Posted by Brian on January 16, 2003 at 01:22:40:
Where is the property located (general area). I might be able to help you with an investor.
Instant Equity on First Investment Property - Posted by BH King
Posted by BH King on January 15, 2003 at 23:31:43:
A retired lady in my church deperately needs to get out of her house. She is 3 payments behind and is considering just abandoning the property.
She has been told the house has a Market Value of $250K. She has tried listing it at $230K, $217K, and most recently at $204K. Our pastor asked her her absolute bottom line price and she said she could break even if she sold it for $175K.
My wife and I just purchased our first home in October. I want to continue investing in real estate and this seems like a great deal. Potentially, I could acquire a 4 bedroom, 2 bath house with a guest cottage and earn $75K instant equity.
I would appreciate any thoughts on how to get into this property for no money down. Our savings is now depleted from buying our first home.
Am I starting to invest too soon after buying my first home?
Re: No Equity on First Investment Property - Posted by Nate(DC)
Posted by Nate(DC) on January 16, 2003 at 23:26:03:
The market value is not $250K, because it did not sell at $230K, $217K, or $204K. The market value is probably around $175K, which is what she could actually get a buyer to pay for it.
NT
Re: Instant Equity on First Investment Property - Posted by William Earl
Posted by William Earl on January 16, 2003 at 22:53:21:
Just a suggestion,
Equity in a property is not the same as cash. If she can’t realize the equity at 204 k (about 80% LTV). If she’s 3 months behind then she still is about 2 months from “cure.” You might want to consult a reputable local real estate agent and find out how much of that equity can be realized if you clean up the property and do some new things to it. That also depends on location. I suggest you read a book by Wade Cook entitled, “How to pick up on Foreclosures.” Ed and some others on the board could probably comment on better books also. The lender might do a short sale and you could get the property for 60% LTV with a quit claim. You will need to come up with some cash, but say she’s back on her house 3 months and the lender will rectify the situation for her past due balance and then she can quit claim the property into your name. For example 3 months @ 8% mortgage payment is about $1300 per month on a 30 year fixed (for $175,000) You offer her a way out of the house for $3,900 and some moving money to be nice, let’s say an extra $1,000. She can move out, rent an apartment, and then you sell the property and assume the equity. So you’ve invested $4,900 and the vacancy on the property (this should not be taken lightly) and then when it sells to some lovely couple on an FHA deal you get 94% of the value of the house (closing costs) and you make a gross of $235,000 and a net profit of $55,000. (not including vacancies.) Or better yet you can lease option it to a family, let them pay down the mortgage for a year and then help them get a note in a year or two if they have problems.
Remember there are always opportunities if you make them and as Robert Kiyosaki’s Rich Dad said, “I never want to hear you say we can’t afford.” The question is HOW can you afford it and is it worth paying for?
Best of Luck
Uncle Willy