PLP-042 The Foreclosure Journal – Part 1: Foreclosing On An Owner Financed Note
It can be quite difficult to foreclose a property, but sometimes, you just have to do it. When a borrower has seized making payments, the lender must take some actions before things get worse. In this foreclosure journal, Keith talks about foreclosing on an owner-financed note. He talks about what you need to know with foreclosure as he shares his own personal experience of dealing with a client in this situation, including the difficulties in contact as well as the effects of natural disasters to the property. He walks you each step of the foreclosure process, highlighting his motto of having insurance. Furthermore, he covers the difference between an owner occupant and an investor, and then letting you in on his exit strategy.
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Listen to the podcast here:
The Foreclosure Journal - Part 1: Foreclosing On An Owner Financed Note
This is episode number 42. I just want to let you know that I appreciate sharing with me your most valuable asset, and that is your time. I hope I can make everything worth your while. It is my goal to provide private lenders just like you and me with help in mitigating risks and increasing our yields and opening doors for bigger and brighter possibilities, bigger and brighter yields and return on investment as well. Our topic is foreclosure and I have started the foreclosure process or moving towards starting the foreclosure process. My goal is to walk you through each step of the way and share with you what's happened, how we got here and share my thoughts. Maybe I'll share my feelings too because this is where the healing begins.
I’d like to thank CountyTaxSaleApp.org for their sponsorship of this show, especially Sammy Gupta. Please go check them out. You can't find a cheaper lead generation tool out there for less than $0.03 a day. It doesn't matter what device you have or where you are in the world, you can still invest in Harris County, Texas, the third largest in the nation. It's a good deal. Please check them out.
The Situation
Let’s start with the nitty-gritty, foreclosure. What happened? We started actively seeking distressed owners. We found one for a house that was in Port Arthur. It’s very much an industrial town, part of the Golden Triangle, east of Houston. It’s along the coast and very close to the border of Louisiana, the Sabine River. It's the hometown of a lot of people, Janis Joplin for one and many others. The Golden Triangle is home to a lot of famous athletes and even some actors as well. We found this house and we were able to negotiate the purchase of the house that was in a very bad shape and had a lot of back taxes owed up on it. We negotiated with the owner to purchase it for what was owed in taxes. He was also getting tired of getting citations from the City of Port Arthur when they would come and cut the grass for him. He was happy to get rid of it. What we did, because it was in such bad shape, rather than going in and spending a lot of money and doing a fix and flip on the rehab, we decided, “Let's go ahead and just try to owner finance this.” We paid cash for the house and ended up selling it last August of 2017 for $30,000 owner finance at 10% interest and we put it out over to ten years.
Everything closed, everything went fine because the person who was buying the house was not an investor but rather was going to be the owner-occupant. We went through a residential mortgage loan originator who vetted our potential buyer/borrower. Once they did their magic and they crunched the numbers, we figured out that we can't get rent for what we were charging a month on the note. He closed, he moved in and then a little thing called Hurricane Harvey happened. We kept our communication up with the owner saying, “Don't worry about paying. We'll do a little forbearance. Just get on your feet.” The house did flood and one of my biggest mistakes there was I d...