Buying a Junior Second


#1

I purchased a junior loan(2nd) at trustee sale for $80k, the first is $100k and the value of the house is $215k. I called the senior lien holder and asked if i could purchase the note but its Wells Fargo and no one can help me of course. Can i evict the tenant (original owner) and fix it up for sale? once in escrow pay off first and still make profit? Or better yet how can I get Wells to sell me the note now, for a cash discount since it is behind. I’m not sure of my rights with a second position thanks in advance


#2

Jeff - you do now own the property and you should proceed with eviction, fix-up and sale. Seems like your going to be a little tight on the deal after expenses, especially if the 1st is behind and the current balance is greater than $100k. Key thing is to deal with it quickly and put it behind you.

Chances of getting Well’s to give you a discount are very low. Not impossible, but unlikely. Better to focus on getting it flipped. If you are in CA, then you own the property as of 8am the date of sale as long as you record the trustee’s deed within 15 days.

With a little luck you’ll find a cooperative occupant and you’ll be able to get them to move quickly in exchange for a reasonable offer of cash for keys.


#3

thank you for the fast response, actually the tenant is being cooperative and may have a hard money loan to buy me out. I will file paperwork and start eviction to be on the safe side I can always stop that process. Yes this is a little tight by far! I’m used to the 25-30% margins not 5% with as many as I’m currently doing it had to happen at least once. By the way my title company said it was the first…sucks!
by the way have you heard about equity lines of credit being reused after sale and payment was made? A abstractor told me to make sure to close the line or it could be reused…