Is there any deal here? - Posted by Tim (CT)

Posted by michaela-ATL on August 24, 2002 at 08:02:45:

if you add another 9k for repairs and few thousands for closing you’re in the deal for 125k. in my opinion it’s not enough profit. what if you have to hold it for an extended period? what if you don’t get fullprice offer (normally people offer lower) and the buyer brings and agent? are you going to turn them down? what if they ask you for closing cost? there is just too much investment for too little potential return.
just my thoughts

Is there any deal here? - Posted by Tim (CT)

Posted by Tim (CT) on August 23, 2002 at 15:56:40:

I don’t believe I can do anything with this. But, I thought I’d throw it out to everyone to see what you think.

SFH, 3 bd, 2bth, 2200 sq ft. Owner has a first and second and is in default (I believe he’s in default on both but not sure). He’s behind 4 months. I believe the market value is somewhere around 150k. He owes about 110k (78k to 1st and 33k to 2nd). He’s got it listed with a realtor for 125k with an 8% commission. From what he told me, the 1st lien holder is going to start foreclosure proceedings on Aug. 30 (7 days from this post). My gut tells me that there’s too much equity for a 2nd lien holder to discount and sell the note and certainly too much equity for the first to do a short sale. My initial thought was to try and offer the 2nd lien holder 4 or 5k to wipe out the 33k note. But, even though they’re in 2nd position, there might be enough equity for them to get more than 5k out of it. Heck they may get all of their money back.

His payments are about 1500/mo PITI. I could probably get about 1000/mo in rent. So, a ‘subject to’ deal is out (even though he agreed to it). I just think this is a situation where the owner is in distress but the property isn’t. And, the banks might think they will get enough money out of a foreclosure to offset the debt.

Any thoughts would be appreciated.


Re: Is there any deal here? - Posted by Kevin Subbert

Posted by Kevin Subbert on August 24, 2002 at 24:12:54:

Heres a long shot…

Get an option for $120,000. Then sell the house owner finance for $150,000. $15,000 down and a note for $135,000. Double close and sell the $135,000 note at closing for $125,000. Thats $120,000 for the seller and his worthless realtor who is charging 8% and $5000 for closing costs. The $15,000 down payment is yours.

Lots of work, but ya never know.

Kevin Subbert

Re: Is there any deal here? - Posted by michaela-ATL

Posted by michaela-ATL on August 23, 2002 at 17:12:58:

what condition is the house in? you don’t mention, if it needs repair, like a lot of properties in foreclosure do. how good is your credit? can you get the deed and then immediately refi at 75% of value
75% of 150k is $ 112,500. if you get a 30-yr at 7%, that would be p+i of about $ 750.-. depending on how high your taxes and insurance is, that might give you a positive cashflow, if you l/o at $ 1100 with 3-5k down (which might be the money you need for closing).
and it might give youa bout 40k in equity by the time they purchase. that all, of course, if the house doesn’t need work.
just my thoughts

Re: Is there any deal here? - Posted by Tim (CT)

Posted by Tim (CT) on August 24, 2002 at 07:51:55:

Thanks for the response. I apologize. I did leave out some details. I haven’t seen the inside yet (going tomorrow). But, the seller says it needs about 6k in repairs. The outside needs some repair also. Probably about 1k. So, let’s round it up to about 9k total. My credit is pretty good (730 FICO).

I’m going to take a look at the comps again just to make sure they’re correct. Doing a refi on the house after I have the deed is an interesting thought.

Thanks again.