I hate foreclosure. Foreclosure sucks.
It was late and we weren’t having much luck, which wasn’t unusual for a Friday night door-knocking run.
My old partner and I had a list of a few houses to visit, and we’d already decided this would be the last one before calling it quits for the day. The list? These were all properties scheduled to be sold at public auction on Monday morning at the annual Pierce County tax sale, now just three days away.
no stopping it now
There were only a handful of houses on the list. Most of the properties are junk lots with problems, and little else worth looking at. The houses were few and far between.
The properties that now remain are considered to be actually in the sale. The 4:30 pm deadline to pay taxes and foreclosure costs had passed and that meant these properties, no matter what, will be sold at auction first thing Monday morning.
We found the place and saw that it was a little tattered and a little cluttered, but overall, not a bad property.
So, we got out of Walt’s white Jeep Cherokee and made our way through the gate to the dark front porch. No lights were on and even though it didn’t look like anyone was home, we knocked and then knocked some more.
After ten minutes failed to rustle anyone to the door, we decided to call it a night and check back tomorrow, Saturday, to see if we could catch Steve at home.
Who knows, maybe we can help him out.
the tiger woods of foreclosure rescues
That’s right . . . I’m an investor, and one of the things I can sometimes do is keep someone from losing his home to tax foreclosure.
How’s it done?
Every situation is different, of course, but in Steve’s case, there are a couple things worth considering. That is, if we can first find him and then figure out a way to get him to talk to us.
And if he does?
We’ll see what he’s looking to do and figure out a way to make it happen.
I hate foreclosure. Foreclosure sucks, big-time.
Of course, there was the not-so-small problem of having missed the 4:30 cut-off to pay, but we’d long ago figured out a way to take care of that issue. There were risks o’ plenty doing so, but high-wire, high-risk deals are what we do best.
the door opens
Saturday morning, bright and early, we hook up, head out, and as luck would have it, find a truck parked in front of the house. Someone is home, but apparently, that someone is not Steve.
Instead, Mike comes to the door. He’s a big gruff guy with a crazy Mohawk haircut and a piercing here and there, and he lets us know that neither he or Steve is interested in talking.
“I can probably help you,” I say.
“Not interested, and too late to do anything about it,” Mike says.
And so it went, there on that porch, for at least twenty minutes when Mike suddenly recognized Walt from a rehab he’d done years earlier, and remembering getting paid as agreed, started to come around.
“Let me go get Steve,” he said.
A few minutes later Steve asks us to come inside and we spend the next hour discussing what’s possible. Steve is real-world savvy, though probably not a lot of schooling behind him. But he’s smart where it matters and wants to know every last detail of what’s possible.
“Here’s what I can do,” I say. “We’ll go to the auction on Monday and attempt to buy the property. And, if we’re successful, we’ll sell it back to you for half it’s value, $60k.”
“But I don’t have sixty thousand dollars,” he says.
“Yes, I understand and it’s not a problem. Just pay us a couple hundred dollars a month in rent and whenever you’re ready, we’ll sell it to you, even if we have to sell it to you on a contract.”
“What’s the catch?” he says.
“There’s no catch, but there is the not so small matter of the money we pay at the auction. In order for us to do this deal with you, we’ll need you to assign your interest in that money to us so we can get it all back,” I say.
And that’s what we do.
Even though it’s now too late to save Steve from losing his home, we agree to a plan that keeps him in place, keeps half his equity in his pocket, and doesn’t force him to up end his life come Monday morning.
Off the charts.
Our big concern is the money we’re committing to buy the property. We’ll likely have to overpay to get the property (there are investors with “different” investment criteria than ours who will pay retail) and he’s got liens, anyone of which could upset our plan to recover the money we lay out at the auction.
just another manic monday
So how did the sale go?
Exactly as planned.
We were able to buy the property for $100k, just a few dollars short of what we imagined the place to be worth (we’d figured $120k).
He’s one happy camper, as you might imagine.
We got all our $100k back, less the amount of the taxes and foreclosure costs, and are now 50/50 partners with Steve.
fast forward to today
And how did this deal play out over the three years we’ve now been involved with Steve?
I’ll let you be the judge.
Steve, remarkably, is still in his home, and that home has doubled in value.
We were even able to send some work Steve’s way, putting tens of thousands of dollars in his pocket with he and Mike running a clean up project on an illegal junkyard we’d somehow ended up owning (don’t ask).
All in all, not bad. But it hasn’t been entirely without problems.
In the three years we’ve been involved with Steve, he’s never paid us a nickel in that rent he was supposed to pay. In fact, he’s never paid us anything. Yes, nothing at all in over three years.
And the property is continually getting tagged for being a public nuisance. Steve is a bit of a pack rat, owns heavy equipment, and is forever being hit over the head with fines from the county for having a mess of a property.
What does that mean to us?
It means we hire dumpsters and crews and get the place cleaned up so Steve doesn’t get himself into any more trouble and so we don’t lose our property.
And when he runs out of money and can’t pay his electric bills (like he recently did), we send him the $600 he needs to keep the power on.
We’re committed. We’ve got a substantial investment in this property which means we have no choice but to make sure it stays out of trouble. The benefit of all of this to Steve is that we’re riding shotgun on this thing, and he’s in the safest possible spot he can be.
So how does this deal end and how do we get paid?
There’s an extra lot attached to the place, and it looks like we’ll get squared away here by giving Steve a 100% interest in the house and us taking the extra lot for our share.
We’ll sell the lot and see a $100k+ profit, and Steve will once again be the full owner of his home (scary thought ;-).
Why didn’t we evict him when he couldn’t pay?
We don’t evict if there’s any way to avoid it. It makes no sense to evict people in these situations. We’d much rather work with them rather than against them, and that’s why whenever we enter into a transaction, the problems don’t multiply, they simply disappear.
look at the problems
How do you judge a successful transaction?
One way is to look at the problems, what they were and what they are today, and see where things ended up. If there are foreclosures and evictions impacting the former owner (and putting him out on the street), then the transaction was likely a bad deal for him.
On the other hand, if there are no problems with all parties delighted with the outcome, then that’s the definition of a deal done well. Our goal was always deals done well and more often than not, we succeeded.
And Steve’s view of this deal?
Imagine, we show up three years ago when all hope is lost, when that home of his, a home that’s been in his family for years and years, is on a one-way path straight to foreclosure, and we save the day.
He’s not foreclosed on. He’s not evicted and out on the street with no money to relocate. He doesn’t lose the truckloads of “stuff” he’s accumulated over the years (and piled up everywhere).
He’s in his home, living rent free for the last three years, his life on the same path it had been on before the foreclosure madness took hold.
Even better, he’s sitting pretty, knowing he can count on us (we have no choice in the matter, but that’s okay) whenever trouble arises.
And what’s it cost him?
Out of pocket, not a single nickel. When the dust settles he’ll lose the extra lot, but that’s a small price to pay, all things considered.
And in all likelihood, that house of his is worth more today than the day we set first set foot on Steve’s doorstep.
This was an amazing foreclosure rescue, Rob, with spectacular results. There are few people on the planet who can pull it off (or have to stones to even attempt it), but it is exactly what we do, time and time again.
I am the Tiger Woods of foreclosure rescue.
No brag, just fact.
just another foreclosure rescue scam
Rob, your office is now telling Steve he’s been the victim of a scam.
Your AAG’s are telling my attorney that Steve didn’t know what he was doing when he agreed to our deal, and that as a result he’s been a defrauded.
Worse yet, your office has issued a press release calling me a scam artist and accusing me of perpetrating a foreclosure rescue scam for having done this very deal with Steve, and others just like it.
Rob, your office is nuts.