Doesn't look like a good deal, does it? - Posted by Augie (So. CA)

Posted by Augie (So. CA) on October 23, 2000 at 14:59:44:

Ok, I might’ve phrased it incorrectly. The comps come in at $295k. The reason I said about is that they are on different lots (interior vs. backing to a busy street). I am quite familiar with the prices in that tract because I have a rental there which is the same exact model as the one in distress.

But, you’re right. If I were the owner and I am facing foreclosure, I’d be happy with moving money. I, as the buyer, am willing to give them moving money. But, the property doesn’t seem like a good candidate, which is why I thought I’d ask the experts. Thanks for all your help.


Doesn’t look like a good deal, does it? - Posted by Augie (So. CA)

Posted by Augie (So. CA) on October 23, 2000 at 24:59:57:

Hi there,

I found a house whose owner is about 3 months behind. The house happens to be listed in the MSL also. Here are the specs:

total of 1st, 2nd, and 3rd: $270,000
seller’s asking price: $324,000
rental going rate: $2000/month
tax rate: 1.12%

I’ve calculated PI on a $270k loan at 8.5% to be $2076/month. This doesn’t look like a ‘subject to’ candidate, does it? Monthly tax calculates to about $252. PITI on this property looks like it’s about $2228 assuming insurance is about $100/month. If I “get into the same page” as the seller, what can I offer this person? Is this a Lease-with-option-to-buy (L/O) candidate? My guess is that this is a flip candidate. However, it doesn’t look like there’s enough margin to work with. My guess is that the recent comps are around $295k. If I L/O this property, how can I make sure that the seller gets current with the back payments? Thanks in advance. You guys are all great.

Augie (in Orange County, CA)

Re: Doesn’t look like a good deal, does it? - Posted by Bill Gatten

Posted by Bill Gatten on October 23, 2000 at 20:59:38:

This could be a good deal if it doesn’t cost you any thing (no down, no loan, no payments, no expenses and no direct credit risk).

To do what we teach (thank you Bud), you might offer to just bring the loan current and take over the property completely.

When the seller’s head starts to bob…the first thing is: Get an option to buy in 30 days. Then advertise for a buyer. Next, put the property into a PACTrust with the owner and have your resident co–beneficiary cover all the closing costs and make all the monthly payments.

To get the payments up there where they belong (above normal rent), you give the tenant (as a resident beneficiary) a portion of the future appreciation; a portion of the loan pay-down; full use and occupancy and 100% of the interest and property tax write off…and charge 'em for it.

In other words:

The ad says hy Rent? The Benefits of Homeownership can now be Your. No Down! No Ban Qual! 3 pmts and clos costs moves your in. $285K 3+2 only $2,150 per month plus tax and insurance. Call now.

When they call, you merely say: “Yes I have this really nice house over there on — Street: and if you can afford the payments and the $xxxx that it’ll take to get in…I’ll just give it you. The only thing I want out of it is to have to you sell it or refinance it in your own name in a few years, and at that time if there’s been any appreciation, I’d like to split it with you.”

'Sounds like a workable deal to me.


Re: Doesn’t look like a good deal, does it? - Posted by Bud Branstetter

Posted by Bud Branstetter on October 23, 2000 at 10:02:25:


The problem becomes that a L/O tenant may not want to pay that as monthly rent and that you have to have 3% cash to pay the realtor. A conventional buyer would have to come in and qualify for a new loan and 10 to 20% down. Doesn’t happen as often as the seller would like. What would happen more often is someone that would “buy” with no bank qualifying, 20K down and be willing to make the monthly payment if they could get the tax deductions. The 20K would cover the realtor fees and back payments. The seller would have to be willing to defer getting what portion of the equity that is his and that you can agree on.

Until you have been trained by Bill Gatten you may not understand on how to do this. But you could email him or click on his banner and ask the question.

Re: Doesn’t look like a good deal, does it? - Posted by Bob-TX

Posted by Bob-TX on October 23, 2000 at 09:11:03:

“my guess is that recent comps are around $295k” is pretty loosie goosie don’t you think? First things first…you MUST know what the fmv on this place is.
Why are they asking $324k? If they are 3 months behind I would think they better be open to bailing out with moving money for equity. Remember, you are not here to be their first and best choice…you are the buyer of last resort. That seems to be the only attitude that will get you in this where you need to be. But first peg the market value!

Re: Doesn’t look like a good deal, does it? - Posted by Augie (So. CA)

Posted by Augie (So. CA) on October 23, 2000 at 22:54:38:

Thanks. If this looks doable, why doesn’t the current owner do it? Is it because I am the one who is on this message board? Maybe he doesn’t know what his options are. Thanks again. I’ll keep you guys posted.