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Monday, February 18, 2013

Finding the Hidden Market for Real Estate Investment

3:10 PM
Tony Youngs was aboard Royal Caribbean's Adventure of the Seas to discuss "Analyzing Your Deal w Confidence." First deal Tony bought was a pre-foreclosure purchased for $65K w no money; wholesale? take over loan subject to (and lady owed $62K); worth $120K. Had to come up with $3032, borrowed from an investor; he painted it in and out, cleaned the kitchen and cut the grass; It was refinanced in 88 days and Tony pulled out $27K. He rented the house out and kept repeating the process. Everything changed in 2007; "subject to" no longer works if market value is less than the loan. So Tony started making offers on REOs; and in the course of doing that, discovered three times the profit in the "hidden" market, those properties not listed, no signs. Every Sunday he plots every recently-repossessed house and looks at all properties and makes offers; finds out several "hidden" properties while looking at these. Hidden market may even be occupied; but not well-cared-for. Tony sends letters or knocks on doors, talks with neighbors. Tony's strategy for the hidden market: See if sellers want to sell. Look for distressed properties. Give them a little cash. Get signed contract and sell immediately. Tony goes to foreclosure auctions in his county to sell these distressed properties. These investors have to pay cash for properties. Hedge fund buyers are outbidding local investors in many auctions. Local individual investors are desperate for deals. Banks have slowed down on foreclosures. Many investors face more competition, as Wall Street investors are coming into the market to buy. Banks know they can sell to hedge funds. There are thousands of vacant or distressed properties in every market. Aren't these upside down? Sometimes, and these can be purchased as a short sale. Sometimes the owner died and left property to heirs. Tony bought five probate properties in 2012. Sometimes the owner is in bankruptcy. Use pacer.gov website to look at bankruptcy case, for Order for Motion of Automatic Stay (then house may be bought directly from owner). bankruptcydb.com will sell leads of people in bankruptcy. Knock on doors, leave flyer on door, or send a letter to owner. POA to sell house for someone in jail. Seller thought it had to be fixed up first to sell. How to do your own title search. Learn how to do. Know how to do research and buy title insurance. Will save you a lot of $ to do your own title search. Deed/record room where you can find mortgages and liens. Use title company to do search. Federal tax lien is recorded against person or business, but attaches to personal property. Cannot be sold without paying lien. Recommendation that everyone pay title insurance. Buy one of those liens and wipe out the others. Only junior liens get wiped out, so try to buy first lien. Quiet deeds in one state may be different from other states; homestead state vs. commonwealth state vs. others, just does not work in every state. Buy title insurance for protection. Close through attorney or escrow agent; do not do table top closings. Google (state) foreclosure laws. Tony Youngs is a national speaker on finding, buying and selling distressed properties.

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