I have a deal underway now in Detroit, Michigan. The property owner wants to sale me a property and is okay with a subject to deal. The home is in a very nice area of Detroit but the As-Is value and loan amount are about 108k. The comps in the area are at 135k. The mortgage is current but I will have to pay the 2 years of behind taxes.
The tenant has been in the property for a long time and is now moving out and I think the property will need some minor updating.
I need some advice as to wheter I should do minimal cleanup of the property (paint & carpet) and market it for a new tenant or should I take a small loan out against the home to do 15k worth of well needed work.
Any advice you can give would be helpful.
Market value $135,000 +/-
- $108,000 due on mortgage
- taxes ($4k or so?)
- $15,000 repairs and updating
- realtor commission when you resell it
Where is the profit?
I was thinking of renting out the property or lease option to buy the property. If these two options don’t work I was considering walking away from the deal.
I would not do a Sub2. I would try to short it. If not that, I’d walk.
You’re basically getting it at retail when all is said and done after repairs and taxes, etc…you can find better deals than that.
Thanks. you guys I will let you know what happens.
Hi Turborocket. Are we able to short sale deals that are not in default. Should I wait until the owner reaches that stage and try to short sale with the mortgage company?
I’ve started the short sale process before when the HO’s mortgage was current. It just depends on your persuasiveness with the lender. Map out a good hardship case and the lender may listen. Demonstrate to the lender as best you can the HO’s upcoming financial need. For example, spousal loss of job and now they have depleted savings trying to keep mortgage current.
I called Coutrywide about the short you were right they do shorts before default. The only thing is my father owns the property and countrywide stated they would not accept a package from a family member. I would have submitted to package if we didn’t have the exact same name.
I was able to contact an investor who is possibly interested in it and will flip it to him.
I really appreciate your help I don’t have the gitters I did before about calling about a short package.
It gets easier and easier every time you try another deal, and as they say, there is no replacement for experience.
Glad to help. Good luck.