Property in pre foreclosure owner has 25% worth of equity

General Real Estate Investing
1

Hi everyone , this is the first time posting I’m a newbee but I have been studying a year on creative realestate about 4-6 hours a night every night and can’t afford to screw my first deal up,ok with second deal getting screwed up .LOL.Here’s my question going after a pre foreclosure with owner in distress having 25% equity in property. The house appraised 105,000 and amount owed to the bank 72,000 I got him to sign a affidavit to bank to release the info to me this is how I know the details,payments 795 a month and 3 behind I’ll get his payments caught back up and start making payments myself ,I done a lease with a option to purchase contract for 3 yrs and seperate contract to a couple lease woption for 1 yr, there opt money is what paid for the 3 back payments I get 200 month cash flow and 50% rent credit goes torwards thre purchase price if and when after 1 yr.I won’t make alot at the close after giving owner 10,000 but I raised th purchase to 110,000 so I think I can come out ok. Did I structure this Right or need to learn more before i go through with this deal?Thanks

2

Magic, sounds like you’ve been reading a good bit and basically on track. Personally, I would feel a lot more comfortable taking the property Sub2. There are so many things that can go wrong caught in the middle of a sandwich lease. Since you are giving the owner $10k plus making up another nearly $3k in back payments, you have skin in the game and should have some bargaining power with your seller here.

I would also make sure I went into this with a good Plan B if your buyer doesn’t qualify after 12 months. Check your buyer out real good to see that his credit is rehabilitatable in 12 months plus this is not the kind of people that would trash your place out if things should fall thru.

3

Good job on the money side but I agree with Gerald. You should always take a house that is going into foreclosure via sub2. Hope it all works out.
:beer

4

Thanks guys !!! I’m just a student in this business and value your advice on this ,I will look deeper in the sub2 approach or just walk away from this deal .I see so many pre foreclosures in the paper in the public notice section that I feel there is big opportunities if you can just structure a solution to the owner.