Wednesday, June 22, 2011

Foreclosure purchase update

I purchased a property at a tax foreclosure auction in December of 2011. 

I wrote about the initial purchase here, and then followed it up about a month later with an update where I talked about the financial situation here

I talked a bit about dealing with the former owners here, finally deciding to evict them, and then I wrote what I thought was a final update here, where I tallied up the costs. 

Today I got a pretty interesting call.  I could not figure out why the bank didn't pay the back taxes (about $10k) to redeem the property from the auction.  I couldn't figure it out. 

Turns out that the bank had turned over servicing of the mortgage of the property to a company, and it was this contracted company that probably dropped the ball, in my opinion. 

So the call went something like this: 

"Hi.  you purchased a property at a tax auction in December of 2010, and I'm calling to inquire about the redemption figure for that property".
 Ok.  who are you?
 "Well, I work for the servicing company, and we're interested in getting that property back and returning it to our contracted party.  "
  Oh.  You mean that the bank that used to hold the mortgage on this property is pretty darned pissed that they lost the property, and you're interested in paying me to get it back for them?

Comparable units in this area are selling for $165k. My acquisition cost was around $103k.  I've rented it for 6 months now for $1k a month.    


Enjay said...

Are you going to sell it back to them?

Nancy Olympia WA said...

That would make it a really quick and profitable investment.t

Frank said...

Dec. 2010, I'd guess ;)

Seems to have a pretty decent ROI now ... selling back would need to be for quite a bit above the 165k figure you mention. I doubt whether the service company want to loose that much one it....

Bruce King said...

I've owned it for about 6 months now; sure, I'll sell it back to the bank for the right price.

What's the right price? There's value in a quick sale; direct to the bank means no real estate commissions...

If I sell it back to the bank for $145k or so, considering the rent paid as well, I'll have made an annualized return of 51%. Not too shabby.

Urbancowgrrl said...

I am completely confused as to why the bank wants to buy the property back? I thought they wanted to get rid of them in order to not be losing more money on them? (or at least that seems logical).

That might explain why 18 months ago we wanted to buy a short sale but the owner was dicking around and we pulled out. Now the house is for sale for a much higher price than it was when we made our offer and the bank is nowhere near foreclosing - even though this guy isn't paying any mortgage but is renting it out and making money of tenants.

I don't understand banks.