I have an owner is relocating to another state, owes 333K on current 2 yr old home (very nice house) in my state that would probably have to be listed at about 295K to sell in this market. The PITI is approx. 2200 mo, but the rental market will possibly bear 1500 mo. Does anyone have any ideas? I’m a newbie, all I can think of is short sale. I may have some resistance there, any other ideas or any advice to battle resistance?
This is my first time i’ve answered a post so please don’t be too harsh if I am mistaken.
Your friend seems to be in quite the dilema. He has no great options since no investor would buy a house over market value (anymore). IF he can afford to sell his house and pay the difference between that and the balance owed to the bank he should pony up and do it. If the owner has no assets to cover the remaining balance after selling then he has no choice but to allow the foreclosure or entice the bank with a short sale.
An investor will want to purchase this house for no more than 70-75% of the retail value so that is out. It’s possible that the bank will take a short sale to avoid foreclosure, but not at the % cut that you would have to offer to attract an investor.
Other people are more experienced and well read than I am so perhaps they can offer you a better solution.
Ted is absolutely right. This property is a waste of time. Move on.
Mike
You have to sift through a lot of potential deals to find one that works. There are a lot of short sales available now, but most short sale situations are not profitable. That is because if the bank agrees to a short sale - it is normally down to somewhere around current retail value. That is not a bargain for what an investor is looking for.
Mostly, short sales are profitable where there is a heavy rehab that needs doing. Then it can be documented about the high costs to do repairs - making a good case that the property is worth much less than retail.
There are two elements you need to have a profitable deal: A motivated seller AND a situation that is profitable. Seller sounds desperate, for good reason, but there is no profit there for you. Move on.
In short, my offer will be for a 36-month lease/option for $1400 month ($200 option deposit) with the seller funding an escrow account with $36,000 to be used to supplement the $800 difference between lease payment and PITI. Any amount remaining in escrow at the time I exercise the option will be applied towards the purchase price of $333,000; this will be beneficial for me should the market improve sooner than anticipated. I will show them that all available options they have will cost $36,000 at a minimum. My exit strategy will be to sub-lease/option for above current rental market with 3.5% down and a healthy positive cash flow (400- 600 a month), which the market will still bear with no bank qualifying. A straight lease will cost them $36,000 plus and retailing the property will cost about $55,000. I have run the numbers; this is the very condensed version of my pending offer.
one word - no. move on.
all that fancy stuff will get you one thing - a house that is not an investment property.
Thanks, advice taken!