new investor looking for insight

I am thrilled to be part of this. I have my first possible deal on the burnner. The house has been gutted due to a fire (No wiring, insulation, drywall, kitchen cabinets, bathroom, yada yada.) Has new roof and well with a storage shed and above ground pool with a deck. Owner has a 50K mortgage and is asking an additional 15K for his cut… for a total of 65K…Of course I’m not paying that. The house needs everything!! The house is worth approximately 100K in post repair condition.
Would a mortgage company take a discount on the loan to get paid off early? Has anyone ever succeded at that?
Also, since I don’t have any investor partners yet, would a hard money lender be the better way to go?
Maybe this isn’t as good a deal as I thought since the house is probably worth about 20-30K as-is.
I look forward to advise from any and all

Howdy Ellerby:

What happened to the insurance proceeds from the fire if any? It is pretty much like you said $25,000 total price would be tops if even that depending on the amount of work. You want to have around $70,000 as your total costs going in which I would like to include some of the carrying costs in this as well. Sounds like about a $40,000 rehab job. You just need to get more numbers at some point. I would not spend days and hundreds until you can get it under contract for a reasonable price. A hard money lender would be the way to go. They will want you to have experience in construction or have a partner that does.

LOL and let us know what comes of the deal

I’m with TedJr on this…if there was/is a mortgage, there was/is property insurance. Sounds like the owner wants to packet the insurance money and get another $15K to boot…can you say “Insurance Fraud”? No wonder the rates are so high!

The insurance company should have had the lien holder as a beneficiary to fire damage…

How is the house structurally? How are the mechanicals (furnace, air conditioner, etc.)? Fire damage can be really hard to cover/mask. Sometimes it is nearly impossible to get rid of the smell (though, in some places, they enjoy that “down-home barbeque” fragance!)…also, whatever the price, you may have to go to an unconventional lender (HML) or pay cash because most traditional lenders won’t hold against fire damaged/uninhabitable structures.

Just my two cents…


Thanks for your info Ted and Keith:

We’re all seeing this property on the same eye level here…my wife and I just finished talking about the insurance and the mortgage he claims is left on it. So, do you think he’ll sign the “Authorization to release mortgage information” paper? HEHE.
Structually the house is in good condition, I haven’t had the contractor go through it yet though. My original thoughts were to go to an unconventional lender with this one.

I’ll let you guys know what happens later tonight after I talk to him.