Posted by Zack on December 09, 2002 at 16:06:28:
Don’t forget mortgage payments while it sits on the market, but I’d go for it.
Foreclosure guru’s delight… - Posted by David L. Rosengarden
Posted by David L. Rosengarden on December 06, 2002 at 23:12:47:
The following situation has been brought to my attention and it may be a good deal, if I have the ability to work it out.
A gentleman who has difficulty holding a job, paying his bills, and just got married 3 weeks ago, is living in a house that faces foreclosure this Friday the 13th!
Payoff statement shows about $117,000 due with all fees.
The house is not finished being fixed up, but has all the materials needed to fix it up. Partial updating has already been done (Driveway, roofing, etc,) Has new windows there, the drywall needs to be put in, maybe carpet, etc.
The house will sell for $130-140,000 upon completion of rehab.
I’ve been told through information obtained by an appraiser, and the gentleman in the pickle himself that if I had a crew, I’d finish the work in less then a week.
I got this information through a friend at school who works for a mortgage company. His boss had this guy facing foreclosure come to him looking for a way to bail him out. The mortgage guy has had this guy on hold for 3 weeks without returning phone calls, only for me to get a hold of the guys # from 411.com and find out that this guy thought everything was a done deal. He thought the mortgage guy had everything worked out and was expecting the mortage guy to buy the property through a short sale, then sell the property back to the gentleman living there for about $130-140,000 in a year. The only problem is the mortage guy is in the middle of building/buying his own house ($1 million!) and just spent 1/4 million on funriture. His cash is tied up.
I was thinking I could come in with the $15,000 cash advance off my credit cards (held and prepared for such a situation) to do the short sale, bring my crew in and finish the rehab then sell the property for a quick sale price still taking $15-20,000 profit. That’s if the guy would agree to do this and walk away. He said he would think about it - I offered to “buy him out” and share the profits to be made so he wouldn’t walk away empty handed.
The guy was saying that he wants to stay there, continue paying on the loan, finish the rehab, and in 1 year to 18 months refi to buy me out.
From what I understand, this would involve land contracts and quit claim deeds and the like. I know nothing about this. I’m just in the business to do rehabs/wholesales. I see, I like, I buy, I fix, I sell, I make money. (Or I flip and do the same!)
Anyway, I wondered what do the foreclosure people do, does this look like a good deal, and/or what am I missing?
Dave R
www .dalero1. com
Re: Foreclosure guru’s delight… - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on December 07, 2002 at 23:04:16:
Dave R---------------
Well Heather(TX), while correct, is just too polite, it seems to me.
This is not a buy. There is no profit here. $130K value minus $117K due on the loan equals $13K. Then, it needs work on top of that! NO WAY!
Forget it. The whole point is to buy cheap. This is not buying cheap.
Do not get distracted by the circumstances: foreclosure, whatever it is. The point is to see the dollar numbers. Most foreclosure situations are not good deals. MOST. This is no different than most.
Good InvestingRon Starr***
Re: Foreclosure guru’s delight… - Posted by Heather -Tx
Posted by Heather -Tx on December 07, 2002 at 17:06:02:
117K- resale for 130-140K… say 130 to be safe How much will it cost you to get a crew in and do the repairs ? And how much holding costs will you have?
Only 13K left before you pay a crew to come in, and before adding in anything else (closing,title searches ect) Very skinny unless Im missing something ?
Heather-Tx
(Forever Newb!)
Re: Foreclosure guru’s delight… - Posted by Zack
Posted by Zack on December 07, 2002 at 13:50:00:
Be careful, if he can’t make the payments now, what makes him think he will be able to make higher payments in the future? I would only do the deal if you could get the owner to move out.
I agree with Mr. Starr - Posted by Hugh James
Posted by Hugh James on December 08, 2002 at 06:48:08:
The deal is too thin. The owner is (as are many folks in foreclosure) living in a state of unreality. And I don’t think a foreclosure workout is the best first timer deal I can think of. But in any event, the numbers don’t work, even with the lender taking a hair cut.
Re: Foreclosure guru’s delight… - Posted by David L. Rosengarden
Posted by David L. Rosengarden on December 07, 2002 at 23:23:31:
The bank said they would short sale at $90-95,000 - putting in $15,000 to keep from foreclosure.
$130-95= $35k!!! No profit (and $130 should sell the house in a DAY!) (Houses being listed much older and not updated are listing high $140’s.)
I’d probably only still need to throw $4-5K in it to finish.
Re: Foreclosure guru’s delight… - Posted by David L. Rosengarden
Posted by David L. Rosengarden on December 07, 2002 at 23:24:49:
As I told Mr. Starr…
The bank will short sale @ $90-95 with $15,000 to keep from foreclosure.
Re: Foreclosure guru’s delight… - Posted by David L. Rosengarden
Posted by David L. Rosengarden on December 07, 2002 at 23:33:13:
That’s exactly the angle I was taking it. I offered to cut him in on some of the profit to make it win-win and let him feel that he’s not loosing. He would not prefer this, but this being my first deal and all, I don’t think I want any clutter or confusion. I want a clean slice as possible.
What kind of things do I need to do get this all done with as close to 100% Gaurantee no problems done as possible before December 13th!!! This Friday???
Dave R.
(I’d be happy to double what I have to put into it - in other words, I walk away with $15,000…I’m a SUPER happy camper!)
That means this:
Lets say bank sells: $95,000
I can fix it up for: $5,000
Thats total cost: $100,000
I sell for conservative:$130,000
That leaves me/us: $30,000
Then there’s realtor: $7,800
Attorney, etc.: $3,000 (too low?)
That’s total left: $19,200
I want: $15,000
Our man in a pickle: $4,200
Not too bad, I would think…feedback?
How do you know the bank will Short? - Posted by Mark_IL
Posted by Mark_IL on December 08, 2002 at 01:22:09:
Do YOU have the written committment from the bank? Or an investor who will assign the committment to you?
If not then the only numbers that make sense are the ones everyone else has quoted you (13K before expenses.)
If you think the bank will short, get the authorization to relase from the seller and a signed contract for between 40% and 50% of the value and fax the offer to the bank and get a written committment for the short sale, then you may be closer to a deal.