OfflineGood afternoon family.
My heating and air service tech owns a home that he's had prior to the recession, now lives in another home, and is renting the older one out.
He owes (hypothetical numbers rounded for ease) $100K on the home but the market value is now $70K.
He's renting it out for $800 but his monthly mortgage is $1K+. The two year rental lease doesn't end until this coming December.
He just wants to sell it for what he owes so that he can walk away from it. It's in great condition.
I've just started gathering my buyers and real estate agents/team.
What can I do to turn this into a deal? Is it possible?
Help!
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I would walk away from that deal, you have 30k neg-equity, the property is upside down, There's no deal there at all, don't walk run, there's plenty of deals out there which have equity, if you do deals like this one, you wont be in business very long.....John H. PS this is at best a short sale, I suggest you work on whole sale properties for now, If your networking with other investor's in the area, I would pass this on to somebody who does short sales for a fee maybe.
"Action and Mistakes" always-outweigh "Analysis Paralysis"
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who doesn't have good credit, but does have a down payment. He can lease to own for a few years, pay the mortgage down, and then get a loan to buy it for the outstanding balance.
You may even ask the renter if he's interested...
Wishing you success,
Valerie
“And will you succeed? Yes indeed, yes indeed! Ninety-eight and three-quarters percent guaranteed!” ― Dr. Seuss
"I believe in angels, the kind that heaven sends; I am surrounded by angels, but I call them friends" - Unknown
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Key words from the owner: He just wants to SELL it for what he owes and walk away. That is not going to happen. he is in a short sale situation. Also, he is currently renting at a $200 a month loss.
If the seller will take payments the person that will lose out is your tenant/buyer. How can he get a loan to buy the house when there is a existing mortgage of $100,000 on a $70,000 property? Even if he puts down the $10,000 (good for you)
He will still owe $90,000 on a $70,000 house (bad for him) He will only get a loan for what the house appraises for!! Where is your tenant buyer going to come up with the extra $20,000? Maybe a 15 year lease so the mortgage can get paid down??
How will you make a positive cash flow? The seller is losing $200 a month. I would not do something like this unless I could see a minimum $250 a month cash flow. Will the place rent for $1250 with out putting a dime into it?
This is a deal where only the investor will make money. A lose/win/lose situation. The tenant buyer will not be able to buy the place in reality/YOU will make some money/The seller will end up in the same situation in a couple of years.
He needs to short sale now if he can qualify. Or rent the place for an extra $200 a month and break even while paying down his mortgage. OR WALK AWAY.
Give him advice and move on to a real deal where it is a win/win situation for ALL involved.
Michael Mangham
Mentoring/Team Building Nationwide
MD Home Acquisitions LLC
Knowledge is power, but execution trumps knowledge. Tony Robbins
http://www.mdhomeacquisitions.com Seller site
http://www.mdhomeacquisitionsbargainhouses.com Buyer site
http://www.mdhomeacquisitionshousehunter.com Bird Dog Site
http://www.mdlodeals.com Tenant/Buyer site
I found a home that I am about to call the FSBO. He wants more 100.000 more than it is worth? Should I bother. I think I will call and find out the situation, and if I can't do anything see if he wants to list it with my agent. That was good advice that I learned from you Michael Mangham in another post. Tammy
www.tw4homes.com website
https://tvallc.isrefer.com/go/RehabLite/reigirl/ FREE SOFTWARE FOR WHOLESALERS, REHABBERS AND AGENTS! Present professional looking deals to buyers and lenders as well as run your numbers and get the ROI.
You are welcome. Every now and then I come up with a helpful little tidbit! That tip is only 1 of 9 that I use to keep my realtors happy and working WITH me. Not counting actually closing deals with them.
Michael Mangham
Mentoring/Partnering Nationwide
MD Home Acquisitions LLC
Knowledge is power, but execution trumps knowledge. Tony Robbins
http://www.mdhomeacquisitions.com Seller site
http://www.mdhomeacquisitionsbargainhouses.com Buyer site
http://www.mdhomeacquisitionshousehunter.com Bird Dog Site
http://www.mdlodeals.com Tenant/Buyer site
This is exactly what I was thinking. I told him that I can't make any obligations because he's so far upside down. I'm not savvy in the ins and outs of Lease Options but I know that's one of the options that he may be able to do if the renter is willing to purchase it at a premium.
Thanks!