New investor's first potential deal - Need advice!
The deal is a probate situation where the daughter has inherited the property from her mother. Upon inheriting the property the home was already delinquent by 12 months with a $70,000 balance. She says that she was unable to bring the note up to date but tried to submit three months’ worth of payment to the bank. The bank was quick to decline any payment on the mortgage. She also says that her and her husband have tried to refinance the house and renegotiate the terms of the loan but to no avail. She says that she has also talked to lawyers about filing for bankruptcy but that it is not applicable to the this particular probate situation? This is where she had seen one of our bandit signs stating “You have options – We buy homes”. She wants to know what we can do for her to save the house.
She said that she had received the Lis Pendence in June of this year, so by my calculations (and according to FL law) she has about three months to figure out what to with the house before the bank takes it and loses all that equity. After doing a little foot work I have come up with an ARV of about $245,000 based on some not-so-strong-as-I-would-like comparables from the MLS but seems to fit other estimates such as Zillow's Zesitmate and the county's assessed value (slightly lower). I also have found that they currently have the house up for sale on the MLS for $188,000, reduced in price twice since Aug 2013. The house will be a very minimal rehab project if we do manage to get her to sell the house as it requires mostly cosmetic repair, although I won't really know what it needs until I actually get out to the property and take a look for myself, adjusting MAO accordingly. The aesthetics of the house is what leads me to believe that the house is not selling on the MLS. She also realizes that due to a major highway construction plan in the general area that the property value is to increase significantly within the next few years. I am currently trying to confirm the exact plan for construction with the county. She also has said that there are couple tax liens against the house that are "soon to expire"? I assume these liens are her parents incurred, as that is the only reason I can think of a lien expiring (as they have both passed). I am having some difficulty locating the liens but that is what would be covered in a tittle search should we get the property under contract, right? I'm told the liens equate to about $88,000.
Property Details: 4BR/2BA, Log Home, 2300sqft, 2 story, balcony’s on both floors, located on just over 5 acres of land, detached garage, stables for horses and about 2.5acres of fenced pasture. Home built in 1986. More info available upon request.
What approach should I take when we go talk to her tomorrow? She wants to keep the house but considering what she has told me as far as her credit and previous attempts at renegotiating the loan are concerned, what else is there to do but sell the house, save her credit and salvage what equity she can?
Refinance with a private lender for a high interest rate and points up front? Would a PL assume this kind of risk with the liens and all?
Thanks for any input!
Scott
PS-First post, hope I didn't over do it!