Hi, I recently meet with a motivated seller who’s house is in foreclosure. The House is worth $390k based on appraissal and previously sold similar houses in area. The amount still owed to the bank is $200k and the owner is in foreclosure for the amount of $8000. They were trying to sale the home for $325k because of a divorce and rented the home to someone who got them into this trouble( they didn’t pay rent). If I bring this mortgage current and take over the home sub 2, would that be wise. or should I offer the seller money for their equity say 10k to 20k and buy the house. They have no intentions of living in the home and the owner said he would rather, if he could bring the mortgage current wait to recieve money from the sale of his house rather than foreclose. Also if I take over the property and catch up the mortgage is lease optioning the property a good idea, since the owner is open to waiting to be cashed out. Any help or scenarios will be highly apprecaited
Thank you, Youngone
Howdy Youngone:
Sounds like a super deal. Just keep on feeling out the seller and see what they need to have for you to get the deed. The sooner you sell for cash the sooner you get cash. I would wait on the lease option sell method and use it as a last resort if you can not sell for cash.
Where will you get the funds to bring it current and give some to the seller and do any repairs to the property?
Hey Ted jr thanks for the reply. There are no repairs needed on the property. They need a quick out because of the divorce and they are both renting. As far as the funds needed to get them out. I don’t want to use any of my cash and If so I don’t have enough to offer the seller for his equity just enough to get the house out. If I had to should I use borrowed funds to get the house out and pay them a percent of say 12% of that money and have the owner take his payment in the form of a note. Also since it is winter up here houses don’t move quickly, should I lease option until summer then sell if the optionee does’nt want the property.
I am trying to come up with a good proposal to the owner.
Any Idea’s anyone,
thanks, Youngone
Howdy Youngone:
Those are decisions we all make. I have one now that has not sold and the market will probably be weak a while here too. It has new everything and for sure if I rent even to a tenant buyer I will have to redo it if they can or do not actually buy it and most do not go thru on average.
I am hanging in there until after the first of the year on this one. You may do it on a case by case basis with a tenant buyer. I just hung up with the lender and appraiser on a call and they are amazed it has not sold.
Each investor is different in how they do deals as far as lease purchase or straight sale or ?? You too will have an easier time deciding how once you have done a few. Talk to your appraiser too, he may have some good ideas on marketing in the cold weather.