Is this too complicated for a 1st deal? - Posted by diana

Posted by Ronald * Starr on September 29, 2001 at 20:30:54:

Diana--------------

No, it doen’t make sense to me. She holds about $185K in real estate and owes about $83.5K and she can’t make her payments? This does not compute, as Robbie the Robot used to say.

A blanket loan is, as you said, one on more than one property. That could be so. I suspect there is another loan in there that you haven’t heard about. But, if not, there may be a way to do a pretty good deal.

Now, if this is all that she owes, you could structure the deal something like this. Oh, before I get into this. Please do not get into the position of being a lender to a person who can not pay mortgage payments. Forget that idea, I say.

Otherwise, the deal works like this: she owes $83,5K plus she wants $20K in cash. This is a toal of $103.5K She is selling to you for $70K. So even if she gets all of the money $70K, there is still a shortage of about $33.5K

She could get this money by putting a loan on the #2 property that she wants to keep. Being that this loan is less than 50% of the value of the property, she should be able to get it, even with terrible credit. The current lender might agree to loan that much, taking $70K - $20K (to seller) = $50K in cash from the sale of the #1 house.

And you are not connected to her after that.

How you finance the pruchase is up to you. I assume you have the downpayment money and credit to be able to afford the house you want to buy. Then do what you want with it. Sell it, lease option it, hold it for rental income. If you can not afford to buy the house, my structuring can still work. IF you can line up a buyer for the property who will get his/her/their new loan on the property and has downpayment money to be able to afford the purchase price. Now, I don’t know if you can sell for $88K a house worth only $85K, but who knows. So what if you have to sell it at $85K? You do a double escrow closing where you buy for $70K and resell for $85K and walk away with something like $12K or $13K in cash. You are away from the property, the seller, and the buyer. You are footloose and fancy-free, dancing down the street kissing your cashier’s check all the way to the bank.

Good Investing****Ron Starr

Is this too complicated for a 1st deal? - Posted by diana

Posted by diana on September 29, 2001 at 12:54:57:

Hi all,

Please be patient, I may be way off here.

I’ll take a stab at it anyway.

Seller is about to go into forclosure (3 months behind)
on 2 loans one for 78,000 and one for 5,500
Seller explains these actually cover two properties (she called it a blanket mortgage)
Home #1 she would like to sell - Home #2 she wants to live in.
Home #1 comps at $85,000
She agreed to let me have home #1 for 70,000.
I would like to sell it on a l/o for $88,000

Her angry lender said if she was to sell it at that price she would need to get an appraisal on home #2 to break up the loans.
Seller said home #2 is worth 100,000

Now here’s where my brain goes dead:
She also wants to pay off the rest of the loan (14% interest) and would still like approximately 20,000 cash to get her out of all her troubles.
Should I get warrantee deeds on both properties and then refinance give her 70,000 for property and lend her 13,000 to pay off rest of loan and then 20,000 for her. I would then hold a note for the 33,000 she owes me.
Does any of this make sense?

Diana

Re: Is this too complicated for a 1st deal? - Posted by dewCO

Posted by dewCO on September 30, 2001 at 12:38:43:

I’d ust add to Ron’s advise that you should make sure that the properties are separate and individual properties with separate legal descriptiions etc. That way you do what you want the each of them.