Any hope of making this work? - Posted by D.Miller

Real Estate Investing
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Posted by tmofa-IN on February 06, 2004 at 18:08:58:

Hey Drew,

Well a couple of things. 1st DO NOT assume the loan. 2nd DO NOT sign anything stating you will be personally responsible for payments. Also make sure you get the seller to sign a disclaimer that they are aware the due on sale clause may be used by the bank, if the bank does find out.

Next you can negotiate for more time, or can make the payments yourself.

Ask for more time up front, negotiate for 4,5, or 6 months instead.

Ask him how much he can afford to pay per month and you make up the difference until you find a lease option.

Your scenario states about $12K back end profit. Not much but you’re not investing either.

What is the approximate rate of appreciation? The monthly mortgage is being paid down and if the rate of appreciation is decent The back end will only go up.

But say you only negotiate 3 months payments from the seller. If you do not find a buyer in three months, you walk away…nothing out of pocket. Please makesure you notify the seller.

Keep in mind though, you’re telling me it’s in a decent neighbourhood and “like” houses are going for $170K, you should be able to get a seller in that time, if you get worried even sell it for less. But you also have the option of low down, no bank qualifying (Lease Option) it.

Example, advertise as I just said with out the lease option printed. L/O for 2-4 years, selling price $180K or more some would say go for $190K or so. should get $6K - $10K down at least, monthly PITI already higher than your payments, plus ask how much extra they can pay a monthly as rent credit.You get to keep the down payment. You get to keep the monthly cash flow, and you still have the back end.

Shoot…you should be able to find a seller.

BUT DO YOUR DUE DILIGENCE.

Again, I’m not an expert…hopefully one with support or refute the advice I have given.

Peace,
Teddy

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Any hope of making this work? - Posted by D.Miller

Posted by D.Miller on February 05, 2004 at 11:53:54:

I have a seller that is ready to let the bank foreclose but has not yet. Comps are selling for 170,000. Rent is only 1200 per month but in a good area. For me to make this work with conventional financing I would have to purchase at 145,000 based on my NOI analysis. He owes 158,000 and can come out of pocket for a total of 8000. (5k to cover closing and another 3000) which brings his price to 155000 he covers closing. I need 145 w/ closing covered. Anyway to make this work or work with the bank before they foreclose and if so how should I go about it?

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Re: Any hope of making this work? - Posted by tmofa-IN

Posted by tmofa-IN on February 05, 2004 at 18:03:11:

Hey D,

How about seeing if subject to is an option? If he will let it get foreclosed, why should you give him a dime. Of course you could always offer him $'s if you wanted.

Peace,
Teddy

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Re: Any hope of making this work? - Posted by tmofa-IN

Posted by tmofa-IN on February 06, 2004 at 10:45:14:

Hey Drew,

I am definitely NOT an expert about sub2. But here is the offer you could make him.

You take the prop, sub2 existing financing. Tell him he can keep his $8K…sort of. Have him pay 3 months (or whatever amount you can negotiate…the more the better) worth of mort. payments. In the mean time you can find a tenant/buyer and L/O. In a L/O you can get a down payment, plus either market rent($1200 and mortgage payment $1200 = break even…worst case scenario) OR you negotiate a rent credit which can be however much they can afford above and beyond that ( or at least a portion of), this provides positive monthly cashflow. Plus you get to set the selling price HIGHER than current value because the actual sale is in the future AND you are enabling them to get into a house they otherwise couldn’t.

You could possibly to do a wrap around mortgage.

Or find a buyer out right by selling on land contract. At market price, you may get a quick sale plus you have the potential of $3K outright at the sale AND then monthly payments there after, which if structured right…you have the chance to sell to a note buyer.

If you get it under contract you could possibly flip it to some one who is more knowledgable or savy too.

Just a couple of thoughts.

Peace,
Teddy

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Re: Any hope of making this work? - Posted by Dmiller

Posted by Dmiller on February 06, 2004 at 13:26:55:

Excellent. Thanks for the advice. One lst question? What happens if I do not fine a buyer/tenant within that three months? Is it subject to me finding a buyer and would they still have the house on the market in the meantime? Thanks. You’ve really provided good info.