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Property in Preforeclosure with lots of EQUITY!
15 posts by 6 users
Arnold C.Real Estate InvestorSeattle, Washington 
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We been in contact with OptionOne Mortgage on a property that is in PreForeclosure , they are mortgaging for 283k with arrears. The property is in a good neighborhood but the property is run down and lots of junk in, on, and around the property. The Comps for the neighborhood is 455k-510k
The Seller is very motivated and would agree to sale with minimal profit to himself I was considering trying to assign the property to a builder for 25k or Trying to Short Sale it also...if possible? Any & all input will be great Thanks Everyone! |
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John M.Real Estate CoachChicago, IL 
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I'm not sure what you're saying -- what is the loan payoff? |
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Eric F.Real Estate InvestorPortland, OR 
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Mortgage Balance… Totals past due plus attorney fees? Cost to repair? 2k, 20k, 200k? Seller minimal profit? 2k, 20k 50k? More specifics please... |
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Arnold C.Real Estate InvestorSeattle, Washington
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Loan Payoff is Est. $282,201.33 Total all fee's Seller wants 350k for the property (still not executed) Repairs & Rehab is 90-110k guesstimates The Home is 800sqft on a 5000 Sq ft lot. If I can provide anything else let me know, Thanks for all your advice everyone |
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Eric F.Real Estate InvestorPortland, OR
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So lets say you pay $350k... after closing costs you are in at about 360k plus lets use $100k to repair... you are now at $460k... To get to the point quickly... If you list it for 500k and sold it for that amount... pay a Realtor commission and closing costs again... and pay say 3-6 months of holding costs, mortgage, taxes and insurance... you would lose 10k-15k.
Guesstimates = No Money...
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Arnold C.Real Estate InvestorSeattle, Washington
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Thanks Eric for your Advice. We're going to wholesale the deal. We're going to redo our numbers so we can make a conservative spread and also get our investor a deal too. |
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Eric F.Real Estate InvestorPortland, OR
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An investor buying it wholesale will do the same “quick math” and come back with a quick " No" as their answer... Rework the numbers… i.e. Offer less, reduce costs to rehab, sell to end user, etc |
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John M.Real Estate CoachChicago, IL
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Nunya B.BankerMD 
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First - get REAL estimates. Second - it's too tight if those estimates are correct or close. You'll lose money unless you can purchase for closer to 300k. |
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Jon H.Real Estate InvestorDenver, Colorado 
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Its worth $450K and needs $100K of work, right? And you're going to wholesale it, so you want a cut and still leave enough profit for your end buyer. I think you need to be closer to $225K on the purchase price. I have other posts where I break this out in more detail. But, if a rehabber buys a house and has rehab costs that come up to 70% of the final sales price, do it in six months, use hard money and some of their own for the deal, they will stand to make about 12% of the selling price after the closing costs on both ends and the holding costs. That's about $55K in this case. If you buy for $300K and flip it for, say, $310, the rehabber is going to lose money. At $350K like the seller wants, there's no deal. $350K + $100K rehab = $450. You lose all the costs, which in this case is going to be something like $60-70K. Jon |
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Arnold C.Real Estate InvestorSeattle, Washington
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Thanks everyone! Recently I got the seller to agree to 325k with 285k in arrears. I have a buyer for retail buyer for 365k. I want to flip this property with a vehicle. Would I consider an Option or a Land Trust? There’s a problem that might come up as I'm a licensed agent. Thanks Everyone! |
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John M.Real Estate InvestorRancho Cucamonga, CA 
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hey seattle, so how much would you get out of this deal (if you haven't already provided the numbers)? Is it a simple subtraction of the your buyer's offer and the purchase price? |
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Arnold C.Real Estate InvestorSeattle, Washington
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Yeah simple subtraction, 40k estimate I'm a real estate agent too so I just found out that we have a form that the mls provides with an Option Form |
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Arnold C.Real Estate InvestorSeattle, Washington
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Thanks for all of your advice members. |
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Edited: 12/19/2008 at 01:08AM by Arnold C. |
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Eric F.Real Estate InvestorPortland, OR
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Glad to hear it worked out! |
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Posted: 01/18/2008 at 04:53PM
Ha! Truer words of genius have never been spoken . . . I bow down before you!