Possible deal

Hi everybody,
I posted on the foreclosure forum and tedj mentioned I should do a L/O. Here are the numbers.

112,000 and some change owed to bank including fees.
bank just started foreclosure proceedings.
about 4 months behind, so I figure about 3400 total.
He bought the house for 125,000 in 2001. if it retails for even close to that, I still have a fairly tight deal. I will be calling a realtor for comps in the area tomorrow to find out for sure what the retail would be.

I was wondering about L/O or Sub2. I don’t exactly know how to go about it. I don’t have much cash for carrying costs. I will be meeting him this weekend. He says it is in good condition. I will see for myself this week. What should I offer him. Do I promise to make up the back payments and make monthlys and then just try to find somebody who will pay the back payments as a down payment? Any help would be much appreciated.


Foreclosures with a continued L/O can be tricky, and you may find yourself upside down in little time. Why did they fall into foreclosure? What is ther current debt ratio with the newly proposed L/O. What is the dump value of the home, not market value. Where did the money go if he wasn’t paying his mortgage?
There are many more questions and things you NEED to look for.

Whatever you do, do it under an LLC. Go with a lease option to purchase with the terms that will make the deal work. The terms are your flexiblity do not take it unless the numbers pencil out or you have a non exclusive option. In the event they get nasty, you will always have the option to do or not to do, with the excuse that they always had the option to sell or bring the home current.

Howdy Mokerchino:

Glad I could help in the earlier post. Some of this is just hard knock learning in the street. Like after I just spent $150 on software I learn about Limewire where I could have gotten the same software free.

On a tight deal like this I would make the whole deal subject to your finding a tenant/buyer before you close the deal with the seller. You would not want to close and pay their back payments and closing costs and have it just sit. Been there done that and lost $15,000. At $1500 per month it adds up. We were not looking to lease purchase but just to sell this particular one as we were too heavy with the cash for rehab.

I would just offer enough to cover the back payments plus some uhaul funds to be paid after the house is vacant.

There are many deals that fall into the scenario and you need to be careful and check you numbers.