Equity Buyout Training
Each of these three arenas have their respective champions trumpeting wonderful things about their chosen niche and why it's the "best" approach. And for them, that's probably true. And ultimately, you'll prefer one approach over the others too. So what's really important is to understand the requirements of working each area and then focusing on the approach that you're most comfortable and successful with. You might even work all three areas if you have enough manpower, leaving no stone unturned in your pursuit of foreclosure profits. Herein are the uniquenesses of buying the property from the trustors before they lose it at the trustee's sale.
Your capital requirement per deal has to cover such items as the seller's cash-out, delinquent loan payments, general lien payoffs (usually discounted), cosmetic fix-up expenses, and your monthly out-of-pocket holding expenses.
Your other expenses (property taxes, assessments, senior lien balances, sales expenses, escrow costs, loan fees, etc.) can be deferred and paid out of your refinance/resale proceeds. You can expect your average deal will take about $20,000 out-of-pocket and that your profit will be about $20,000 . . . taking a total turnaround time of about 6 months. So the more capital you have the more deals you can have going at any one time-and the busier you'll be keeping up with it all.
Your walk-thru inspection of the property, plus the Condition Disclosure Report the sellers are required (Cal. law) to give you, detailing the condition and hidden shortcomings of the property, should eliminate the costly unknowns you're exposed to when buying at the trustee's sale.
Once you know what liens there are and the make-up and condition of the property you need to know what comparable property is selling for in the neighborhood. Then from that figure subtract all liens, back payments, late charges, fix-up costs, etc. for an accurate idea of the owners' equity.
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