The 1st lender has required that the 2nd only get 1K for their position. I have gotten the 2nd to accept that amount but should I inform the 1st of this now.
My thought process is that once the 1st hears of this they will be less willing to discount much since I am already getting a good deal. Then again maybe they will feel that the home is not worth much since the other lender has bailed out. Any thoughts.
Check out your numbers. Perhaps the 1st will discount their note 10% and it still means good profit for you.
If the 1st did discount 10% from the amount loaned it would still be a very good deal. My concearn is that the first will tack on all of the arrears (15k+) to the principle and come up with an offer to me more than what is owed. In that case the deal is a little to tight in the investor arena.
Make an offer acceptable to you, but low enough to negotiate & see what they say.
I can’t seem to understand the logic behind why the 1st would even want the 2nd to accept $XXX dollars. It shouldn’t be their business what you and the 2nd have an agreement on. Just my opinion. I can understand the logic if the reverse was true.
J
Mr. Short, this is a fairly common practice. Whether or not it’s logical, help the homeowner, make some profit, and happy investing!
You are saying it is common practice for the 1st to know what you are bidding with the 2nd? At least that is what I was questioning. there is no reason for the 1st to dictate what I should get with the 2nd. That is not my practice. Otherwise, I just walk away.
Mr. Short: What I’m saying is that it’s common practice for the 1st to not deal with you unless the 2nd has already been accepted at an amount the 1st is agreeable with. The 2nd’s know this. They know that worst case scenario, the 1st can foreclose & they get nada.
Properties with a 1st & a 2nd is where the $ can be made. If the 2nd accepts $1K and you discount even 90% of the 1st, you may have a lot of profit spread. My recommendation is to just do one, see how the 1st & 2nd’s react, then let the chips (or should I say $) fall where they may.
Just by my experience - preconceived notions don’t make you $.
Well, I guess if you’ve experienced that then okay. Just becuase I haven’t experienced it doesn’t mean it doesn’t exist. Still doesn’t make sense. Maybe the mindset of the 1st is that if the 2nd makes $XX then the 1st will scale their lose accordingly.
Okay.
Mr. Short: you’re right, it doesn’t make sense. Unfortunately, a lot of things in REI don’t make sense. Like when banks do BPO’s that come in too high even when there’s lots of documented repairs. But that’s another discussion.