This one (as of this moment the video is still up, watch it while you can if you haven’t, as new owners often take it down): https://www.redfin.com/CO/Colorado-Springs/4525-Churchill-Ct-80906/home/34515765 – when that was originally posted, we watched it go viral live in the thread, someone “3 hours ago” posted “omg it has 100k views just on redfin already!” – and I was looking at 200k views “3 hours” later.
This is the one where the original tenant’s distant relation (of some sort) took over the rental house, didn’t pay rent, got evicted, and destroyed the house when they were let back in to “collect their belongings,” with year old meat in the unplugged freezer to boot (that’s my memory from 1.5 months ago, I didn’t re-watch video).
Thought you guys might like some context on what backs these types of business purpose (read: few/no consumer protections) acquisitions.
Here’s a title report that shows some details about the buyer and the transaction. FYI your LO/Realtor can pull these, if you’re ever curious about the transaction history of a property, digital records are accurate going back about 10 years, and get spotty before that. “F you Suzy!” was written all over the house, so I didn’t black out the old owner’s first name, I left it since there was speculation in the old thread about if “Suzy” was the landlord, an ex girlfriend, or what.
– After being listed for $592,500, “Enterprises LLC” got it for $580k.
– At closing, they took out a hard money loan from “Funding Inc” for $531k, which is about 91.5% LTV on the sticker price.
– 5 days later, they took out a private second mortgage from “John Doe” for $110k (“John Doe’s” natural human given name appears on public records, not a business entity), putting the total CLTV (combined loan to value) at about 110.5% on the sticker price.
– Often times for these types of high risk hard money loans, they base the LTV/CLTV on the after repair value (“ARV” if you’re a cool kid) (so they can internally justify the loan to themselves as being less risky than it actually is, at least as far as I’m concerned that’s all they are doing), but that’s an internal number we can only speculate on.
– The reason these folks can do this high risk financing and close quick, but Fred First Time Buyer can’t, is because: a) Fred is going to owner occupy, so all the consumer protections to protect Fred from “predatory lending” (aka risky borrowing) kick in, and b) Fred has no track record of success at this (sorry, HGTV and “I worked for a contractor for 7 years” does not count). “Enterprises LLC” also has deep pockets, they aren’t doing ~10% down because they HAVE to.
submitted by /u/aardy