Follow-up On Latest Leads

I received an email from the birddog about the most recent deals. He sent me a copy of an email he received from the owner in which the owner pretty much spills his guts about the whole situation. It turns out he is a doctor who was told that investing in central Texas was a good option a couple of years back (which it was and still is). Unfortunately, he didn't do his due diligence and never dreamt the property taxes were so high here. Therefore, he's been running cashflow negative since day one, and time has slowly taken it's toll on his finances. I can just imagine being cashflow negative to the average tune of $300 on 12 properties for almost 3 years now. I'd be wiped out, too. The birddog gave me his info (I already had his name and address, but the birddog gave me his email address and phone number). I didn't get the email until I got into work, so I can't call him yet. As an alternative, I sent him an email with my info and for him to call/email me ASAP so that I can try to help. Part of me is a little uneasy about the situation, but being a little cautious is a good thing. I'll hopefully get to see how bad a shape this guy is in soon, and whether I can swing any deals.

BTW, three of the four properties in my farm area already have tenants. One is empty (I'm guessing from the info I got). Unfortunately, even from the owner's email, it sounds like he's still cashflowing pretty bad. I just need to find out how much the rents are, how long the contracts are for, how behind the owner is, and so on in order to get a clearer picture of the situation.

My exit strategy would be to let the leases run their course and then sell the properties via owner financing. I would like to keep at least one for long-term growth, even if it cashflows negative at the onset. I can always refi later with better terms.

Edit: Here is the email I sent to the owner ...

Mr. [owner's name],

I was referred to you by a gentleman in Austin, TX, who said you are in need of getting rid of some properties. I am a real estate investor who buys properties in this area. I read your story, and I am heartbroken that your life has taken a turn for the worse - financially as well as physically and emotionally. With God's help, you will pull through this.

The information he gave me was enough to build a good financial picture of your properties, but in order to get a complete picture, I would need more information. Looking over the financials I have, it appears the properties are cashflowing negative by $200-$400, depending. I don't have the rent amounts, but rental comps in the area support my figures.

The existing loans on the properties make buying conventionally out of the question. I would not only be cashflowing negative, but also be upside-down on the properties - IOW, owing more than they are worth. As an investor, you can understand that this does not make sound business sense for me. However, depending on concrete financial data, I can still take ownership of your properties subject-to the existing loans. What this means is that the loans will stay in your name, but I will make the payments each month. This benefits you in two major ways. First, barring any underlying title issues, we can close on the properties in a matter of days. Yes, THAT quickly. With a conventional loan, we'd have to wait 30-45 days for the lender to get all the paperwork submitted. Second, since I will be making the payments on time every month, and since the loans will stay in your name, your credit goes from being bruised to being repaired. I cannot guarantee when I will sell the properties once I take ownership, but since I make my profit selling, I can assure you I will be diligent about trying to sell them quickly.

If this sounds like an avenue you would like to pursue further, please reply to my email with as much information on the four properties in [location] as possible, including, but not limited to, lease amounts, when the lease contracts end, any stipulations in the lease I should be aware of, if you are behind in any of the loans, and, if so, by how much, and if the lenders have already started the foreclosure process. Again, I am a real estate investor, but I first like to think of myself as someone who can help people like yourself overcome their real estate problems.

You can visit my web site at [web site] for more information about our services. You can also contact me via this email address. Or, you can call me direct at [phone#] anytime. Do not procrastinate - contact me TODAY.