I am a newbie to real estate investing. I just came across a single family home that the owner wants to walk away from because he is upside down on his mortgage. I want to explore what is the best option for me in this situation. The house needs some rehab work. I am thinking about a subject to but the owner wants another house. I just want to get this house under contract and find financing for the rehab work and try to find him another house. I need advice since I am new to this.
Several issues here:
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Best option: Pass on the deal. Or help the seller process a short sale.
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Why would you want to buy, much less invest in, a house that’s upside down?
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Why not help the seller find another house regardless?
A couple of options to consider…offer the seller a subject to deal with him writing you a check for taking him out of his bad position. I’ve done this dozens of times…it saves the seller financial disaster and his credit.
Once that is complete, understand that a home plus private financing equals something much more valuable than the appraised value of that home. The value is a package of a home with non qualifying financing, worth much more than an appraisal.
So, if you have the courage…you can ask for money by the seller to take him out of his bad position and ask a buyer to pay a premium for a house with non qualifying financing.
Hope this helps.
Rob