MV $65,000 from comps (which is what he paid last year).
1st mort: 52k payment: $337 ARM (6 missed)
2nd mort: 13k payment: $143 ARM ? (13 missed)
Total payment:$480
Arrears: $3.5k
Market Rent: $650
Repairs: Cost of carpet. Otherwise good condition, easily rentable, nice kitchen, jacuzzi in MB, nice deck. Floor plan good, except MB is only accessible through another BR.
beds/baths/garage: 3/2/1
“Needs” 2k to pay on a new house some time soon—so he thinks—but his credit score has fallen from 700s to 504. He talked about renting an apt. Will probably be glad to just get out from under it, “this place has been a downhill slope, financially, ever since we got here.”
The value to me in this property would be the cash flow, since there is no equity.
Is a short sale a possibility?
Would this property wholesale? This deal would be mine and my partner’s first deal and we don’t have the cash to catch it up.
If you can negotiate a short sale it might be ok. But to just catch up the mortgages does not make sense to me.
If the value is 65k and he owes 65 k how is that a good deal?
But if you could pay 40 for the first and 500.00 to the second mtg then you would have a good deal.
Good Luck
My initial reaction was ‘How are you going to wholesale a property with no equity in it?’…
Wholesaling involves buying low and selling a little higher, leaving the person that you sell it to enough room to make some repairs or remodel and make some profit of their own on the back end…
Ramona is right…unless you can negotiate a short sale with the lender, there’s no room for a wholesale deal or much of anything else…if you do get a short sale approved, it is my understanding that the seller can receive no proceeds from the sale…
I think the seller is a little unrealistic. He buys a house, then he takes a second (getting cash, I suspect)…he’s got a payment of less than $500 a month and he’s not paying it! Now he wants you to give him money for equity that he doesn’t have so he can buy a house that he probably won’t get a loan against? If I were a landlord (and I am!) and this guy showed up, I wouldn’t rent to him…if he won’t pay a mortgage what could he do to make me believe he’d pay his rent?
Now, Lets say Bo has a contract to purchase the house
for say 40K. That is at about 61% of the Retail value.
Now, the contract can be worded such that he will only
purchase if the bank will offer it at that price. Now, at this
point we have 2 ways to go.
The bank accepts and Bo closes and everyone is happy.
The bank rejects. The homeowner is back to where he
was before BO get involved. Time is lost. What are the
legal ramifications here?
Given that there is about 25K spread, even if Bo makes
around say 5K and hands it off to a wholesaler, i guess
it is not such a bad deal.
Bo, the rest are correct. If you get the house, get the owner
out. Don’t keep em in the house. Agree to perhaps move
him with a rental truck/help (or) just offer 1 month rent as
a deposit to some place he chooses. Nothing more IMHO.
Your post is confusing. Where is the $25K spread? The house is worth $65K (from bo: “MV $65,000 from comps - which is what he paid last year”) and the owner has a 1st of $52K and a 2nd of $13K for a total of $65K. This property is mortgaged to the hilt and yet the owner is still looking to get $2k AND it needs carpet…
There is no margin. Additionally, it is a “squeeker” for a rental ($65K with a $650 rental income is probably very thin).
Maybe I’m missing something but if “Bo has a contract to purchase the house for say 40K. That is at about 61% of the Retail value”, who’s going to pay off the lenders?
Keith,
The Comps is 65K.
The Lien is 65K ( First and Second lien).
There are some arrears as well - 3.5K
This one is nothing but a short sale candidate.
I was discussing under the premise of, what if BO
has a contract with the homeowner to purchase it for
40K contingent on the fact that the bank will accept
a shortsale payoff. This might also involve either
not paying the arrears or between the 2 lien holders,
he works out a deal such that he pays nothing more
than 40K out off pocket.
Makes sense?
Is it not true that while submitting a shortsale package,
its the homeowner that is willing to sell the property
to the buyer and the buyer stating to the bank that he
is willing to pay only 40K ???
Something else to consider, you are buying the house, not the contents: refrigerator, tv couches,etc. This is something I am learning now. Correct me if I am wrong, normally in a short sale you do not offer cash to the seller. The bank frowns on that. If Bo can get the bank to take the $40k short sale, then he might offer the seller cash to leave the house(from Bo’s slush fund) and turn over the keys at the closing. NO keys, nodeal, no money for seller. THAT would motivate the seller. Again, this would be a simple agreement between you and the homeowner. All the bank cares about is the homeowner will not get a red cent out of the deal. Which is correct. He is not getting money from the sale of his property. He is receiving a check from you alone if he moves out on that day for the contents of the house. Based on what I’ve read so far. He needs the cash fro another place to live. That should motivate him.