I have a house that I am going to look at tomorrow and I need help figuring out if I can get a deal out of this. After looking at comps, the house is worth between $100,000 and $110,000.
The owner owes $61,000 on the property, and he told me it is about to go into foreclosure.
I am going into this thinking they will want to walk away with a few grand in their pocket.
Is there a way to get a deal out of this? If so, what is the best way to structure it?
I’m extremely new but if he still owes 61,000 that sounds like a deal breaker…that’s 61,000 out of a buyers pocket before any repairs so enless u can get it for under 6-7k I don’t think there’s a deal :flush
You don’t say what your exit plan is. But with 40k of equity why is the seller going into foreclosure? Sounds like it is an opportunity to sub2 get the deed and control of the property. But again something is fishy.
Thanks for the replies! I am very new and have not done a deal yet. To give you the back story, this lead is coming from the inheritance list and the guy lost his mother who previously owned the house. There is a second mortgage out for 61k (he is telling me the first is paid off) and my assumption is they cannot pay that and have not taken the time to try and sell the place.
I am really only familiar familiar with the traditional wholesale model, which would be my exit plan. I dont think this will fit in a traditional wholesale model because there is not enough room for me to find a cash buyer.
My question is basically what else can I do if I could tie this property up for 61-65k. You mentioned sub2, what would I do there? Any options or suggestions would be greatly appreciated.
Sorry for the newbie response and questions, I am just trying to get my first deal!
To do any deal you need to know more from the sellor. Dont make any assumptions. Then go read about Sub2’s in the appropriate forum. Don’t get too caught up on a deal and feel like you need to close your first one. If you rush into it, you are going to make a mistake and could destroy the deal.
There is a potential deal here. But you need to get the complete picture such as actual mortgage balance, back payments to reinstate loan, property condition and estimated repairs and what the owner wants. Until you know all this it will be difficult to formulate a purchase plan.
From a cash offer No deal.
If you provide more info this could be a subject-to existing mortgage deal.
• You need to know the loan term: fixed vs. variable, interest rate, how many years left on the loan, when did the loan start, monthly payment on principle, interest, taxes, insurance, and HOA (if any).
• You then need to do a cash flow analysis: monthly rents, other expenses, and PITI.
• Repair costs on the house
If it is a subject-two deal then educate yourself on it and then talk with a real estate attorney that knows this stuff.