Posted by David Gregory on March 11, 1999 at 13:52:50:
Raelynn:
You responded to me regarding “Need Help Before Home Reaches Foreclosure”, this was not my request for help you responded to my follow up and not to the original posting.
NEED HELP BEFORE HOME REACHES FORECLOSURE! - Posted by Zuriel Barreto
Posted by Zuriel Barreto on March 10, 1999 at 21:33:57:
I thank you, in advance, for your advice regarding a potential foreclosure…
The owner of this house cannot make the current and subsequent payments and is considering returning the property to the bank.
Current debt(loan balance) = 105,000. No other loans standing, Good prior payment record.
The house requires 10,000 in repairs/improvements for its FMV to reach 125,000+ Last four houses sold for this amount or more.
Current as-is value is less than 102,000. The owner will consider all options.
I need your advice!!! I was thinking of asking the owner to do a second loan (equity line or perhaps a 125% LTV). Use this money to implement repairs and save some as buffer until house is sold or rented.
I heard FHA has a program that provides monies for expansion/improvements but I do not have the details. Once fixed, the house could be rented with a positive cash flow of $225. I am looking for $3-4k as my cut for the deal and I will not use my own funding.
Help! Is this realistic or should I let it go and bid for it after foreclosure? I will like to help the owner avoid chapter 7, if possible…
Re: NEED HELP BEFORE HOME REACHES FORECLOSURE! - Posted by Bud Branstetter
Posted by Bud Branstetter on March 11, 1999 at 13:18:53:
While the figures say there is no deal here the question becomes can you get the deed at what cost. If it costs you nothing but time why not. You could advertise as a handy man discount and make a few dollars. This is not meant as a negative to you but will it really cost 10K to fix up. Carpet and paint don’t cost that much. As an owner financed wrap buyers are less discriminating and willing to pay above FMV. Whether an experienced investor could make money on this I don’t know because more info would be required. If you have to start from scratch and find buyers and inexpensive contractors you may not be able to do much. The Title I loans require some decent credit from the homeowner so that will not work.
Re: NEED HELP BEFORE HOME REACHES FORECLOSURE! - Posted by David Alexander
Posted by David Alexander on March 10, 1999 at 23:07:43:
David’s right. What about back payments and attorneys fees. Even if you just took this loan over, you’d probably never get all your money back out. As far as renting goes, have you calculated expenses, and do you need another JOB.
Good luck,
David Alexander
Re: NEED HELP BEFORE HOME REACHES FORECLOSURE! - Posted by David Gregory
Posted by David Gregory on March 10, 1999 at 22:47:15:
If the owner can’t make the current or subsequent payments how is the owner going to do a second loan?. In my opinion any time your borrowed amount on a property exceeds 80% of the LTV you are heading in the wrong direction.
If the market value is $125,000.00 and current loan plus necessary repairs of $10,000.00 = $115,000.00 that leaves only a $10,000.00 gross profit before all the soft costs, Attorney or Title Company costs, insurance, utility cost durring the holding time, loan interest ect. You did not say what the days on the market looked like in this area, will this property move once it is on the market?.
The margins on this one look to close, let it go and see if you can pick it up after forclosure. By the way where can you get funding to the tune of 125% of LTV?.
125% LTV-Credit Unions-Need AAA Credit - Posted by raelynn mitchell
Posted by raelynn mitchell on March 11, 1999 at 09:07:29:
Been seeing these ads lately. They don’t tell you the details. That’s the details I found out from my Credit Union once I asked. I have good credit, never been a day late on anything. I didn’t qualify; had to already own the property; had to have 3+years history. Don’t have it yet.
By the way, the interest on that 25% above the equity of the property is NOT tax deductible, and a lot of lenders’ 125% LTV advertising is VERY misleading, leading you right up to a tax problem with the IRS man…
food 4 thought,
raelynn