Hello, I'm looking at a distressed commercial property in Florida, where there are two notes on it. The first note is available thru the bank

Asked by Commercial Investor, Florida Mon Sep 20, 2010

and the second was taken out by a group of private individuals whom were also guarantors of the first. The second mortgage is also 4x's as large as the first. Since the first is in default, how does an investor tackle this? If foreclosure is pursued, then ultimately at the foreclosure sale any proceeds above the first go's to the second note holders.... correct?

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Margaret Ama…, Agent, Sarasota, FL
Mon Sep 20, 2010
Hello, Is there enough equity to pay off the first? If so, theoretically the first could foreclose and make the second go bye bye. On the other hand if the second lienholders are the same people who guaranteed the first perhaps they might want to buy out the first. Depending on leverage and value they might negotiate a good deal and become the first lienholder.

This all just depends on the economic possibilities of the property and how strong the lienholders are.
I would recommend to work with a Commercial Realtor, get to know the economics of the property and what mortgage the cashflow can buy before proceeding..
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