NEW: BP Podcast 66: Flips, Apartments, & Protecting Yourself From Professional Tenants with Michael Blank

Hide this

From the BiggerPockets Blog

 BiggerPockets Blog »

Jump to Forum View All

Click a category below to view different forum categories.

BiggerPockets

General Info

BiggerPockets Q&A, Site Questions, & Announcements

1508 topics, 14381 posts — Last Post 04/17/14, 08:09PM

BiggerPockets Exclusive PRO Area

117 topics, 838 posts — Last Post 04/16/14, 09:08PM

New Member Introductions

10870 topics, 85469 posts — Last Post 04/17/14, 10:16PM

Real Estate Success Stories

394 topics, 6121 posts — Last Post 04/17/14, 10:03PM

General Real Estate

General Real Estate

Buying & Selling Real Estate

5924 topics, 46697 posts — Last Post 04/17/14, 09:00PM

Renters

643 topics, 5816 posts — Last Post 04/17/14, 04:11PM

Get Foreclosure Help - Help Stop Foreclosure Forum

316 topics, 2557 posts — Last Post 04/16/14, 03:58AM

Home Owner Association (HOA) Issues & Problems Forum

237 topics, 1609 posts — Last Post 04/17/14, 08:53AM

Do it Yourself

653 topics, 6259 posts — Last Post 04/17/14, 08:00AM

Reviews & Feedback

Real Estate Deal Analysis and Advice

3666 topics, 29392 posts — Last Post 04/17/14, 10:15PM

Real Estate Guru, Book & Course Reviews and Discussions

1132 topics, 11544 posts — Last Post 04/17/14, 06:06PM

Ask About A Real Estate Company

740 topics, 7312 posts — Last Post 04/17/14, 09:46PM

Real Estate Investing

Real Estate Strategies

Wholesaling

5591 topics, 43679 posts — Last Post 04/17/14, 10:01PM

Rehabbing and House Flipping

3327 topics, 30929 posts — Last Post 04/17/14, 09:59PM

Real Estate Development & New Home Construction

552 topics, 4679 posts — Last Post 04/17/14, 10:10PM

Innovative Strategies

703 topics, 6023 posts — Last Post 04/17/14, 09:46PM

Tax Liens, Notes, Paper, & Cash Flows Discussion

864 topics, 6667 posts — Last Post 04/17/14, 06:13PM

Rent to Own a.k.a. Lease Purchase, Lease Options

691 topics, 4869 posts — Last Post 04/17/14, 10:20PM

1031 Exchanges

143 topics, 1052 posts — Last Post 04/16/14, 05:39PM

Foreclosure Investing

General Foreclosure & Pre-Foreclosure Forums

1686 topics, 11285 posts — Last Post 04/17/14, 06:41PM

HUD, VA, and Tax Sales

414 topics, 3088 posts — Last Post 04/17/14, 07:35AM

REOs

1214 topics, 10570 posts — Last Post 04/17/14, 02:28PM

Short Sales

1534 topics, 13120 posts — Last Post 04/17/14, 04:44PM

Landlord & Tenant Forums

Landlord & Rental Property Questions

7193 topics, 70635 posts — Last Post 04/17/14, 10:04PM

Mobile Homes & Mobile Home Park Investing

638 topics, 5137 posts — Last Post 04/17/14, 10:04PM

Investor Basics

Starting Out

7689 topics, 60356 posts — Last Post 04/17/14, 09:58PM

Investor Psychology

430 topics, 6092 posts — Last Post 04/14/14, 06:53PM

General Real Estate Investing

4711 topics, 37163 posts — Last Post 04/17/14, 05:53PM

Real Estate Investor Marketing

1730 topics, 14091 posts — Last Post 04/17/14, 06:21PM

Commercial Real Estate

Commercial Real Estate Investing Forum

1409 topics, 8983 posts — Last Post 04/17/14, 06:13PM

Multi-Family and Apartment Investing

1106 topics, 9193 posts — Last Post 04/17/14, 09:54PM

The Business of Real Estate

Real Estate Technology and the Internet

Real Estate Technology, Social Media & Blogging

638 topics, 4884 posts — Last Post 04/17/14, 02:08PM

Business Basics

Goals, Business Plans & Entities

830 topics, 7549 posts — Last Post 04/17/14, 10:19PM

Real Estate Finance & Legal

Financial, Tax, and Legal

Tax, Legal Issues, Contracts, Self-Directed IRA

2783 topics, 19994 posts — Last Post 04/17/14, 04:52PM

Property Insurance

309 topics, 2045 posts — Last Post 04/17/14, 07:41PM

Personal Finance Discussion

328 topics, 2730 posts — Last Post 04/17/14, 04:56PM

Loans, Mortgages, Credit Lines

Private & Conventional Lending Discussion

2829 topics, 19675 posts — Last Post 04/17/14, 10:30PM

Creative Real Estate Financing

1207 topics, 8762 posts — Last Post 04/17/14, 03:35PM

Crowdfunding Real Estate

35 topics, 455 posts — Last Post 04/14/14, 02:14PM

Real Estate Professionals

Real Estate Professionals

Real Estate Agents

1206 topics, 7957 posts — Last Post 04/17/14, 09:20PM

Bankers, Lenders, and Mortgage Brokers

441 topics, 1919 posts — Last Post 04/17/14, 01:58PM

Contractors

268 topics, 1680 posts — Last Post 04/17/14, 08:08PM

Local Real Estate

Local Real Estate

Local Real Estate Networking & Recommendations

1984 topics, 11584 posts — Last Post 04/17/14, 08:36PM

Americans & International Real Estate

161 topics, 566 posts — Last Post 04/14/14, 11:19AM

Foreigners Buying in the USA

62 topics, 409 posts — Last Post 04/10/14, 06:27AM

Canadian Real Estate

64 topics, 427 posts — Last Post 04/17/14, 03:22PM

Marketplace

Real Estate Marketplace

Real Estate Marketplace

15004 topics, 53907 posts — Last Post 04/17/14, 09:32PM

Real Estate Events and Happenings

163 topics, 2476 posts — Last Post 04/17/14, 09:31PM

Off-Topic

Off Topic

Off-Topic

2902 topics, 32399 posts — Last Post 04/16/14, 03:07PM

Housing News & Real Estate Market

914 topics, 8351 posts — Last Post 04/17/14, 08:41AM

BiggerPockets Real Estate Investing Summit

97 topics, 1751 posts — Last Post 04/10/14, 02:27PM

BiggerPockets Resources

Forums » General Foreclosure & Pre-Foreclosure Forums » I couldn't sell this house, so I wanna buy it cheaper from the bank.

I couldn't sell this house, so I wanna buy it cheaper from the bank.

6 posts by 5 users

Signup

Wholesaler · Denham Springs, Louisiana


I have a contract from a motivated seller that was 4 mos. behind. It was a purchase contract with it contingent to me finding a buyer. I was trying to find someone to rent to own this house, Here is the scenerio.
Purchase from seller:
5 BR, 3 BA on 3 acre.
House was recently renovated from insurance money.
Looks new and ready to move in.
Buying for mortgage amount of $187,000
Appraised for $250,000 in 2008.
PITI of $1,850 mos.
2 yrs left of Prepayment penalty.
$7,000 behind

Sell to buyer:
via rent to own asking $1,850 mos with $10,000 down earnest deposit.
Selling price of $229,900

I marketed for 1 month before the bank took it and winterized the house. Only 6 bandit signs were used and I received an average of 8-10 calls a day on this one house. Damn, those sign work well. No one bit the hook due to the high monthly payment or down payments and to most, Both. Well guess what? I have plenty of buyers for lower priced houses when I do a rent-to-own.

Anyway, I've been talking to the bank with the house to see if I can make an offer to them. I offered them $115,000 two weeks ago when they called, but said that offer was too low. They finally called back today and said if I want it, they'll take $160,000 and no less. I thought about it and asked them to pay closing cost at that offer. They want me to put it in writing and they'll most likely take it. That's $27,000 less than what is owed to them.

I know I can still sell it on a rent-to-own or seller financing for $229,900. That's a $69,900 profit.

My question is, is this a good deal?

How can I purchase this house from the foreclosing bank without putting my personal guarantee on this house?

Should I pursue this?

Is there a creative way to buy this house?

Let me know, Thanks



Multi-family Investor · South Jordan, Utah


How are you paying the $160,000? Conventional financing using 25% down? Do you have that financing lined up?

So you're going to put $40,000 down and finance the remaining $120,000, $645/mo for P&I. From there, you're going to rent it?

$10,000 down payment reducing your cash outlay from $40,000 to $30,000... $1,850 a month (you can really get that for rent in Louisiana??) gives you a little less than $300 a month in cash flow. $3,600 / $30,000 = 12% cash on cash returns.

Not great returns... and if you can't really get the $1,850 things get dicey. Everything I've read about rent to own says you only have like a 10 - 20% conversion rate, 80 - 90% of the time it stays a rental and you just get to pocket a down payment.

I think you're better off trying to cash it out even if you have to sell it at $200 or $210,000. After $20k in closing costs, you'd still pocket $20 or 30,000. The numbers just don't work out for a long term rental hold IMO.



Note Investor · Fort Lauderdale, Florida


It does not seem highly likely that the property value has only fell a little over 10% since 2008. Secondly it does not seem highly likely the bank would take a 14% loss and leave $69k on the table.

That being said, to answer your question, if you conventionally finance it, they you will have personal recourse. Assuming you do not have access to a commercial line of credit with no recourse. You will have to put money down to finance it as an investment property.

You had the correct idea of finding a exit buyer via contract assignment or some sort of wrap but if the bank will not allow an assignment then you might have to take the house on personally and re-sell.



SFR Investor · Scottsdale, Arizona


I have a couple of concerns. How is it that the bank took it back being only 4 months behind ?

Secondly, how are you in contact with them directly?

Is your exit strategy solely to rent/sell on owner financing terms or could you just be happy with a traditional flip to retail buyer for profit?

I wouldn't even consider an appraisal from 4yrs ago. I would base my decision on comps within the last 3 months within a 1/2 mile radius for my conservative taste(this is a personal preference).

If the property is truly worth close to or around 230k and you're picking it up for 160k. I would just acquire the house however you see fit. Personally, I might pick up a HML instead of conventional, since it doesn't need rehabbing, turn it right around and sell it retail.

I wouldn't worry about percentages, COC returns or rental rates. I would just knock it out of the park and move on to the next one.



Wholesaler · Denham Springs, Louisiana


Thanks for all the responses.

The banks took it back close to 6 months of non-pay. It is a small local bank that I've been keeping contact since I signed a purchase contract with sellers. The loan officer kept me in the loop when something happened to the house.

I had plans on buying via conventional financing, but don't really want to go that route. Don't know how to go about this transaction without tying up my personal resources, as I'm getting ready to build a home for myself and currently rehabbing houses with the little amount of money I have left.

It's just too much money to leave on the table.

I know I can get $230k via seller financing. No way under conventional financing. Therefore, I'm stuck on how to go about this transaction with the bank.

Anyway to acquire this house from bank using creative means?



Wholesaler · Memphis, Tennessee


Have you not been reading others responses? One way to get this is go with a hard money loan or get a private pipeline loan at a lower interest rate for a longer period of time.


Small_buymemphisnow_stacksCurt Davis, Buy Memphis Now
E-Mail: [email protected]
Telephone: 901-207-8977
Website: http://www.BuyMemphisNow.com
KAIZEN Realty 901-221-4041




Sign up