Posted by Terry (Houston) on July 25, 2001 at 15:36:10:

I do not know the answer to the last question so I will leave that to the pro’s.

To the other questions: Assuming your comp figures are right lets play a little:

You are taking over \$64,200 and they are behind \$1,653 so that is \$65,853. Ask them “Where would you like the \$2,500 to come from, comps are \$68,000! I would have to sell Your House for You and come out of MY pocket to do that. Does that sound fair?”

When they say no explain that you are saving their credit, their house, and the repairs that are needed will be taken care of by you!

If they don’t like that they are not motivated. Now the real question comes in:

Do they know the comps are really \$80k? If so then is that a deal for you? I don’t like coming out of pocket that much though.

Good luck.

Terry

Posted by ChrisNC on July 25, 2001 at 14:04:51:

I wanted to run this by all you seasoned investors to see if you could help me structure this any better. Usually when dealing with subject-to I am looking for the seller to pay at least two months payments after they vacate. However this deal is much different because the sellers are in arrears 3 months and are looking for \$2500 dollars moving money. However there is at least 15-20K in equity that they are unaware of. They said house is worth \$68,000 when comps are showing \$75-\$80K. Here are the components:

1st = \$61,500 @ 7.25% Conventional
2nd = \$ 2,700 Down payment assistance program through HUD

Total taken over Subject ? to = \$64,200
Total payment \$550.00 PITI

Comps = \$75,000 - \$80,000

Buyer wants payoff & \$2500.00 moving money

Arrears total = \$1653
Repairs = \$2500
3 month holding until L/O = \$1653
Utilities 3 months = \$400

Total out of pocket expense = \$ 8706.00 ( way to high )

Exit Strategy: L/O / Sell out right

With lease/option I can achieve a \$200.00 month cash flow and at least a \$20,000 back-end profit.

Questions:

How can I structure this one so that the out-of pocket ( risk ) is not so high. The sellers are broke and wont go for taking nothing. I suppose I could offer them \$500.00 and see what they say. Even if I get them to take 500.00 I am still looking at \$6700 out of pocket. Veterans: WHAT WOULD YOU DO WITH THIS DEAL? Has anyone ever dealt with this type of 2nd mortgage. Are there any implications I need to know about when taking the second over subject ? to. Thanks in advance.

ChrisNC

Think local move and move on deal quicker… - Posted by Harvey Carroll, Jr.

Posted by Harvey Carroll, Jr. on July 28, 2001 at 23:09:47:

If I really wanted the home I would agree to do a little up front leaseing of local storage units and a few days truck rental to help him move. If your able perhaps a bit of sweat equity to help them move. Sign a waiver and don’t take responsibility if anything gets broken. Or give him a couple hundred to hire some of his family/friends.
This would allow him to move quickly and have a couple months to completely move out of the storage units.
Sometimes time is just as important as money. If he sticks around then he is stuck with future bills. It would be smarter for him to make the move and only have those minimal expenses facing him.
Next find a local contractor to take monthy payments from the rental income and/or rent under a “handy man special”…
Lastly finance the amount that he currently owes into the deal to include the utility cost…
JR
BBA in Finance and Real Estate, KY Broker, partial MBA…

Re: Sell a half interest - Posted by Ed Copp (OH)

Posted by Ed Copp (OH) on July 26, 2001 at 17:55:04:

to a partner.

sell half of what you purchased for \$8,706 to a partner. His cost for his half would be lets say \$9,000. You make a couple of hundred going in.

Split the monthly cash flow with him (he gets \$100 monthly). Not too bad of a return for him.

Now you also get \$100 monthly on your investment of \$0, a little better return called “Good N’uff”.