a step by step how to guide for investing in pre foreclosure homes. Also, please recommend books or links for further reading.

Thanks a bunch!

Not sure what level you are at with real estate investing, but i would look into the short sale success blueprint. you could google it if you want. or if we are allowed to post websites here i could post the link. i think they are releasing the short sale manifesto 2.0. That will give you tons of info.
let me know if you need any more info. JOE