Learn me: Foreclosed/bank owned property

Looking for a cheap ass house. No idea where to start. HUD? I know there are some investment property whizzes here. School me.

It's been a while - around the Chicago suburbs Fannie Mae assigned forclosures to one real estate agent for the area. Pick a property (you got a walk through, no inspection), make your offer and they say yes or no. We got a yes even though we got outbid because we could close before the end of a quarter and got the property off their books before they had to report it. Short sales and direct with banks get a little more complicated I think.

Are you looking for an investment property or something to live in? That dictates to a certain extent where you need to look, as some of the deals are only available for owner occupied properties.

Your credit score is going to be largely irrelevant.

If you can't approach the bank (owner) with a cash offer, no deal.

You may borrow money, but you won't be able to use the house for collateral. Especially if it is a distressed sale (which are the low prices).

That's a little different if you are going to live in it.

Are you asking about a particular property, or just general bargain shopping?

When I bought my own forclosure (HUD), I was informed that I would have to make the place my primary residence for at least two years. Not a problem for me, I was just looking for a roof over my head without a rent/mortgage payment. Seems like if you can catch a "distress sale" from a private owner instead of a bank, you may have a chance at a loan. Everybody I know that actually works (or worked) in Real Estate says that there's money to be made..but that 'it takes money to make money'. And remember what some of the other folks around here have said (on older threads) about being the landlord.

I have been doing a ton of work on distressed multi families lately. Its all been for contractors that have large crews of guys. They buy the multi and completely gut it. I come in and install all new plumbing and heating systems. The electrician runs all new wiring. They completely change the inside layout on the two families so now instead of one apartment up and one down, the house now is a side by side duplex. These means both tenants pay first floor rent, both pay their own utilities. This gives the guys a place to work when nothing else is going on. I'm sure they get all kinds of write offs, tack material onto others jobs, and all kinds of other shenanigans that go on in the construction industry. Once the house is renovated, they go to the bank and get a loan on the finished property or they flip it and go buy another one. Under this scenario, they make out pretty well. I haven't seen joe blow trying to buy and flip a house around here in a while. Material and labor costs are too expensive to justify most flips for the average guy. Admit it, you have been watching the good looking blond with the tiny tank top flipping houses on the home improvement channel. TV makes this stuff look easy.

Sorry. Looking for a primary residence for a friend. Sooooo, any good websites to check out?

In reply to poopshovel:

Where you been dude! Long time go see.

Shoot Curmudgeon a PM. He just bought a foreclosure/short sale. There was some website that listed all the properties.

SVreX wrote: Your credit score is going to be largely irrelevant. If you can't approach the bank (owner) with a cash offer, no deal. You may borrow money, but you won't be able to use the house for collateral. Especially if it is a distressed sale (which are the low prices).

All three of these assertions are false. The problem with generalizations is that they are often too general. Properties might be owned by FHA, VA, FNMA, FHLMC or individual financial institutions. Each has different rules. Most will allow investors to purchase, and they don't care where the money comes from as long as you can promptly get it to the settlement table. Finding a lender is a different matter, but they are out there.

Fannie Mae actually has a specific program for investors:

"Expanded financing opportunities are available for investors who may have existing financed properties to allow mortgages up to a total of 20 financed properties (Fannie Mae–owned properties only; consult your lender for details). The investor may be an LLC or an individual. HomePath Mortgage (HPM) is available on eligible properties noted with a HomePath Mortgage logo on the Property Details page of this site. Currently, a limited number of lenders offer this expanded financing.

"HomePath Renovation Mortgage is also available to individual investors (no LLCs) for up to four total financed properties. See the Financing tab for more information about HomePath Renovation and for a list of HomePath Renovation lenders."

bluedoptop's post jogged my memory.

http://www.homepath.com/

We bought a foreclosure a couple of years ago that I think was owned by fanniemae. They could not care less what we did with it. They just wanted their money. But the people writing us the mortgage were a bag of dicks. The problems were: this was not going to be our primary residence (it was for a our daughter and new grandson), and with the large down payment we made, the amount of the mortgage was below what anybody wanted to write a mortgage.

In reply to bludroptop:

You are right.

I answered before I got the answer to my question, and left out the qualifiers.

Those are details specifically related to recent FL purchases of mine.

YMMV

Edit: but since he is talking about an owner occupant, none of it matters.

Regarding a website...

My observations are that if it hits a website, it is generally much too late to get a good deal on it.

Again, YMMV.

SVreX wrote: Regarding a website... My observations are that if it hits a website, it is generally much too late to get a good deal on it. Again, YMMV.

x2. a listing popped up the other day for 10 acres, 4,000sf house, 3,000sf shop for 133k. it came up online so late that when we went to look someone was already living in it. unless they're the PO that has not been kicked out by the sheriff yet.

also check and see if there are any non profit neighborhood development corps just looking to get the home into the hands of someone who will fix it and not flip it.

got one of mine from a lady that does that. the banks give them to her instead of letting the city take them and make them a garden and she just finds someone willing to agree to begin work within x months and not sell it for 5 years. i bought the house from her for 5k cash and have been tinkering with it as work permits.

You sometimes can find good buys at tax sales.

Funny. Was just looking on homepath's site.

Dammit, i had forgotten all about Homepath. Now i'm going to cry myself to sleep again wanting some of those houses so bad.

YUP. http://www.homepath.com/listing?listingid=40874351

Holy hell. http://www.homepath.com/listing?listingid=40278706

My body is ready. http://www.homepath.com/listing?listingid=40739995

Welcome back! How's the little one?

Yeah, homepath.com is probably the best site. trulia.com is good for identifying properties that are about to go into foreclosure, called 'lis pendens'. If something is in lis pendens, figure 18 months to 2 years for the lawyers to get fat before a deal can actually happen. On homepath that's already done, they are ready to sell.

Homepath encourages owner occupied, I had to sign an agreement that if I sold my house within 2 years I would have to write them a check for $10,000.00 at time of closing.

It is possible to finance a foreclosure, but Homepath will not do a 'contingent on financing' deal and they will not finance, if you don't have the cash at closing it goes right back on the market. I suggest your bud go talk to his bank, tell them what he plans and see what they might be able to do to expedite it for him.

Oh yeah, avoid short sales like the plague.

Curmudgeon wrote: Oh yeah, avoid short sales like the plague.

If you want a deal and you aren't in a hurry there's nothing wrong with short sales. You have to have patience but the deals can be great. This one took me 6 months to close but at $20k for a 3/1 that I was able to have renovated and rentable in a week for under $5k invested...worth the wait.

spitfirebill wrote: and with the large down payment we made, the amount of the mortgage was below what anybody wanted to write a mortgage.

I'm running into this now. Plenty of affordable investment properties right now but they are too affordable, no one wants to write the note.

I looked into a couple of short sales, in both cases they were still owner occupied and had been on the market for a while. It seems in a short sale the owner is still responsible for any deficit between the selling price and the mortgage balance, making for a lot of resistance on their part. After initial negotiations, I decided against them and other people's experiences have been similar.

So again, where are you guys finding these deals? Are you hiring an agent? Newspaper? Driving around? Aside from the homepath site, I'm not coming up with much. If it's "gone the second it hits the site," then how are you guys finding them "before they hit the site?" Do I need to be a Mason or something?

In reply to poopshovel:

Luck of the draw most likely, but there is that "Supervillains of Real Estate" secret handshake I keep seeing........

In my case, I decided ahead of time the area I wanted (this was determined by the school district) and the budget that I had. I then checked Homepath and Trulia.com daily.

I also did some driving around and that was important, I had already seen the house I have now before it popped up on Homepath, it never did show on trulia. What helped me was to Google the address, with a little digging I found that it was a Fannie Mae that was in the final stages of foreclosure, meaning I knew where and roughly when it would pop up.

This is not a quick thing. It took me roughly 9 months from the time I started hunting till I was able to close. I actually made an offer, it was rejected, then it came back up for $20k cheaper (that inspection's the best $175 I ever spent ).

You don't have to have an agent, although if you are working full time it does help to have someone on it at the times you can't be there. In my case, the agent handling some of my dad's properties took mine on at the same time.