Posted by Beth on July 14, 2001 at 15:17:01:
Thanks for the prompt response.
In your example, how do you get the $25000 into your pocket or available to split? If the property were refinanced or buyer gets loan, typically 80% of value or 80000-75000 purchase price, leaves $5000. Don’t banks or money lenders only allow home equity or refinancing 80-90% of value?
I guess my original question should have been if there’s a way to help someone who owes equal to or more than the property’s worth “as is” or 75% of market value after fix-up. In particular, I’ve located a distressed seller who contacted me the first day I had a magnetic sign on my car stating “I Buy Houses.” (A real head turner and conversation piece in smalltown PA, by the way. Also a rush that someone responded, then that uh,oh! now what do I do feeling as a beginner.) She wants out of the area and is ready to just leave the property…after seeing the property, it too is highly distressed due to neglect and pet romper room. This is a half-double in low-moderate income area. Specifics: Retail-~$25000; As-is comps selling ~14000. Owner owes $13900. Appraised 1998 before “fix-ups” (paint) according to owner was 18,500. Other half sold last month for 25,500 after fix-up. Fix-ups are required in every room (3BR/1BA).(Not sure of fix-up costs, estimate ~$5000).
Is there a way to help this person? I feel a sense of obligation with advertising “I Buy Houses” (not just the pretty ones, ha!ha!). I’ve read to look for great deals (distressed seller and/or distressed property). This is a combination that is problably common in pre-foreclosure that the owner has neglected the property to the point that the balance due is equal to or greater than the current property value and cost of fix-ups reduce the profits needed to quick flip to another investor.
In your experience is there much success in approaching the bank financing the property to see if they’ll accept less than her mortgage? I’m thinking this is the only way I’ll be able to help her.
Rents go for ~$350/month, so would not generate $100 cashflow monthly when consider 5% vacancy and $500 yearly maintenance, plus W/S, taxes and ins.
One thing I like about this real estate business is the opportunity to help others while helping oneself. Any insight would be greatly appreciated.