I have a friend who is separated and his wife lives in a house that is under his name. Recently he stopped making the mortgatge payments. He is prepared for foreclosure. There is hardly any equity in the house b/c he refinanced recently. Is there any positive outcome for me to purchase his house or should I stay away from it?
ATLNEWBIE
if you can purchase it for less than it’s appraised value, rent it for more than payments, insurance, maint and taxes, make good cash flow while you wait for it to appreciate or accrue equity, then that’s a good real estate deal.
to know if THIS particular one is a good deal, you need to do the math. And as much as you want to help your friend, you will need to take the emotion out of it and evaluate it simply as a business transaction.
However, having the wife still living there may create some kind of legal/divorce/community property sort of nastiness that will blow up any potential deal and/or friendships. You’ll need more expertise (and testicular fortitude) than I have to navigate THAT minefield.
Good luck.
Thank You Mark.
ATLNEWBIE
there is a slim chance this could be a good investment, but seriously doubt it (possible title issues, little/no equity, unknown rental potental). Three strikes…sounds like a pass on this “deal”
Removed by Infowell due to Moderator altering my other responses
Bank appraisals are always supposed to match the sale price or at least the loan amount. If they don’t, the financing falls through.
I use a tool on Bank of America’s website for a quick estimate of FMV. Of course, this is a WEB engine, and is at best fairly close, and at worst, a foul ball that leaves the park and hits your windshield! :o
You can also ask an appraiser for a CMA, which is the same thing a realtor would do, but they might just charge a small fee instead of a realtor commission.
Removed my response in protest of Moderator altering my posts
My rule is that I don’t do business with anybody I can’t sue. That forbids me from doing business with friends or relatives. I will give them money but I will not loan them money. I will give them money to get out of trouble, but I will not buy their house. If I do business with a personI ask myself if the deal goes sour, will I have a difficult time at Christmas, or the next friendly party, I don’t do it.
If you start to buy the house to get them out of trouble, and during the inspection you find out that it has a major problem andyou don’t go through with it, they may hold a grudge with you because you backed out on them when the “needed you most” I just don’t do that kind of stuff.