Need Help !! Possible Deal to Sign up Tomorrow !! - Posted by PJ

Real Estate Investing
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Posted by PJ on January 10, 2004 at 21:54:47:

I met with the seller today at the house.

Again, he told me he wants nothing from the sale of the home and simply wants to walk and avoid making payments of $1100/month.

However, his ex-wife wants $10,000 cash from sale of the home.

Also, I asked him to bring his ex-wife to the house today so I can get both signatures on the contract…she was unable to come… So, I gave him the partially filled out contract (from dealmakerscafe) and told him to talk to his x-wife and get back to me ASAP!

This was my first offer so my presentation wasn’t as smooth and the seller seemed a bit hesitant

I set the purchase price to $112,000 (payoff on mtg.)

I told him I can give him a max of $2,000 cash as closing

I put a stipulation in the contrac that goes “subject to buyer finding a qualified resident to occupy this property”

My goal is to either ASSIGN the contract or FLIP to another seller for $125,000.

If I assign, I am looking for $5,000
If I flip, I will look for $13,000

If anyone in the ATL, GA area is looking to pick up this deal… email me and we can talk!

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Need Help !! Possible Deal to Sign up Tomorrow !! - Posted by PJ

Posted by PJ on January 09, 2004 at 19:46:41:

I got a guy who called me who wants to sell his house.

He is going through a divore. House has been vacant for a couple of months.

It’s been listing with a local realtor for a few months, with no buyers.

He is very, very anxious to sell!!

I’m just throwing this out there… im not sure exactly how to approach this… flip it? assign contract ? etc?

Value of Home: 150 K (current value, as is)
Pay off quote: 112 K
Current PITI: 1100 / month

Meeting with him Tomorrow afternoon.

I would like to sign him up tomorrow! But, I’d like to hear your comments/suggestions on how I should do this deal to maximize profits ???

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Re: Need Help !! Possible Deal to Sign up … - Posted by Tbyrd

Posted by Tbyrd on January 10, 2004 at 24:49:06:

Sounds like possibly a great opportunity. Just don’t take his word for anything you can’t verify. I would suggest going out @ 0900 to a local bookstore (booksamillion,etc) and get Peter Conti/David Finkel’s book “Making Big Money investing in Foreclosures” or “Making Big Money Investing in RE” and skim through certain sections real fast.
You could do many things w/this house, sign it up and sell the contract to another investor for a quick $, or immediately sell it rent to own or owner finance, getting 3-10% upfront $ that you can use to pay any arrears,fees,etc., if needed.
If this guy is as desperate as he sounds, he may even pay you to take over the payments ( or at least cover any fees,etc.)
Lot of t’s to cross and i’s to dot!
Sign up tentative contract w/him, but make sure it states you must get approval of your partner, review by atty, etc., that can buy you some time to find out more about what you need to do but still not lose the opportunity.
Good luck.

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Re: Need Help !! Possible Deal to Sign up !! - Posted by Marc NJ

Posted by Marc NJ on January 09, 2004 at 20:41:27:

What state, and area.

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Re: Need Help !! Possible Deal to Sign up - Posted by Rich Hyams

Posted by Rich Hyams on January 09, 2004 at 20:05:59:

Do we have any clue as to what he wants or needs?

If he just needs to get out from the payment at any cost, take it sub2 and throw a few k at it to make it more presentable, sell it for 150k and be done.

You say ‘as is’, does that mean it needs some major work? Some serious minor work? A paint job?

What would the value be if it was in pristine condition? How fast are good condition houses selling in that area?

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GA…metro ATL…does this make a difference? (n/m) - Posted by PJ

Posted by PJ on January 09, 2004 at 20:57:53:

.

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more details - Posted by PJ

Posted by PJ on January 09, 2004 at 20:54:35:

seller has asked for nothing more then to be rid of house.

He has not asked for any cash etc. so far.

When I say ‘as is’ - the property needs NO major repairs…

it has new carpets, good paint(inside/out)… I am estimating that repairs would cost maybe a maximum
of $500 for cleanup etc. House is pretty clean.

Houses in good condition in neighborhood are selling for around $150K.

Question about taking this house SUBJECT TO:

  1. what contract do I use, can anyone email me one?

  2. If I take home sub2, then next month decide to sell
    for $125K, how would this process work? Would I
    have to go back and hunt down the owner of the existing note?

Thanks for all your help!!

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divorce related - any special steps to take? - Posted by PJ

Posted by PJ on January 09, 2004 at 21:19:06:

The guy wants to sell the house b/c he is going through a tough divorce.

I’m assuming I need to get a Warranty Deed from the husband, a quit claim deed from the wife.

Also, I need both the husbands and wife’s signature on all documents, correct? Or can I do this deal with Husband’s sign ONLY?

PJ

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Re: divorce related - any special steps to take? - Posted by Rich Hyams

Posted by Rich Hyams on January 09, 2004 at 21:46:03:

Understand, I am pretty new, have read alot, almost done with my first deal, I am no guru by any stretch of the imagination.

I like to answer these questions first and see my how my opinion is agreed with or disputed by those more knowledgable.

OK, to be safe, you need both their signatures on all documents. The neatest thing to do is place the house in a trust, this will not usually trigger the due on sale clause in their mortgage. You need three pieces of paper, a deed to trust, a form declaring the trust…I believe its called a trust agreement and a transfer of beneficial ownership in the trust. The only thing that gets recorded is the deed to trust.

When this is done properly, you own the house completely, subject to any liens, mortgages or anything else in the title. Now this aint real neat for the seller, if he is someone of some means, he may not want the risk of you being responsible for a mortgage in his name.

You now pay any penelties and all arears and bring the mortgages current and price the house so that it will sell fast enough for you to still make money.

This is NOT no money down, you are going to have to some out of poscket with the penelties and arrears and the monthly payment and anything you may have to sweeten the pot with to get the deed.

If he is resistant, you could offer him a profit or equity sharing deal. You sell the house for 140k, you paid 7k in arrears and penelties, 2k in holding costs, 1k for utilities, 1k for taxes, say 2k to sweeten the pot, now 140-7-1-1-2 is 127 - 10% of the sale price = 113 minus the 109 still owed to the bank, leaves 4k to split 50-50.

Your profit is 14k, that 10% of the sale price plus 2k, your half the over-profit.

Toss out bones one at a time and very slowly, do not mention money for him until he does, do not offer the whole bag at once, the deal I laid out would be the sweetest it would get, I would hope to have it signed before giving away that much.

I am sure someone way more experienced than I will come along and say this is all hooey or maybe they will even agree.

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Re: divorce related - any special steps to take? - Posted by js-Indianapolis

Posted by js-Indianapolis on January 10, 2004 at 24:27:44:

You’re half right.

Where are these arrears coming from? I didn’t see any back payments mentioned. And why can’t this be a no money down deal? It’s been stated that the guy just wants to walk. Sounds like he’s willing to just let PJ start making payments next month.

Now, what I’d be doing is checking value on this sucker, big time. $150K FMV based on what? What was it listed for, and for how long? I’d bet PJ is a little high on the value, as most new people are.

If you can confirm value, PJ, you need someone who knows what they are doing to walk you through a sub to deal. There?s more than 3 forms, if you want to do it right, and fully protect yourself. Not hard to do, but you don?t know what you don?t know. How do you handle the insurance, for instance? Escrow refunds?

Also, as far as negotiating this one, I wouldn?t put any $$ down. If he?s so motivated, but needs some $$ to walk with, tell him to refi it, pulling $$ out, if the numbers still make sense. That should give you a little better interest rate too. Plus, the lag time between refi?ing and the first payment, would give you enough time to fill it, or sell it. If the refi doesn?t happen, I?d certainly be telling him he?s making February?s payment. Mortgage payments are always paid in arrears, you know. Why shouldn?t he?

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Re: divorce related - any special steps to take? - Posted by Rich Hyams

Posted by Rich Hyams on January 10, 2004 at 08:07:07:

My bad

I mistakingly assumed, thought, or read something that wasn’t there.

This can be done no money down for sure.

Wouldn’t refi just add to the cost and lower the profit? I see that it is needed if the op has no money…but he didn’t say that either. A refi with the closing costs financed along with the homeowners walk away money, would make for a larger payoff.

I agree that the most important thing to do next is to get a true value of that house.

I think the equity sharing plan still has merit if needed. I would rather take it at its current financing and offer to split anything over 10% of the sale price as profit. Be sure that it is clear what counts as costs, advertising, monthly payments, utilities, etc.

Although the refi lag time is attractive, I think the thousands that it would cost would just come out of your profit.

I have a trust package and instructions that I have seen in several places. Ron Legrand’s, my mentor’s and several online. Each consists of three forms, one of which gets recorded…is there something else I need?