OfflineDean, Looking for some advise, I have an opportunity to purchse a home before foreclosure, owner is ready to walk away, I'm in the middle of refinancing my home & will have some cash. her loan is not assumable according to bank, they want $12,000. prepayment penalty. I can purchase home for $462, she owes $450, w/prepayment, value now is $540, last yr value was $680, Im a contractor & recently did over $60, in improvements on this house, (term. work & windows ) She has run into financial problems. I also consider her as a freind & would like to help her as much as possible. I know i cant get a loan on my own, they would want 30% down, i may have someone who would be willing to use there credit ? & someone else who may loan some $ for investment. Do you have any advise for me,
I believe she would give me a quick claim deed if any benifit, Ive been trying to do real estate for many yrs but never did anything do to fear ? now that I've read your book, i'm going for it you've giving me the confidence i needed.
Owner also wants to rent it @ $2,000 mo.
Please advise thank you jeo
Use the calculators in the student resources to see where you would stand with it all, month to month so you know what is coming out of your pocket each month. Talk to other lenders about the situation, you might be getting the run around with her note holder. With a renter and the equity, it might not take that much money.
From the few details you mentioned it sounds like you can finder more promising investment though. It sounds a little risky for you, especially your first move. Maybe try doing a reassign on it? If the deal is really as good it sounds to you one would expect you could reassign it, help your friend, and put some money in your bank towards your next move. If not, then you are facing a sketchy situation, where you have a big mortgage to pay for and just imagine if the owner couldn't pay rent where you would be. Could handle carrying the whole thing for a while without a renter?
Something tells me to start smaller and find a "steal". It doesn't sound like you can afford to be wrong on a place like this. I think Dean wants people looking for as close to a sure thing as people can find, and not taking chances on things that can make you go totally bust in one decision.
The fact that you added you would be helping a friend out significant part of the equation means there is a decent chance this might not be a good deal for you either way because your investment judgment is being clouded by emotion/sympathy. Even being conscious of it, your decision will not be "pure" so to speak. In poker they refer to that as playing on "tilt".
You can help someone out a lot of different ways... a loan, advice, support. But the kind of help you are considering could be the equivalent to jumping in front of a moving bus, and that happened it might cause a impaction in your friendship and with those who lent you money, let alone what it would do to your ability to continue your path in real estate. Just keep that in mind. You can always help your friend and yourself by doing a reassign.
I don't want to talk you out of a good deal if you have one, but from the sound of it, it sounds like you're trying to be good friend more than you are a good investor, and those things usually don't mix together when it comes to making tough decisions.