Advice Please... - Posted by Laura

Posted by RJ_Indy on October 12, 2001 at 10:37:18:

OK. I needed to read a little further. RJ

Advice Please… - Posted by Laura

Posted by Laura on October 10, 2001 at 16:32:48:

Hi, My partner and I have been interested in the Carlton Sheets style of RE… For a while now we’ve wanted to get into this business as it seems lucrative and quite interesting. Right now life is hectic because my partner is losing his house to foreclosure soon. We started thinking that maybe we could find another home (a fixer upper) to live in using the methods described on this board. We have bad credit and would prefer “no money down”. Can anyone offer legitimate help? We live in the Orlando, FL area. Email Thanks in advance.


Re: Advice Please… - Posted by Jim FL

Posted by Jim FL on October 12, 2001 at 04:22:40:

I just now read your post.
You said you are in the Orlando FL area?
So am I, sort of.
Drop me an e-mail and we can talk.
I MAY be able to help with the house you are in, and also may be able to put you in another home, IF you have some money to use as a downpayment.
We are not allowed to advertise here, so hopefully this will get to you before it is deleted.
But, a helping hand is not far away…write me and we’ll see what if anything can be done.
You can reach me at

Take care,
Jim FL

Re: Advice Please… - Posted by JohnBoy

Posted by JohnBoy on October 10, 2001 at 22:42:46:

Since this business involves solving other peoples problem, then your friends problem with facing foreclosure would be a great place to start! People facing foreclosure is a big source for finding properties to buy with little to no money down and having no credit. You already have the property, now all you need to do is solve the problem. Look at your friends property as someone elses property facing the same problem. Only in this case you don’t have to figure out how to buy this one since your friend already owns it. All you need to do is solve the problem by preventing the property from being foreclosed on and actually make some money on this one instead of losing it and ruining their credit!

Give us some details on this property.

What’s it worth?

Does it need any work? If so, what would it cost to get it up to market standards?

If it needs work, what would it be worth after all the work is done?

How much is owed?

How old is the loan?

What is the interest rate on the loan?

How much are the payments?

How much are the taxes?

How many payments are behind?

How much would it cost to reinstate the loan and bring everything current including any late fees and attorney fees owed?

How far along is the foreclosure process? Has a date been set for sheriff’s sale yet?

Re: Advice Please… - Posted by Anne-ND

Posted by Anne-ND on October 10, 2001 at 20:38:15:


Check the archives for hundreds of great posts (search on JohnBoy to start) on buying with no money down and no credit. I have just one comment to add: avoid the fixer-uppers. They cost a great deal of money even if you know what you’re doing. If you think a fixer-upper will allow you to get into a house cheap, let me assure you, 9 times out of 10, it won’t. The expenses will eat you alive.

good luck, and keep posting your questions here.


Re: Advice Please… - Posted by Laura

Posted by Laura on October 11, 2001 at 10:48:36:

Thanks for responding! Ok… Bare with me here, I’m telling part of the history so you can get a better perspective. :slight_smile:

Supposedly the house is worth $200,000, but it needs the pool fixed, good amount of landscaping, new carpet, painting in and out, and possibly windows fixed. We were told by one Realtor it would cost about $6,000 - $10,000 to fix up, maybe more if we had someone else do the work. We had no way of getting the $$$$ to do this, so he decided to try to sell and listed it with a Realtor. Well, the house was on the market for months and the guy only showed it ONCE. This was coincedentally when it went into foreclosure, which the Realtor made a point to point out to US! As if he were trying to put him in a hole. Well, this buyer miraculously wanted to pay cash for the due amount and was all hot and heavy to get in, including giving us barely any time to vacate the property. This whole deal seemed fishy. My partner didn’t want to deal with this guy and took the house off the market.

Anyway, my partner decided he was going to try and save his house and filed Chap 13 to get it out of foreclosure. With court costs, etc., the mortgage was now up to $165,000 (originally it was around $150K). Chapter 13 made the monthly payments $1,850 per month. Which at the time wasn’t too out of bounds with both of our incomes, which were better at the time. Things happened, I lost the job and he can’t afford the payments on his salary alone.

He’s behind 3 payments to the Chap 13 Trustee. His deadline to pay the arrears to the Trustee was Oct 3rd, and now the Chap 13 has been dismissed. He was thinking of doing a deed in lieu of foreclosure and moving on. There’s no way either one of us can come up with $5,500 and continue paying $1,850 per month, which is what the bank insists on to keep the house. Or is there a way to get cash? Conventional ways won’t work I know. Maybe it’s time to move on? That’s what we were thinking and which is why we were hoping to do a CRE move on a new home. Any advice is appreciated. I’m definitely going to read all of your posts because you know what you are talking about!!!


Re: Advice Please… - Posted by Laura

Posted by Laura on October 11, 2001 at 10:53:27:

Hi, Thanks for the tip… I had no idea a fixer upper home was a bad investment in most cases. I’m definitely going to read the posts and learn what I can.


Re: Advice Please… - Posted by JohnBoy

Posted by JohnBoy on October 11, 2001 at 11:02:47:

I assume the $1850 includes taxes and insurance?

What are the taxes and insurance? I need to know how much of the $1850 is going towards the loan payment (principal & interest) and how much of that is going towards the taxes & insurance?

You say the BK court set the payments at $1850. Is that more than what the original payments were and include back payments that were owed?

Re: Advice Please… - Posted by Laura

Posted by Laura on October 11, 2001 at 12:36:32:

Hi again,
Ooops, my mistake leaving that out. I now have the documents in front of me… The amount toward the principal and interest was $1,317.27. The monthly amount going into escrow, I’m assuming for taxes and insurance, was $138.06 per mo.

The $1,850 set by the court was as follows:
$150 to Bankruptcy Atty (payments 1-5)
$1,445 to mortgage co. (payments 1-60)
$262.73 to mortgage co. for secured arrearages (payments 6-60)
$24.09 to morgage co. for Admin. (payments 1-60)

Also, now that I’m looking at the mortgage paperwork, I see the mortgage starts out at 10.250% for payments 1-24, @ $1,317.27 per mo. Then payments 25-30 are at 11.75% @ $1,479.37 and payments 31-360 are at 12.625% @ $1,575.58.

I appreciate your time. Thanks again!

Re: Advice Please… - Posted by JohnBoy

Posted by JohnBoy on October 11, 2001 at 14:34:51:

Ok, the $150 for the attorney is nothing. You can pay that off from any proceeds you get from your buyer.

Once you find a buyer then call the lender and tell them that if they would take the arrearages and roll that onto the back end of the loan that you can bring the payments current and maintain the payments of $1445.33 until you sell the house within the next year or two. They might go for that or might not. With that interest rate and the way the economy is right now they might jump on it! If not, no problem, it will just create a nice cash flow for you if they do it. Otherwise your cashflow won’t be there, but you can still make some money off this and avoid the foreclosure.

Run an add in the paper advertising, NO BANK QUALIFYING! OWNER WILL FINANCE!

You say the house is worth $200k and the balance owed is $165k.

Find a buyer that has money to put down but can’t qualify for a mortgage right now for whatever reason.

You can offer this to them two ways.

$200k with $20k down and you will take care of all the repairs needed OR $10k down “as is” and you will knock $10k off the purchase price making it $190k if they want to take care of the repairs themselves. That allows them to get in with only $10k instead of $20k and they can do the repairs as they go along and can afford them. That saves them from having to put down an extra $10k.

They give you $10k down and you take $5500 of that to bring the loan current. That leaves you with $4500 left in your pocket.

You sell on contract for deed financing the balance of $180k (assuming they took the deal “as is” putting down only $10k) at 11% interest, amortized over 30 years, making the contract for deed due and payable in full within 2 years. That means after 2 years the buyer will have to refinance and pay off the contract, which would pay off your lender and leave some cash left over for you at closing.

$180k at 11% interest would make the PI payments $1,714.15 plus the $138.06 for taxes & insurance, for a total PITI payment of $1,852.21

Now if you were able to get your lender to roll the arrearages onto the back end of the loan your PITI payment will be $1,445.33.

$1,852.21 - $1,445.33 = $406.88 cash flow per month over the next 2 years.

At the end of 2 years your buyer’s pay off amount to you would be $178,285.83.

$178,285.83 - approx. $165k = $13,285.83 at closing left over for you.

So you would make $4,500 cash up front after bringing the loan current.

$406.88 x 24 months = $9,765.12

$13,285.83 at closing when your buyer refinances in 2 years.

$4,500.00 + $9,765.12 + $13,285.83 = $27,550.95 total profit over 2 years!

No foreclosure. No credit showing a foreclosure. You avoid the foreclosure and make money off this instead of losing money!

Now if your lender won’t roll the arrearages onto the back end then your payments will be the $1,445.33 + $262.73 + $24.09 = $1,732.15.

So your monthly cash flow will only be $1,852.21 - $1,732.15 = $120.06 instead of the $406.88

That would reduce your cash flow profit to $2,881.44 instead of $9,765.12 over 24 months.

Then your total profit would be $4,500.00 + $2,881.44 + 13,285.83 = $20,667.27.

Either way you make a decent profit off this instead of losing the home to foreclosure and getting nothing but a bad credit rating!

All you need to do now is to get busy with marketing the home to find a buyer with at least $10k to put down and can’t get a loan, but is desperate to buy a house. There are a lot of people out there like this!

Run an add in the homes 4 sale section and the homes for rent section of the newspaper. Make up some 4 Sale signs to place in front of the house and around the area with arrows pointing towards the direction of the house. Put Seller Financing on the signs.

Re: Advice Please… - Posted by Tim Fierro (WA)

Posted by Tim Fierro (WA) on October 12, 2001 at 03:49:30:

Posted by JohnBoy on October 11, 2001 at 14:34:51
>> All you need to do now is to get busy with
>> marketing the home to find a buyer with at least
>> $10k to put down and can’t get a loan, but is
>> desperate to buy a house. There are a lot of people
>> out there like this!


I mostly work with listings and I am a real estate agent. Most of the buyers that I have worked with were going for little to no down such as 3% down or even grant type systems. Those that had 5% to 10% usually meant that they had no more than about $15k to work with; and those were from folks who needed to sell their current home first before buying a new one.

My point being is that as an agent, I don’t see those folks who have $10k in their pocket, can’t get a loan, and are willing to pay 11% interest. You say there are a lot people like this, are these coming from the ads you place to find them? It could be that these type of people would not come to an agent since they think they can’t get a loan, which is why an investor can take them away and put them into a home.

I suppose it amazes me that someone with $10k in their pocket, couldn’t get a loan from some mortgage company. They obviously must have some ability to save in order to get that $10k to begin with. Unless they recently inherited it or won a small jackpot.

Re: Advice Please… - Posted by Dale

Posted by Dale on October 11, 2001 at 19:31:03:

I was just reading through some of the posts today and followed this story. That was awesome advice that you gave Laurie! I hope you are online when I have some tough situations. Thanks.

Re: Advice Please… - Posted by Ronn

Posted by Ronn on October 12, 2001 at 22:27:11:

I sold a house a year ago to a guy that could not prove a source of income. He had 40k in cash to put toward a 120k home.

He eventually got a “drug dealer” loan after his wife took a job.

Re: Advice Please… - Posted by JohnBoy

Posted by JohnBoy on October 12, 2001 at 07:44:23:

Yes, they come from the ads. These people see the No Bank Qualifying and Seller Financing which is what seems to draw their attention. There are a lot of people that have money but they can’t get a loan or they just “think” they can’t get a loan. A lot of people will apply at some bank that doesn’t offer a lot of different programs where some of these people are denied a loan. They leave thinking that since that bank denied them that they won’t qualify anywhere else. A lot of people don’t think of finding a mortgage broker that may get them financing where the broker has all kinds of lenders that could finance these people.

Also remember, we’re talking about a $200k house here and $10k down is only 5%. People buying a $200k home have good jobs with good incomes and coming up with $10k isn’t a problem. Some of them may be new to the area starting a new job where they think they can’t get a loan right now. Some are self employeed and can’t prove their income to satisfy the lender or may have been self employeed for a short time where a lot of lenders want at least 2 years. Some have credit problems where they may need to pay off something before they can get a loan from a bank which kills their deal. Some may have recent BK’s that were just discharged where most lenders want 2 years since the discharge date. There are a lot of reasons where someone may not or they “think” they can’t get a loan. These are the people we sell to on contract or L/O’s.

Don’t get me wrong. We get tons of calls from people that don’t have any money, but we just filter through them and look for the ones that have some money to put down. Sometimes someone may have some money but not all the money we require down, but they can afford a higher payment where we might take what they have and just finance the balance of the down payment on a separate note over a short period of time in addition to their regular payment.

Also, it’s not much of an issue getting 10% or 11& interest when seller financing. That’s pretty much the standard rate contract for deeds are set at. The buyer’s main concern isn’t the interest you charge. It’s how much down and how much per month? If they have the down payment and can afford the payments they want the house. These are motivated buyers that think we’re the only game in town that will help them to be able to buy a house. They WANT to be able to own a home and when they think they can’t get financing through a bank they’re only to glad to deal with us as long as they can afford the payments.

Also, we’re only talking about a short term deal here where they will get new financing in a year or two and they may get a lower rate at that time which would lower their payments. So for now it’s a solution to their problem that allows them to get into a home that they are buying instead of throwing their money away on rent! They also get the tax deduction on the interest charged which would off set a lot of their taxable income (when dealing with homes in the higher price range where the standard deduction is lower than the interest deduction).

Naturally if you have decent credit and decent income where your debt ratios are in line then you can get financing at a decent rate from almost anywhere. But these aren’t the buyer’s we’re dealing with here, unless they’re one of the ones that just think they can’t get a loan.

If you’re buying by going through a bank to get financing then you have to jump through all the hoops and it can easily take a month or two before getting everything approved and finalized before getting the loan and being able to move in. When you’re buying from me and if you have the down payment and can afford the payments you can be in within a day or two without all the hoops to jump through! You can refinance in as little as 6 months to pay me off and get a better rate if you’re able to qualify for traditional financing! With me you get into a home TODAY and you have 2 years to jump through all the hoops with a lender to get refinanced!

It’s actually 10 times easier to get seller financing through me than it is to get approved for renting an apartment. Apartment complexes are harder to get approved just to rent their apartment than it is to get a loan and I’m easier to get approved through than the lenders!

Re: Advice Please… - Posted by Jim FL

Posted by Jim FL on October 20, 2001 at 16:47:18:

What exactly is a “Drug dealer loan”?
Never heard this term used before.
Please enlighten me.

Jim FL


Posted by Bob (Md) on October 12, 2001 at 09:34:35:

Anyone wanting to know how this stuff works in the real world should read this thread of messages, print them all out, and study them like they were the map to where all the gold’s stored in Fort Knox! You won’t find this kind of education in most mailorder courses!! LEARN FROM IT!!!