IS THERE A DEAL HERE?? - Posted by Walt

Posted by IB (NJ) on March 18, 2004 at 09:47:42:

Hi John. Isn’t this deal a little too thin? With the $216k first and $8k in late payments, this thing comes is at 75% fmv, and that’s without the second. Throw the 2nd in and rehab costs and I don’t see much of a deal here.

Unless you want to try and negotiate a discount with the 2nd, bring in a retail buyer, and negotiate a nice assignment fee (presuming the lender will allow it). What am I missing big guy?

IS THERE A DEAL HERE?? - Posted by Walt

Posted by Walt on March 18, 2004 at 24:09:06:

House is in default. They havn’t paid in 3 months. They bought it 2 years ago for $288,000. Current Appraisal: $298,000. Current 1st: $216,000. (on 10.99% interest) Can’t refi. Home is in son’s name whose in college cuz they got foreclosed on 2 years ago. They owe $8,000 in back pays.

There’s a 2nd of $43,000 at 8% carried back by the original seller. Family is current on the second ($426 someodd) a month. Total monthly pament: About $2,500.

They want out. Is there a deal here? What strategy is best…if any:

Possible exists:
a) sell for a profit.
b) rent to own it to another family. (an add start tommorow to test for how much response).

House is in decent shape, except for being dirty. Beautiful views.

any feedback or comments are appreciated.


Re: IS THERE A DEAL HERE?? - Posted by JohnB_NJ

Posted by JohnB_NJ on March 18, 2004 at 08:47:40:

There is a deal here. you just have to peel back the layers. The whole thing hinges on the owner carry back 2nd. That is the key. If you can deeply discount the second, you have a deal.
I find the prior owner has no further attachment to the house and are usually more flexible to deal with then an institutional lender. I would bet the 2nd mortgage holder has no clue that the 1st is in default and if they did, they would look for someway out of the mess. As you know, they could be looking at a total loss of the paper they hold.
Run the number on the house. See what rehab is going to cost, holding costs, buying costs and selling costs. Then make an offer to the 2nd mortgage holder that makes it work for you. of course shoot low so you have some room to negotiate.

So, get to work.

Good luck…


Re: IS THERE A DEAL HERE?? - Posted by Farlee

Posted by Farlee on March 18, 2004 at 08:24:17:

Things to consider:

You’re in it for $267K from the get go.

Holding costs - $4-5K?

Rehab/Cleaning - $1-2K?

Selling Costs - 3-6%? $6-12K

That’s if all goes well. You’re still looking at a lousy return on it.

Let the bank foreclose and try to pick it up then.