Posted by Jennifer on January 15, 2003 at 20:29:44:
L/O it…Collect option money- 5-6K- that should pay the arrears. Then collect so you make a little monthly profit as well. Offer to purchase the place for what he owes on it after the year lease is up. Then, sell to your new “buyer” for a $10-$15k profit…Depends on the house and your area- you may be able to get more…
Good luck to ya!
LEASE OPTION HELP !!! - Posted by Alex
Posted by Alex on January 15, 2003 at 20:20:22:
I am a 21 Year old investor. I have a seller that owes $101K + a possible lien of 6K. Area comps go for $120-$130. He is behind 3 months on the mortgage ($2800). What would You reccomed for stucturing this deal? Lease Option? Subject To (Contract for deed)? Any Pros have advice I would really appreciate your information.
Thanks…Live with Passion!!!
Alex
Possible lien?? - Posted by DB
Posted by DB on January 17, 2003 at 20:22:13:
Alex,
What do you mean by a “possible” tax lien of $6K??? There is either a lien or NOT!
If there is a lien then you are looking at some tight #'s!!
Loan bal. $101K + Lien $6K + arrears $8400 +++++++ what about any lawyer lees, late fees, anything the mortgage company is adding to the payment??? You, are now looking at $120K or more! If the comps are only $120-130, then there isnt much room for error!! In fact, NO profit at all!
If you use your own money to bring it current and buy sub-2, and then L/O to a buyer, you still need to collect a good option consideration up front to make it worth your while!
A possible short sale might be another angle to work the deal. They are a hassle to deal with! Basically, you would have to seller sign a release of Info. form so you can speak to the lender. You, would then talk to their “loss mitigation” department and ask them for a short sale packet. Each lender or bank is different. Some require more forms and others not as many. Some of them might negotiate at 90% of value, and others might go to 75% of value. Start your offer at about 70% and go from there. If there are major repairs, make the offer lower! If they accept your first offer, you offered TOO much! The worse you make the saituation sound, the lower you can try and get the price.
Find out if there is a lien or not! See if you can buy this at a discount. Ask them what is the least they will take to remove the lien. Hopefully, It will be $1K or maybe $2K. If they want more, just tell them it will be wiped out in the foreclosure. Tell them you can pay them something NOW, or they will get NOTHING later! They usually will take the money now.
I would keep looking for better deals. If you can make it work go for it.
dave
Re: LEASE OPTION HELP !!! - Posted by Craig-SoMD
Posted by Craig-SoMD on January 16, 2003 at 11:36:23:
If he will lease option it to you, go for it. Of course, you need him to get out of the house as soon as you sign the deal(borrow a truck if necessary and help him get out). As Jennifer said, turn around and LO it to a tenant-buyer, use some of the option consideration to pay off the arrears(it doesn’t usually take very long to find your T-B, but you certainly don’t want the bank foreclosing on it. In this type of situation, where the seller is expecting nothing out of the sale, I would probably get the deed, having owner place property in a land trust and having beneficial interest assigned to you. Lender will also need to be notified that property has been placed in trust for estate planning purposes(helping prevent due on sale clause problems), in that case. On your LO to the T-B, certainly get some monthly cashflow out of it, premium rent is okay, but get whatever the market can handle, usually somewhere around $200/mo is a good ballpark. I would make the sales price even higher than what Jennifer recommended, possibly as high as $150,000. Believe me, it won’t greatly deter your T-B’s, and you are so generous with your owner financing at close, that you will not mind lending them the difference the lender will not loan them. I love this business.
LEASE OPTION HELP !!! - Posted by Martin Greenberg
Posted by Martin Greenberg on January 16, 2003 at 02:11:55:
Dear Alex:
Ask the seller how much they would pay you to make this problem go away.