Author Topic: Ways To Gain Real Estate  (Read 2836 times)

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Offline flyingvan

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Ways To Gain Real Estate
« on: October 20, 2016, 07:11:34 AM »
Just opened escrow for the sixth time.  I've only sold one property, my first----and I wish I still had it.
First house, when I was 20 was a definite fixer upper, kind of a training house.  In hindsight I could have bought it for less.  A few years later with wife and kids, we found a foreclosure at the lake for $345K.  Went through it with a fine toothed comb and sent a certified letter to the bank informing them of everything they must disclose to potential buyers, and offered them what they were owed----$150K----which they jumped at
    After that house was "done" I wanted to attempt ground up construction instead of rebuilding old crap.  There was this beautiful 2/3 acre lot at the end of the street bordering Cuyamaca Rancho State Park I liked. It wasn't for sale but I found who owned it. My letters met no response.  So I borrowed $60K against the now rebuilt lake house, had it in cash in a suitcase like a mob boss, and drove the hour and a half to the owner's home and made an offer.  Seeing cash did it; of course there were some hoops to jump through for escrow but I mad it as easy for him as possible.  Two years later it was all built and renting.
   The Cedar Fire burned down 1/3 of the county and 9/10s of our neighborhood, forcing a rethink on owning all the properties in the same neighborhood   Borrowed against the now finished rental and bought a bungalow at the beach.  2005 it was a steal; by 2006 I was waaaay upside down.... Now it's finally crept back up, I'm doing all the redoing old crap work on it, as my daughters live there for college....
    Property #5.  I was reading all about purchasing real estate out of probate,  and discovered the beautiful lot across the street was currently in probate.   The sale went exactly as the book said, with the probate attorney trying to obfuscate and spend as much billable time on it as he could   I had all the title and recording and cashiers check ready, and informed him i was aware of his obligation to sell it for the price set by the trustee blah blah blah...long story short $.50 on the dollar, cheap because it was 'unbuildable', but had done my homework, moved a water main and an improperly eased driveway (put it where it belonged, even built parking for the neighbor) and built my wife her dream home.  Total cost $98k, appraised at $295K.
     (I realize this whole diatribe has narrow appeal.  I'm just trying to show some ways to get land cheap). Which brings us to this escrow. I keep a close eye on the County Property Tax Default sales.  The beautiful lot above my wife's dream house (shared property line) wasn't on the list----but I researched who owned it, and discovered the three girls who inherited it also inherited other properties that were defaulted and on the auction block.  I wrote them, got no reply.  I hand wrote a letter, and my wife even wrote a personal note at the bottom.  She responded!  We hosted her and her husband.  I showed her all her parcels, including the ones she was about to lose.  I had all the paperwork she needed to redeem the properties, and made a lowball offer for the one I wanted.  I was clear I would take care of all fees and take it as is.  I was up front that it was a lowball offer but pointed out we were really the only ones with convenient access.  She didn't even counter, and accepted my offer.  The earnest money I gave her was the amount she'd need to redeem the other properties, but I have a feeling it won't go there.   If this escrow goes through it'll be a terrific deal, and I'll build my 'man cave'
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Offline MikeC

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Re: Ways To Gain Real Estate
« Reply #1 on: October 25, 2016, 10:39:16 AM »
Interesting, and timely.  I'm pondering how best to approach the purchase of a not quite foreclosed property, owners moved out, bank had scheduled foreclosure hearing for last February but apparently did not follow through with the hearing. Limbo now best I can tell.

In this area banks are really dragging their feet on foreclosures, having loaned absurd sums for dumps - like $347K for something worth around $150K.  We've known of situations where the "owners" lived in the house for FIVE YEARS after ending house payments before the bank acted.  The profit motive on foreclosure for banks around here (Idaho) has been replaced by an attempt to recoup the loan amount, which is often exemplified by sitting on a property & hoping for an increase.  And without selling at market the rest of the loan portfolio doesn't need to be re-valued.

I do like the inspection followed by certified letter, but I'll pass on the briefcase o'cash.  The cash is likely to be "arrested" anymore.

Offline flyingvan

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Re: Ways To Gain Real Estate
« Reply #2 on: October 26, 2016, 10:06:04 AM »
   A buddy of mine has been buying properties in Salton City--really nice for about three weeks out of the year, Godforsaken for the rest.  These 3 bedroom homes were built during the housing boom, the loans are for around $345K.  He's been picking them up at auction for under $50K, and renting them---he's doing very, very well with it.
   Banks are not in the business of property improvement or maintenance.   Developments on properties that are unoccupied decay very quickly. 
   The foreclosure proceedings are expensive for banks as well.  I would send them a certified letter of intent to purchase.  List all the problems with the property and come up with your offer price--this should be completely based on what you are willing to pay for the property.  Include language saying they must identify the property corners, pay closing costs, pump and certify the septic, and clear the (whatever) off the property.  When they counter, hold firm on your price, but be willing to bend on the other things.  Banks loathe having to clear junk off properties, but it's exactly the sort of thing we do-it yourselfers can tackle, so leverage that sweat equity. 
   The most difficult properties with the biggest messes, both actual and financial, are where the highest value is hidden
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Offline MikeC

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Re: Ways To Gain Real Estate
« Reply #3 on: October 26, 2016, 05:02:31 PM »
That sounds like a reasonable approach.  I'm considering contacting the owner of record (since foreclosure hasn't yet happened) both for inside info & to possibly offer a few hundred for a quit claim deed from them in lieu of foreclosure, contingent on bank acceptance.

I imagine that your friend is doing well with that kind of spread.


Offline flyingvan

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Re: Ways To Gain Real Estate
« Reply #4 on: October 26, 2016, 06:20:02 PM »
Keep me posted!
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Offline flyingvan

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Re: Ways To Gain Real Estate
« Reply #5 on: January 24, 2017, 11:44:34 AM »
   OK...Just closed on these two parcels.  For awhile there it looked like it was going to fail, and I'd have a really tough time recovering my $3,000 down.  I wrote up a receipt, which she signed, and handed her a check---next day she needed me to call her bank to 'unlock her account' because they didn't know where this check came from...  Next, there was drama with some extended family members who had signed a quit claim but now that actual money was involved they wanted back in...Someone not even on the title called the escrow officer forbidding her to sell me the property.
   Not clear on how it all played out, but the disbursement is divided 5 ways instead of just the three names on title.
   Also, when they first gave me the title report, it included a third parcel not even contiguous with these two!  As much as I'd like another chunk of land with a lake view, we hadn't talked about or negotiated for that one so I had to get the title company to re-do it with that one removed.
   Then, nothing---no word at all for two months.  I wrote her a nice note, saying I had other options but this lot was my first choice.  If she couldn't get her family's signatures I totally understood, just refund the $3k and no hard feelings.  If, however, she could close by the end of the month, I'd send her a bonus outside of escrow since she was doing all the work with her family.
    Anyone want to make millions?  Set up a real estate procurement company targeting properties held jointly by families that hate each other.  Put a family counselor on you staff to help with the drama.  They will settle for anything, as long as they don't think someone else is getting more than they are...
     Don't know if the $3,000 down was split up or if my contact kept it--don't really care, either.  It never showed up in the purchase price, $27,000.  The 2bd 2ba property next door just turned down a $400,000 offer, this lot (actually two together) is much bigger.

 

  You can just see AnnaMarie's cottage downhill



   I've got a lot of work to do down at the Ocean Beach house for now, so I'll have plenty time to decide what the structure here will look like.  There was a cabin here that burned in the 80's, so locating the septic or seepage pit will help determine the layout
« Last Edit: January 24, 2017, 03:26:39 PM by flyingvan »
Find what you love and let it kill you.

 

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