One of her rentals, whose tennants are now evicted, is going through the foreclosure process. She is three months behind on the first loan and one month behind on her second. Total, she owes 160 k for the house and the house is worth 160 or less in the current Tucson market. The homes interior needs some work as the carpet needs to be replaced and holes can be found in the drywall of each room, among other things. The home would be a perfect shortsale candidate, if not for the following:
She is a loan officer. Her income fluctuates, but has been doing OK recently
She has 22 other rental properties, although many of them are taking losses each month
How should I approach this one? Specifically, is there away around the fact that she does make OK money as a lender, but is taking significant losses as a landlord?
Please post any suggestions or advice…I have not been in a situation like this before. Thanks-----Gregg Tucson
One of her rentals, whose tennants are now evicted, is going through the foreclosure process. She is three months behind on the first loan and one month behind on her second. Total, she owes 160 k for the house and the house is worth 160 or less in the current Tucson market.
Yet another example of what happens when you pay too much for your properties.
This is how you can determine how much (in a mathmatical formula) actually how much the bank is losing holding onto the property!!!
so to cut to the chase…
After the bank has recieved all your paperwork( proposal letter,contract, hud, REO spreadsheet, hardship letter, sellers finance statements, AVG. days on market in the area COMPS, and finally your repair estimates), they will send a BPO out there to give an “AS IS” value.
So What you do is you give a HONEST estimate of the BPO’s price.
lets say he comes in higher than expected.
165,000 estimated PBO
- eviction costs
- (holding costs) PITI montly / 30= how much they lose daily (PITI)
- Interest lost already
- repair costs
- attorney's fees (ask lender how much)
- realtor commisions
- settlement costs
= the amount the bank loses for holding onto the property
(this is how much the bank is ACTUALLY going to lose) AND THEY DAMN WELL KNOW IT.
IT’S JUST A MATTER OF YOUR PROVING IT TO THEM YOU KNOW THEY ARE GOING TO LOSE THIS AMOUNT.
This is how I determine my first offer minus 5k-10k more. This lets the bank know you are around the ball park of how much they are goin to lose.
The actual price the bank will want to net is based upon the BPO!!!
that number is: BPO’s price x .85= what they want to net.
if this is no where near where you want to be.