Been a long time reader here and have made a decent secondary income due to the REO forum here, So kudos to this site.

That being said, I had an Interior BPO scheduled today. Checked out the property and it could use some work but it had good bones as they say. Its a 3 story SFR w/ 4 bedrooms & 1 Full bath & basement. Homeowner was up for sheriff sale in November, but cut a deal with the bank to do a loan modification (which is why I was called to do the BPO)and put his $18k in arrears onto the end of the mortgage which I am told is $90k. His mortgage payments are about $961/mo. Subject last sold for $95k and change. Sold comps for the last 06 year show similar properties sold for $150k+ in much better condition than the subject.

After I left the BPO property inspection H/O called me and basically laid out all of the info I just mentioned above. Told me he just wants out (wants to stop hemorrhaging cash) and is willing to take a loss on the money he already has in the place so long as he is free and clear again. He mentioned he would be comfortable signing over the place to someone else and letting them resume paying the mortgage if they could pay the $18k in arrears. I was looking at two possible outcomes if I can find a smart way to acquire the property.

1 - Fix it up and rent it out to a family or Section 8.

2 - Fix it up & flip it at a price under market value for a quick turnover.

I looked at today like a late Christmas gift and this would be a great start to my new years resolution of doing deals in 07 if there is a good way to make it work. I have been a Realtor for 4+ years now and really want to get involved with property investments, by and hold/flips/etc. As I mentioned I usually reside in the REO forum , but I just started looking at the other forums here. Any advice for this forum newbie? Thanks in advance to all and Happy New Year!!!!

Anyone?

1.Irregardless of the bank before going any further with this deal you need to check for any LIENS on this property that could kill the deal.
If you find liens they will have to be negotiated down to 10 to 20 cents on the dollar.
Some will settle for 10 cents on the dollar to RELEASE the lien but will still come after the existing homeowner for the balance at which point the seller could file bankruptcy or just not pay the lien etc.

2.I don't like that it has 4 bed and just 1 bath,that is not good.Would there be room to make a second bath?What are 4/2's going for considerably more?

3.Most mortgages have an acceleration clause if he deeded it over to you and you made payments the bank could accelerate the loan and make the whole mortgage due.Just have the seller sign an authorization to release form and get the payoff information,if you don't want them to know you want to buy it have the seller order the loan payoff info without the authorization to release and then they give it to you.

4.Some bpo's specifically state they don't want you buying these properties or solicting the people because you are using information given to you by the bank that was supposed to be private and confidential.


The numbers don't lie and tell a story.

You need to run 3 analysis.

1.fix and flip
2.rental
3.wholesale or assign the deal

Don't beleive anything the homeowner says get the payoff with the date in writing from the bank,often times the payoff amount is different fromt he loan balance.You need the payoff and lien results before running your numbers,you need to also make sure this is the only person showing on title.

Depending on the amount of work or repairs needed this could be a loser.Is the 150,000 + in the top of the range?If so for instance homes 4/1's are selling in the 130 to 150 range.you would want your flip to be in the 130 to 140's to sell fast.Each month it doesn't sell the carrying costs of utilities plus the mortgage will kill your bottom line.If you flip you will get hit with 25 to 35 percent capial gains tax when you sell depending on your tax bracket.If you rented it for a year and then sold you would only pay 15 percent capital gains or you could 1031 exchange the property at that time.

good luck