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How to buy a foreclosure like a champion with 0 income (but good score)


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hello,

 

My ficos are approaching the mid 600's I am ready to start looking for forclosed homes. I workked construction for quite some time s im better then average at looking for a good home. I was wondering what the process is? I am a total newb to this. I tried looking in the threads but did not find much pertaining to just forclosure aquisition so i figured i would start one (instead of calling the shady late night flip your floclosure infomercials)

 

So I was hoping that the less down payment the better (0% is best if someone knows how). I have a cash trust income of 2400 a month right now and other avail income options from the forex market and othr things. Stil hoping or that 0% down!

 

also any tips? I was thinking to call listings longest on the market first? More willing to cut a deal? Any places i should be looking? I have only been looking on zillow and stuff so i do not really know. Thanks!

 

Also looking in the 60k range (hopefully)) but willing to suggestions!

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The foreclosure sale process varies by state but in most if not all states the buyer needs to pay for the house in cash within a day or two of sale with a large down payment the day of sale. And you would be buying sight unseen.

 

 

If you are talking about an REO (bank owned) property then you can get financing but many places won't do mortgages that small due to the costs and it makes them higher priced mortgages.

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Cash??

 

It is pretty simple - no income = no loan - great scores are only 1/3rd of the things that are looked at

Income and assetts are the other - without all three you will be spinning your wheels trying to get a loan

 

If you had a large enough down payment like 30-35% you might be able to use a hard money lender with no income

They dont care about how you repay - they know if they have to foreclose that you have enough equity to allow them to sell at a discount and still recoup their investment

 

Take Care

 

Brian B

Mortgage Forum Lead

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The foreclosure sale process varies by state but in most if not all states the buyer needs to pay for the house in cash within a day or two of sale with a large down payment the day of sale. And you would be buying sight unseen.

 

 

If you are talking about an REO (bank owned) property then you can get financing but many places won't do mortgages that small due to the costs and it makes them higher priced mortgages.

 

currently i am looking for forclosures in wa state. I am very confused. So i have to come up ith 100% of the cash? Can it be in a security form like stocks bonds etc? Im not trying to challenge you but there is no way to get financing like that? It seems like a lot of cash for someone to reasonably come up with.

 

how do i telll the difference if its a bank on or the other kind? thnk you

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Cash??

 

It is pretty simple - no income = no loan - great scores are only 1/3rd of the things that are looked at

Income and assetts are the other - without all three you will be spinning your wheels trying to get a loan

 

If you had a large enough down payment like 30-35% you might be able to use a hard money lender with no income

They dont care about how you repay - they know if they have to foreclose that you have enough equity to allow them to sell at a discount and still recoup their investment

 

Take Care

 

Brian B

Mortgage Forum Lead

 

 

ok so 30-35% are there interest rates sky high? what are examples of hard lenders so i dont go on a goose chase please. willthey do a loan that small for a 60k forclosure?

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The foreclosure sale process varies by state but in most if not all states the buyer needs to pay for the house in cash within a day or two of sale with a large down payment the day of sale. And you would be buying sight unseen.

 

 

If you are talking about an REO (bank owned) property then you can get financing but many places won't do mortgages that small due to the costs and it makes them higher priced mortgages.

currently i am looking for forclosures in wa state. I am very confused. So i have to come up ith 100% of the cash? Can it be in a security form like stocks bonds etc? Im not trying to challenge you but there is no way to get financing like that? It seems like a lot of cash for someone to reasonably come up with.

 

how do i telll the difference if its a bank on or the other kind? thnk you

Other than hard money which is a lot higher interest rates, yes you need cash. This is why most foreclosures are repurchased by the bank or investors with a lot of cash.

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The foreclosure sale process varies by state but in most if not all states the buyer needs to pay for the house in cash within a day or two of sale with a large down payment the day of sale. And you would be buying sight unseen.

 

 

If you are talking about an REO (bank owned) property then you can get financing but many places won't do mortgages that small due to the costs and it makes them higher priced mortgages.

currently i am looking for forclosures in wa state. I am very confused. So i have to come up ith 100% of the cash? Can it be in a security form like stocks bonds etc? Im not trying to challenge you but there is no way to get financing like that? It seems like a lot of cash for someone to reasonably come up with.

 

how do i telll the difference if its a bank on or the other kind? thnk you

Other than hard money which is a lot higher interest rates, yes you need cash. This is why most foreclosures are repurchased by the bank or investors with a lot of cash.

 

 

ill have to see what i can scrape up then. What is the best resource for hard lenders? I can start researching the process

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Private money lenders - they are out there but are usually regional - they like to invest where they can see what they are buying into - (at least thats my experience with them)

a Foreclosure sale is when the bank sales the deed to the highest bidder - usually on the steps of the courthouse on a predetermined date - the bank will put a minimum (basically their bid to keep the place instead of take a loss) and anyone that outbids them with cash can buy it,

No financing allowed - now when you get big time and you can establish a line of credit with a bank and use it like a credit card - how you come up with the cash doesnt matter on the courthouse steps so long as you deliver what you bid

 

If it doesnt sell then the bank takes it and it becomes an REO - these usually get listed by an agent and are up for sale like any other home

 

As long as they arent thrashed you can get a loan and buy

It is much easier if it is an owner occupied home - less risk to the bank - even then you would need 3.5 -5% down depending on the program you use for the loan

 

If it is an investment home you cannot use fha - getting Mortgage insurance for a conventional loan on an investment isall but impossible so it will require a minimum of 20% down so mortgage insurance is not required

 

The private money lenders will take advantage of you - it is how they make their money - most charge 3-6 points on the loan upfront and the rate is in the 9-12% range - they want you to refi out of it asap so they can reinvest but if you make the payment they will gladly take the higher rate income

This is not a long term program -

 

Good Luck

Brian B

Mortgage Forum Lead

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$0 down is not an investor loan..... it is a speculator loan putting all of the risk on the bank

 

and mid 600s is not a good score.... not that it matters

 

can you expand on not that it matters? are you reffering to the hard loan?? How long will the process take from the time i find something to close. im such a newb

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Oh my lawd. This is not for you, unless you want your behind handed to you.

 

CASH buys forclosures, $0 down will never happen. Those that loan hard money will eat you alive.

 

Find something else to do with your $2400 a month trust fund money, this will only end in disaster.

 

I do not mean to sound negative, but really if you have no idea how this works, find something else to invest in.

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OP - did you hear some ad on the radio or on late night TV about "how to buy houses for zero down" or some similar schtick? These are not for amateurs. Quite a few wannabe property flippers lost their kiesters a few years ago in the real estate meltdown, there's also a reason why you see foreclosures going for 5 digits - they are in bad shape, probably gutted or trashed, and you'll put six figures into it trying to make it livable.

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Typically, you'll need to make a cash deposit just to register to bid in a foreclosure auction (5% of your planned max bid is common), and you'll be required to pay in full within a day or two of winning. The county doesn't care if you're borrowing the money - just so you have a check in their hands in that 1-2 day window - so that rules out a typical mortgage. But you could have a pre-approved line of credit, where you can walk into the bank and they'll immediately issue you a check or bank draft.

 

You mentioned stocks and bonds - it is possible to get a line of credit secured by stocks or bonds. But again, this needs to be set up in advance; within a day or two of the auction, you need to be able to hand a check to the court clerk.

 

Do your homework -- google your county name + foreclosure auction, find out when/where the next auction is, and go watch and learn.

 

Your county will have its own rules and procedures, but here's a website for a county with a well organized auction process, and a lengthy FAQ

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Oh my lawd. This is not for you, unless you want your behind handed to you.

 

CASH buys forclosures, $0 down will never happen. Those that loan hard money will eat you alive.

 

Find something else to do with your $2400 a month trust fund money, this will only end in disaster.

 

I do not mean to sound negative, but really if you have no idea how this works, find something else to invest in.

 

ok i understand thank you for the stern advice i can always take that kind of thing you know?

 

OP - did you hear some ad on the radio or on late night TV about "how to buy houses for zero down" or some similar schtick? These are not for amateurs. Quite a few wannabe property flippers lost their kiesters a few years ago in the real estate meltdown, there's also a reason why you see foreclosures going for 5 digits - they are in bad shape, probably gutted or trashed, and you'll put six figures into it trying to make it livable.

 

honestly this made me laugh so hard for like five minutes becaues they have literally been programming us for decades i can put my finger on any one late night salamander all i can say there were many and then so many tv shows over the years sometimes swan diving off the nearest bridge looks appealng as i feel like im stuck in a very very bland version of groundhog day with reverse comedy...

 

Ok so im really happy i asked this question folks because this has allowed me to re-strategize. Im looking in the 30k range for homes on the open market sold by banks so i can get a good rate as suggested. (lmk if that was accurate)

 

i figure a 30k home is a great starting place for equity file. Correct me if im wrong but would 2 30k properties look better on your file then 1 60k right? im just saying that example because by starting that small im reallly doing myself a favor and can pull something from the banks?

 

lmk if that is a good plan because IF i had to come up with a down payment i can def manage a down payment on 30k. Its like 10% or less right? Im hoping for 0% if its bank owned. How much will i have to come up with in cash what will my credit file have to look like?

 

lets give me a 30k-40k window.

 

What banks just the one the people use that sell ou the house?

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I think what everyone is politely trying to day is-

You are way ahead of yourself

If you have cash you need enough to not only get a property but you will need money to take care of them

Once you get going you may roll with it and get a bunch and create a nice income

 

I would suggest reading reading and then watch a few videos and then read some more - educate yourself on how the finances work

what to expect as a landlord - holding costs - insurance etc

 

Run the numbers and make sense of it all - the whole time be stocking away as much cash as you can

 

You do have income if you have 2500 a month so you might be eligible for some financing but it will take better credit and 20% down

You will need to work with a local bank on deals that small - most banks dont touch anything below 75-100k - it just doesnt pencil out for them

local banks take them as part of their overall portfolio - and already have the overhead covered

 

Good Luck

Brian B

Mortgage Forum Lead

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I think what everyone is politely trying to day is-

You are way ahead of yourself

If you have cash you need enough to not only get a property but you will need money to take care of them

Once you get going you may roll with it and get a bunch and create a nice income

 

I would suggest reading reading and then watch a few videos and then read some more - educate yourself on how the finances work

what to expect as a landlord - holding costs - insurance etc

 

Run the numbers and make sense of it all - the whole time be stocking away as much cash as you can

 

You do have income if you have 2500 a month so you might be eligible for some financing but it will take better credit and 20% down

You will need to work with a local bank on deals that small - most banks dont touch anything below 75-100k - it just doesnt pencil out for them

local banks take them as part of their overall portfolio - and already have the overhead covered

 

Good Luck

Brian B

Mortgage Forum Lead

 

i was doing a lot of reading and studying last night and i ran across this o'leary video. I'm a much more aggressive investor then o'leary but like him and his staff i niether have no car or real commitments. And I love it that way beccause i can remain liquid and everything is in the cloud, even my capital.

 

The video explains many ways why a house or land is a poor investment right now. And if you are looking for equity park the money in corporate bonds. I like the idea because its parked so i can sign it off but again i will not have that hard report on my file saying that i have the property equity.

 

Is it true in thinking that its good to have the land / home equity. Obviously what o'leary is say is accurate but it's difficult for me to really imagine that your file can be very strong if they dont see that 30 year lock on the money

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You're doing the wrong kind of studying. ANY information that you pay for re: investing --- the author is making his money selling that information, not by doing the thing he's supposedly expert at.

 

Call your County Clerk, ask them when the next foreclosure auction is. Go to the auction. Pay close attention to how the procedure works. Pay attention to someone who's won one of of the auctions and watch what they have to do after the auction (paying the clerk, paperwork, etc). Strike up a conversation and talk to the people who are actually doing this. You said you have a construction background -- a good number of the people at the auction will be contractors, doing flips to keep their crews busy during slow times. It should be easy to open a dialog with them. Ask how they finance their deals AND how they finance the reno work. Ask how long their flips normally take to close. Talk to several realtors in your area and find out how long properties typically sit on the market. A property that takes 3 months to close can kill your profit margin if you're financing the purchase or the reno work. And speaking of reno work - who will do yours? Even if you come from construction, can you handle all the trades? Are there any trades that WA requires the work to be done by a contractor licensed in that trade?

 

Ignore anyone who wants to sell you information on how to do flips.

Edited by JeffeVerde
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I think what everyone is politely trying to day is-

You are way ahead of yourself

If you have cash you need enough to not only get a property but you will need money to take care of them

Once you get going you may roll with it and get a bunch and create a nice income

 

I would suggest reading reading and then watch a few videos and then read some more - educate yourself on how the finances work

what to expect as a landlord - holding costs - insurance etc

 

Run the numbers and make sense of it all - the whole time be stocking away as much cash as you can

 

You do have income if you have 2500 a month so you might be eligible for some financing but it will take better credit and 20% down

You will need to work with a local bank on deals that small - most banks dont touch anything below 75-100k - it just doesnt pencil out for them

local banks take them as part of their overall portfolio - and already have the overhead covered

 

Good Luck

Brian B

Mortgage Forum Lead

i was doing a lot of reading and studying last night and i ran across this o'leary video. I'm a much more aggressive investor then o'leary but like him and his staff i niether have no car or real commitments. And I love it that way beccause i can remain liquid and everything is in the cloud, even my capital.

 

The video explains many ways why a house or land is a poor investment right now. And if you are looking for equity park the money in corporate bonds. I like the idea because its parked so i can sign it off but again i will not have that hard report on my file saying that i have the property equity.

 

Is it true in thinking that its good to have the land / home equity. Obviously what o'leary is say is accurate but it's difficult for me to really imagine that your file can be very strong if they dont see that 30 year lock on the money

Land or home equity has zero to do with credit unless you take a home equity loan against your property in which most cases will report to CRA's.

 

Even then it wouldn't show approximate value of said property, only what was borrowed and how fast it is being repaid.

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so does anyone heere actually knokw anyting about corp bonds? Ive been researching this more and more. I can get 1yr B bonds for 9-11pt yiedss. Imo they are junk bonds though beccause i cant leverage them.

 

If I go with A bonds i can get 3-5% essentially guaranteed and sign that over to banks and such for more capital that i can leverage even further. So who here is the "bond" guys. I can hear the music now and see little odd job running

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I know about corporate bonds. I've worked in investment banking. After reading your posts I'm going to do you a BIG favor. Whatever exotic investment you are thinking of doing... don't. Simple as that. You will not make money. Period. If you want yield find a way to buy some blue chip preferred stock and then reinvest the dividends. Playing in junk bonds, flipping houses, leveraging assets is not for the uninitiated and will only end with you losing money. You have claimed that you play in the forex market but your naivete in other areas of basic structured finance has me skeptical. What currencies did you trade?

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The last post in this topic was posted 1916 days ago. 

 

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