Anyone buying notes and doing Cash for Keys??

[kelle711]

I got an email from another investor who has a number of non-performing notes they would like to sell. I am interested in trying to buy the notes and work out a cash for keys agreement with the homeowners to get the title to the house. My exit strategy would be to either fix and flip the house, or wholesale it to another investor.

My thought is to call up the holder of the notes and explain what I want to do. My thoughts for the actual process would be to sign a flex option contract with the note-holder to purchase the note(s) to lock in a price, then contact the homeowners and negotiate either a sales contract (preferred) or cash for keys agreement with an escrowed quit claim deed. If I get a sales contract, then I can just purchase the house like one would a short sale, except I have already negotiated with the "bank" on what price they would accept. If I get the cash for keys agreement, I go ahead and purchase the note, then execute the cash for keys.

I am looking for feedback on this approach. Does anyone see any pitfalls I am missing? I am especially concerned about any legal ramifications, like would something like this be seen as taking advantage of the homeowner, if the homeowner were to sue afterwards. Or are there any laws or regulations that I should consider.

Any feedback would be greatly appreciated.

[Real Estate Seller]

Make sure that the investor have the right to sell the non-performing notes.

[satarnag]

I got an email from another investor who has a number of non-performing notes they would like to sell. I am interested in trying to buy the notes and work out a cash for keys agreement with the homeowners to get the title to the house. My exit strategy would be to either fix and flip the house, or wholesale it to another investor.

My thought is to call up the holder of the notes and explain what I want to do. My thoughts for the actual process would be to sign a flex option contract with the note-holder to purchase the note(s) to lock in a price, then contact the homeowners and negotiate either a sales contract (preferred) or cash for keys agreement with an escrowed quit claim deed. If I get a sales contract, then I can just purchase the house like one would a short sale, except I have already negotiated with the "bank" on what price they would accept. If I get the cash for keys agreement, I go ahead and purchase the note, then execute the cash for keys.

I am looking for feedback on this approach. Does anyone see any pitfalls I am missing? I am especially concerned about any legal ramifications, like would something like this be seen as taking advantage of the homeowner, if the homeowner were to sue afterwards. Or are there any laws or regulations that I should consider.

Any feedback would be greatly appreciated.

Well, if you own the note, you can just foreclose if you don't reach a deed in lieu agreement with the homeowner. I don't understand why you will need a purchase contract with the homeowner.

Besides having the ability to sell these notes, you need to know what position these liens are and the values of the properties in questions along with any other liens, such as first position mortgages.

[Bill H]

Non-Performing Notes...

1. Are they secured by a deed of trust that had a Power of Sale Privision?

2. What position are they in.  It will do you NO good to foreclose from a junior lien holder position. You would only get title subject to the existing liens and encumberances and have the due on sale clause staring at you.

3. Why doesn't the present lien holder foreclose?

4. Something just does not seem right to me in this deal.

[Leonard Vice]

Yeah I think so too. Have you checked possible background deals on it?