Hi all,
I have a seller who is behind $1100 on payments. He owes $54,000 on his house which was appraised in January at $87,000.
If he can get his payments caught up (so his credit won’t get affected too much) and get $1000 to move, he’d be happy and will close when I want to. So should I look to wholesale/assign, or maybe do a “subject to”, or are there other options I haven’t considered?
All thoughts/opinions welcome.
Thanks,
JD
Well I think since it is your first deal and you could probably use some quick cash, I would wholesale it and assign the contract to make a quick $10,000. This way you are never at risk for losing more than the $10 you put down. Once you have a little cash on hand, start playing with the other ways to invest. Truthfully I have not done my first deal yet, but this option seems to make the most sense to avoid liability (such as making mortgage payments until the property is sold).
Does that sound about right?
Jenn
The numbers may be tight for a high assignment fee ($5k+) as most investors want to see a deal at 70%ARV (or less). You also didn’t mention anything about repairs, which could really sour the deal, if they are extensive. Still, you should be able to get something for it.
70% x $87,000 = $60,900
$60,900 - $1,100 - $1,000 = $58,800
$58,800 - $54,000 = $4,800
So, $4,700 may be the absolute most you can get for an assignment fee, and $500-$1,000 would be more likely. Again, a lot of it depends on various other factors.
I’m confused a little … if the guy is only $1100 behind and will only take $1000 to move, where is he going to live? Parents? or? With rent he’ll need first/last and deposit at least. That’s got to be more than the $1000. Is this guy unemployed or getting some medical benefit? It just seems like a small amount to be behind to give up this house that has $33,000 in equity. Why doesn’t he try to sell it? Just wondering about options here.
I know your idea is to get the house, but it just seems odd to me.
This couple is in panic mode, really. He’s now on disability now, doesn’t want the house to fall into foreclosure, doesn’t want the headache of the house anymore and he has a house trailer he can move into for nothing up front and no rent. That’s why he just wants out and doesn’t want to sell it himself.
Hopefully you’re right, but I think the other post I read about not getting a high assignment fee may be closer to what ends up happening. It’s not a huge spread, but then again nothing needs to be done to the house either.
Hi Jim - That explains it - makes sense. 