Posted by Jesse (CO) on January 14, 2002 at 17:09:03:
Hey Sue,
You’ve been greatly missed! Good to see you back on the main board!
Jesse (CO)
The Challenge - Posted by Fred K…
Posted by Fred K… on January 14, 2002 at 11:04:09:
My buddy & I have been going out knocking on doors, NODs & TS notices. Man is that rough?
First off no one is ever home. Finally we found someone home who let us in to talk, an older guy and his common law wife. He let us in because he thought we were with the beneficiary of his defaulted loan. A bit surprised and disappointed, yet relieved, when he found out we were just private investors.
His property is a triplex, fmv maybe $180k. Payments are about $1150 PI and they?re about $4000 in arrears. Maybe about 10 weeks till auction if they can?t find some cash and things move quickly. Two units are rented for about $850 total. Taxes & insurance are about $100/month combined.
He has an extremely heavy accent and it?s almost impossible to make out what he?s saying, and his partner just sits there shaking her head and silently weeping. But this is there story:
He receives SSI, and she grosses about $12k a year. They had a $100k, 30yr, 10% first about 15 years old, principle around 86k. Overtime he?s had problems with Countrywide, so he finally decides to take care of matters with them, how? Well he re-fi?s. Gets a new loan of about 100K, probably spent most of the $14k difference in fees, points and stuff. Well a few months go by and he falls behind again, but at least he figures he?s done with the scoundrels at Countrywide. Wrong.
Turns out Countrywide ends up buying/servicing the new loan. As if that doesn?t suck enough it?s an ARM currently at 14.2%, hate to see what it?s going to be when rates come up off the floor.
They keep begging for us to give them a $6k loan, we repeatedly tell him that we don?t loan money, we buy houses. I try to get his signature on a loan info release for so I can figure out the details, but he resists. Says he?s going to call CW today and straighten things out. I don?t think so.
We go have lunch and figure that maybe we could get him to deed us the property for $1000, we could bring the loan current, fix it up for about $6k, refi for 70% fmv and get all our invested cash back, and section 8 it to him. Sec 8 will pay around $825. Now we didn?t do a detailed financial analysis of this, but we figured that we?d recoup all or out of pocket cash and see about $300 pos cash flow from this arraignment.
So we go back and give him the big picture. He’s interested but his concern is when he dies wants to leave something in his estate for his family, and more importantly he wants to make sure his wife has a roof over her head. We say that we can write up the contract to insure that his wife stays in as a renter. After a few minutes he says he still wants to fix things with CW and we leave.
We get to thinking about things and decide that guaranteeing them rent is problematic. As much as we?d like to help them out, going on contract with that kind of a clause is too risky. They may have problems with Sec. 8, or we need to sell and that clause would scare away potential buyers. The returns just wouldn?t be worth the risks.
Can anybody see a way to turn this into a win/win?
LIFE INSURANCE! - Posted by Steve (fl)
Posted by Steve (fl) on January 14, 2002 at 23:04:42:
He dosen’t need $1000. Listen to him. He wants to leave an inheritance for his family. Take the $1000 and a small portion of your profit in the comming years toward buying the guy a life insurance policy.
Thats just what comes to my mind. I haven’t done that before and I’m new at this.
Steve
Re: The Challenge - Posted by SueC
Posted by SueC on January 14, 2002 at 15:07:30:
Don’t rent back to them, don’t do anything with them after you buy, if you buy at all, you don’t want some kind of equitable action on your hands. GL is right though, listen to his advice, don’t wast your time. This guy is in denial.
Re: The Challenge - Posted by GL
Posted by GL on January 14, 2002 at 12:50:48:
You can’t sell when they aren’t buying. Dealing with that man right now is a waste of time. He isn’t motivated. If you let him, he will keep jerking you around until you get fed up.
Give him your phone # and tell him if he decides to sell, to give you a call.
If he phones, and he wants to deal, then deal. If not forget it. You don’t owe his wife a home or his heirs an estate.
Meanwhile quit knocking yourself out on these deals. Advertise and let them come to you. Weed out all but the good ones. Don’t drive around knocking on doors. Send post cards and letters. Only go and look at a property if it’s pretty well in the bag.
Re: LIFE INSURANCE! - Posted by Brent_IL
Posted by Brent_IL on January 15, 2002 at 06:39:05:
Several years ago, I had a deal that was essentially what you have proposed. It worked so well, I added a clause detailing the right of each party to insure the life and/or health of the other in my standard offer. It’s in the back of my mind on every offer.
Since this will appeal to older sellers, if you can find out the state of the sellers health, it will help you to decide the type of insurance carrier you should be looking for. Don’t be afraid to pay for policies that are rated for health reasons; it’s still cheaper than paying interest. Ask for referrals, and get a good (independent) insurance agent. The offer should require the seller(s) to provide true medical histories, take medical exams, if needed, and to actively assist in the insuring process. Get it in writing so they will follow through.
The premium may not be deductible for you and may be a completed sale. The seller will also want the policy to remain in force if you re-sell the property so the continuing cost is a factor. Sometimes I use this as a guarantee when making payments when the older seller doesn?t want a thirty-year note.
This is a very delicate topic of negotiation. It is usually the spouse who doesn?t want to contemplate the death of a partner. You need to establish a foundation before you spring it on an unsuspecting real estate agent.
Another ingredient in the mix.