BiggerPockets

Update:

After a month of trying to contact the owner I finally talked to him this morning!!!

He said $96,000 is owed on the property.
He let me look inside and it needs about $60K in repairs. Two flats in that area range anywhere from $300K - $400K ARV.

He said the two-flat is still in his deceased grandfather's name and he doesn't know how to get the property out of his name. His grandfather died several years ago.

He knows that I am interested in purchasing the property and he said he would be willing to do whatever needs to be done so that I can.

I'm interested to know what some of you would do in a situation like this if you were acquiring your first property like me.

Thanks!
Tara

Jon,
I'm not sure about that title though. If there are other potential inheritors, that property could stuck in probate court unless it goes to full foreclosure or it is under a trust. Isn't it?

Originally posted by Jon Holdman

Who's name is on the loan? How bad does this guy want to be rid of the property? Would he consider letting you buy it subject to the existing loan? You take over a $96K loan, put in $60K, and you're into it for $156 vs. a $300K ARV. That's a clear money maker.

Can you come up with the $60K for the rehab?

Looks like a flip to me. A $300K value means you need rents something like $2200 per unit.

The grandfather's name on title isn't a big deal. A death certificate and the will showing the ownership has been transfered to the guy you spoke with should be enough. A title company or real estate attorney could help you with the details.

You need to have a better ARV. That range is way to large.

Jon, thanks for your response!

His grandfather's name is on the loan and he's very motivated and desperately wants to get rid of the property. He lived there with his grandfather, and when he passed away he just stayed there and continued paying the mortgage for as long as he could. I'm not even sure if the ownership was ever transferred to him. I'm supposed to call him again tommorrow and will know this answer for sure.

I'm sure he would let me buy it subject to existing loan, but I just don't have $60K.

If you buy it subject to, can you handle the payments for a few months? If so, buy it subject to and look for a partner for the rehab.

Could you move into it for a couple of years? Buy it subject to, move in, get a HELOC to fix it up, then sell in two years. You get the exclusion on a primary residence, and it will be easier to get the HELOC.

Or, perhaps you could live there for a few months, then do a cash out refi to pay off the old loan and give you cash for fixup.

If you don't want to move in, then a partner or possibly a hard money lender could help you out.

Jon. Can you do a subject deal and then ask the seller to lower the amount of the loan? I thought when you do a subject to deal, all you do is take over the payment? Can the loan amount be negotiable?

Originally posted by Jon Holdman

If you buy it subject to, can you handle the payments for a few months? If so, buy it subject to and look for a partner for the rehab.

Could you move into it for a couple of years? Buy it subject to, move in, get a HELOC to fix it up, then sell in two years. You get the exclusion on a primary residence, and it will be easier to get the HELOC.

Or, perhaps you could live there for a few months, then do a cash out refi to pay off the old loan and give you cash for fixup.

If you don't want to move in, then a partner or possibly a hard money lender could help you out.

I spoke to him and he said that his name and his niece and nephews name are all on the Land Trust. He said he would allow me to buy it subject to. Then I would have to find a hard money lender because I don't want to move in; it was in horrible shape and I don't see how he was even living in there.

But,what if I can't find a partner with experience to do a rehab, couldn't I wholesale it?

By the way, he said he found out his sale date is in Oct. 2009.

Unless its very large, needs high end finishes, or is just falling down, $60K would do a LOT of work. Just based on your statement, I'd guess that estimate is very high.

Do you have any buyers who'd be interested? Seems like just wholesaling it would be worthwhile. There's enough room for you to take a nice profit and still leave lots for the buyer.

Originally posted by Jon Holdman

Unless its very large, needs high end finishes, or is just falling down, $60K would do a LOT of work. Just based on your statement, I'd guess that estimate is very high.

Do you have any buyers who'd be interested? Seems like just wholesaling it would be worthwhile. There's enough room for you to take a nice profit and still leave lots for the buyer.

Jon,
It's 4,930 sq ft. and the basement can turned into an apt. as well. I'll have a contractor go in and take a look and get another estimate, because like I said the owner had a friend/contractor of his give that estimate.

There are several who are interested in purchasing that's why I'm trying to move fast!!! My dad has even had a few people in the neighborhood ring his doorbell inquiring about the building since he lives right next door.

Thank you so so much with all your great advice!!! I really appreciate it!!