Don’t put any money out of your own pocket unless you are very experienced. I don’t want to see you lose it. Agree to buy taking it “subject to”. Buy it for what he owes. If you’re feeling charitable give him $1000, and nothing more. Put all sorts of contingencies like subject to verification of back payments. You need to make sure he hasn’t got a lot of liens and/or is behind much more than he says. Also get an auth to release info so you can deal with his lender directly. Check title. Check everything. If he doesn’t accept, give him a different type of offer, WITH NO MONEY OUT OF YOUR POCKET. You can make him 2 offers at the same time and see which one he likes better. When he accepts, do your due diligence and market like mad at the same time to flip it – or just keep it. You should determine your exit BEFORE you buy. I really really hope this helps.
GOT A DEAL NEED ADVICE PLEASE!! - Posted by eliteprops
Posted by eliteprops on November 22, 2002 at 09:28:58:
I met with a owner today in pre foreclosure whom wants out of there home. They are behind 6 months on there mortgage payments lost job and is looking to just start fresh. Numbers look like this
Market Value 280K
principal 81,860.38
Behind 9,125.55
Taxes 4,500
2-units at 900.00 per month
Property is in good condition only needs minor work like carpets and paint.
Now comes the hard part there is plenty of equity in this home I need to make a deal. I’m wondering which options to go with… I was thinking of contract for deed with me paying back his back payments and getting the deed. the mortgage would still be under his name until I can sell the home.Then in turn agreeing to take 75% of the equity of a sale of the house with me giving him 25% to the owner.
I also was thinking getting a investor or hard money loan paying it all cash and give him some walking money like 10k-15K then in turn sell the home at a discount for quick sale and pay back my investor and split the profits 50/50 with him…
I also was thinking wholesale it with me getting the owner to sign a contract then selling the home to a buyer or investor for about 20% more then my purchase price with the owner…
I would like to know if my options are my best bet to offer the home owner or they are other options I have that im not thinking of… like can I do subject 2 here or any other methods…What would you do …
please any ideas I would love to hear from all you experience investors out there on my best options.
Find out the minimum seller needs in order to walk.
If market value is 280k, seems like you could get a loan for 50%ltv, which would cover paying off the existing and back payments/taxes, giving seller a couple thousand (least you can get him to take), adding new paint and carpets, closing costs, and even putting 20k in your pocket! Then you have a nice monthly cash flow.
140k loan at 8% is around 1050/mo, add ins and taxes and whatever you have left of your 1800/mo rents goes to you.