OfflineI've been reading 30 days to Real Estate Cash. I made and email address to start receiving my listings. I started calling agents. Haven't got a good one yet, put i'm still hustling and getting better! I'm always looking out for vacant properties now and have been trying to stay engaged! Anyways...A friend calls me out of the blue and ends up telling me he is facing foreclosure in a few months and doesn't know what to do. This seems like a potential deal that just fell in my lap!
He is looking to save it some how if he can. My original thought is try a short sale to a private investor that could rent the property back to him for X amount of time till he is able to attempt a repurchase.
Anyone out there that can give a new investor some advice? I want to help a friend and this seems like a good opportunity as well!
Specs:
Single Family - Colonial
lot - 0.13 acres
Living area - 1792 sqft
3BR/1BA
Thanks,
Leo
Inspired to Inspire Inspiration.
Mtg owed: 195K (per owner)
Est. Value: 230K - 245K (online estimation)
roughly 20% equity
Inspired to Inspire Inspiration.
Hi Leo you might have something going with what you are trying to do and help him at the same time to possibly buy back, thats sounds pretty darn good, keep up the good work and always do good unto others, much success, Jim
jbischoff
receive any money through the short sale proceedings or make any profit. so if that is true you could not rent it back to him. I'm not positive but i've heard it explained on here enough I believe I'm right.
WALT
Of course your friend wants to keep his house but sometimes a homeowner just has to face reality. Are you sure this is a short sale situation. Does your friend owe more that the house is worth?
Here is another thing to ponder. If your friend is being foreclosed on, why would someone buy it, then rent it out to your friend and wait for him to be able to buy the house back. How can he afford payments that he is not making now? Who will loan to him with a recent foreclosure or short sale on his credit report?
He needs to face the fact that unless he cures the foreclosure he is going to lose his house and he will need to move, regroup and buy a new house in a few years.
Walt is right about the seller making a profit on a short sale. However, I have seen sellers receive $2,000 to $5000 from the lender at closing for moving money or a little cash back.
Michael
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
the bank will not allow him to repurchase a property that has been sold short. If it's worth 230 and he owes 195, the bank won't take less than 195. One option would be to do a wrap and get enough of a down payment to cure the default and seller finance to create some cash flow for him every month.
I see what you are saying about the short sale...(duh Leo! lol)
I'm going to meet with him this weekend and take a look at the property's condition.
His mortgage is about $1,900 everything included. I'm looking to see if I can comp this place out at about 240-250K (after repairs, assuming repairs are not going to be significant)
If I can get the house under contract for 195K with the seller/owner
I can look for a private lender (cash buyer) to purchase the house even at 200K, that leaves roughly 40K equity (not including repairs) and 5k for me.
Our new owner will now rent to previous owner at a rate lower than his mortgage as a tenant at will with a contingency for optional buy back after a period of time. I was thinking between 1500 - 1600 as monthly rent (about 18-19K annual)
As a tenant at will, New investor is not bound to a lease agreement, so first signs of default on my friends part can result to an immediate sale since the house has that equity.
Still working it out but that's my rough plan...any thoughts guys???
Is it possible to offer less then the debt to the bank if its going to be a quick, cash only sale???? I'm trying to squeeze what I can!!! lol
Inspired to Inspire Inspiration.
Hi Leo,
It's a decent plan but with some questions / comments:
- No the bank will not accept less than $195k even if it's a quick cash sale, especially if they know the place is worth more. Otherwise it becomes a short sale and the above comments are all correct - your friend cannot benefit in any way if you go that route.
- If it is worth $240k, why doesn't your friend just sell it through a realtor for 6% commission? That's $14k for commission versus losing $45k in this scenario.
- I think the biggest challenge will be to find an investor willing to put up $200k for $1600 per month. Remember the investor will still have the other normal expenses of home ownership: taxes, insurance, maintenance, capital expenses (heating system, roof).
- Michael’s concern of “if he can’t make the payments now, how will he in the future?” is a challenge as well.
Did you go to the property this past weekend? Wishing you good luck and keep us in the loop!
Tom
How many payments behind? What is the total of back payments and penalties? How much will it take to cure the default and reinstate the loan?
Leo - Did you see the property the other week? Anything further?
Good luck and let us know!
- Tom
Hi guys,
This deal doesn't look like its going anywhere. The owner is adamant that he can save his house. He isn't willing to entertain a sale.
I don't want to let it go but I now realizing you have to know when to move on and focus on new opportunities.
Not discouraged....still looking for deals
Inspired to Inspire Inspiration.
Hi Leo - be sure to follow up with the owner in a few months - people change their mind all the time. Agreed - on to other deals for now - good luck!
Tom