Posted by JT - IN on May 04, 2001 at 23:27:15:
I like the approach of doing the wrap, or taking property subject-to, with a L/O back to owner in foreclsoure, provided the equity that they are about to lose, and you are about to gain, if/when they default is substantial; 25 - 30%, or more, and house is a nice house; not JUNK, and people are NICE people, not A$$H@@@@!
This obviously would not be a prudent approach with all folks in foreclosure, but I do work foreclosures intensly, and some of these folks have gotten behind on payments for a very legitimate and understandable reason and circumstance, and can simply not get caught up. Have good income, etc, but need a new start. If they screw-up new start, bingo; you evict and they loose option at regaining equity. You get the 25-30% equity, less expenses to manage the tenant until out.
Have brief experience with doing this concept. People are very wary of this, as they should be. I can cash flow 2-300 mo positive CF and make 10% of FMV of house on the option. This is a WIN-WIN deal, if they perform, and exercise their option, or a I WIN BIG- THEY LOSE BIG, if they don’t honor and treasure this golden opportunity to escape 4closure.
Just how I approach this…
JT - IN