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[ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] Re: Figuring out Jr. benes Posted by Ward-CA- on September 11, 2001 at 7:18 AM In Reply to: Buying Jr. Loans posted by Gary on September 10, 2001 at 10:10 PM : I have a question I'm hoping one of you savvy investors who are active in buying 2nd and 3rd notes. : For example, let's say there's a home, FMV at 200K. 150K first, and 50K second. : If the first has begun foreclosure proceedings, what is the most a smart investor would pay to buy out the note from the second and make a reasonable profit? : Thanks for your help. I love this gathering place... : Gary =•=•=•=•=•=•=•=•=•=•==•=• Gary, there are a couple of caveats in this business of buying junior bene’s. One is keep an eye on your local real estate market. You want to have a Seller’s market to lower your risk. That means an average marketing time according to your local Multiple Listing Service (MLS) of about 1 — 60 days. In addition, you’d want the property located in the metropolitan area anywhere except in a barrio or ghetto—an area a yuppie wouldn’t be afraid of. In such a bustling market you can count on amateurs bidding foreclosures up to 80% of their present fixed up market value (FMV). So let’s turn to your example. If we assume that your $200K home is in a hot real estate market and located in an area agreeable to a yuppie then the foreclosing first of $150K will be predictably bid up to $160K. The $10K overbid would then go downward to the next equity holder. In this instance it’s the holder of the $50K second. The 2nd would have been wiped off the title of the property by the foreclosing 1st. The only money the holder of the $50K 2nd would receive would be the $10K overbid from the foreclosure of the 1st. I think you’d agree that this example doesn’t appear to be too attractive as a junior bene buyout (JBB) prospect. We’d have to buy out the $50K 2nd for about $5K to pick up the $10K overbid and make a little money. Not a likely prospect. Hope this helps. Follow Ups: Re: Figuring out Jr. benes Gary 1:51 PM, 09/11/01 (0) Post a Followup: Name : E-Mail : Subject : Comments: : : I have a question I'm hoping one of you savvy investors who are active in buying 2nd and 3rd notes. : : For example, let's say there's a home, FMV at 200K. 150K first, and 50K second. : : If the first has begun foreclosure proceedings, what is the most a smart investor would pay to buy out the note from the second and make a reasonable profit? : : Thanks for your help. I love this gathering place... : : Gary : =•=•=•=•=•=•=•=•=•=•==•=• : Gary, there are a couple of caveats in this business of buying junior bene’s. One is keep an eye on your local real estate market. You want to have a Seller’s market to lower your risk. That means an average marketing time according to your local Multiple Listing Service (MLS) of about 1 — 60 days. In addition, you’d want the property located in the metropolitan area anywhere except in a barrio or ghetto—an area a yuppie wouldn’t be afraid of. : In such a bustling market you can count on amateurs bidding foreclosures up to 80% of their present fixed up market value (FMV). : So let’s turn to your example. If we assume that your $200K home is in a hot real estate market and located in an area agreeable to a yuppie then the foreclosing first of $150K will be predictably bid up to $160K. The $10K overbid would then go downward to the next equity holder. In this instance it’s the holder of the $50K second. The 2nd would have been wiped off the title of the property by the foreclosing 1st. The only money the holder of the $50K 2nd would receive would be the $10K overbid from the foreclosure of the 1st. : I think you’d agree that this example doesn’t appear to be too attractive as a junior bene buyout (JBB) prospect. We’d have to buy out the $50K 2nd for about $5K to pick up the $10K overbid and make a little money. Not a likely prospect. : : Hope this helps. Optional Link URL: Link Title: Optional Image URL: [ Follow Ups ] [ Post Followup ] [ The Forum Board ] [ FAQ ] WWWAdmin 2.0a © 1997 Matt Wright and DBasics Software Company, All Rights Reserved

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