OfflineI am a neophyte to real estate investing but it has been an interest for quite some time. After learning of the idea of contract assignment, I am ready to get started. I intend to start by buying the right to purchase a property, and then assigning this right to investors for profit.
After looking further into this, I have encountered what may be a roadblock to doing this in California. I came across a post that mentioned the state legislature has limited the amount an investor can profit from a pre-foreclosure to ~18%. If this is true I imagine it would be enough to discourage many investors from purchasing pre-foreclosures in California. I have scoured the legal code, specifically the code as it relates to equity purchasers, but I haven't found any mention of this 82% fair value purchase requirement or any other mention of specific limits that investors can make off of pre-foreclosures.
I am hoping someone will provide some more insight into reassignments/investing in pre-foreclosures here in California. I am a fresh MBA graduate and also pursuing the CFA designation. I have had enough of the corporate life and am willing to do whatever it takes to make this work! If anybody is interested in being a mentor or just wants to offer some advice I would sincerely appreciate it!
buying pre foreclosures in California
Posted on: Mon, 08/04/2008 - 20:11
buying pre foreclosures in California
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- by saritasungcheu
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There is a lot of speculation about the percentage a bank will accept on a foreclosure / short sale. The most common reference is 82% of the BPO (broker price opinion - basically the bank hires a Realtor to give their professional opinion about the value of the property). This percentage has been tied to many other aspects of real estate but has nothing to do with the amount an investor can make. I am assuming this is where your law statement comes from.
For example:
True market value $250,000
BPO: $200,000
Purchase at 82% of BPO: $164,000
Possible profit: $86,000
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