An opportunity had presented itself where i can purchase a property for less than what the current owner has left on mortage. He is really on hard times and he came to me. Truthfully, I have never been in this situation. My question is how will this work for me and him. Wouldn’t this cause a pretty big problem for his bank or mortage co?
Any additional steps I am gonna have to take? What are my best options here.
ARV is 95K he owes like 65K and he says 55K is final price. I have no backround except for this. I think he has tried to unload these, but no takers so thats why low price. They do need some work, i haven’t done those costs yet?
Are there any other options. He is selling multiple properties because he got in over his head and has Zero cash left for pretty much anything (rehab, mortage, so forth)
As a previous poster alluded to, I’m curious how he is going to sell the property for $55k when he owes $65k and has no money to make up the difference?
Those sales are accomplished through the loss mitigation at the seller’s mortgage servicing company.
They will analyze the shortage of this potential sale compared to if the property went into foreclosure. It may be better for them to allow the “short sale”.
As to the investor who wants to buy these, you didnt mention any criteria that would help determine what type of financing would be best.
My opinion is that you’ll probably need to move quick, obtain rehab funds, and base the loans off the after repaired value. To accomplish this you could use a hard money lender which will not want to see income/assets and can take very low scores. Not to mention that they can fund in a couple weeks. Although it appears they have higher cost associated with them, in reality, for lower loans the costs are comparable to conventional financing.
You’ll need to contact a mortgage consultant that specializes in investment loans including rehab/hard money.
Thanks for responses. I just wanted to get details on what I might have to do before I even looked in depth at numbers and so forth. Think I’ll contact sellers mortage company and see what they can do before I put too much time into this.