Property with no equity

3 Replies

Hello Community. I am looking at a low end property in a decent neighborhood. The community is stable as far a housing values are concerned. The price for the home is consistent with the Comps. There is very little  real estate activity in the area.The home owner has purchased another home and he is in need of selling this property and not continue to pay two mortgages. He is currently over leveraged and needs to get what he owns on the mortgage. He has a realtor working with him who does not know what to do for his client. There are very few offers on the table. Of note I came across the property through an expired listing.

My thoughts:

1. Consider a subject 2 approach and ask the home owner to release the realtor. 

2. Do a lease option and find an end buyer to purchase the option.

3. Walk away since there is no room financially if the realtor remains with his client. The client will come to the table owing everyone.

What are your thoughts my BP community?

You seem to have a pretty good handle on this one.  I would look to do a lease option with sub-too terms, then exit with an NROC payment to me, and let a tenant buyer have it.  that is assuming that you can find a tenant buyer.  The thing that concerns me here, is that you say there is little activity in this area, why? You might want to build a few months into your agreement before your first payment is due, or a funder clause that says your deal is subject to your funders approval.  

HI Josh! Thanks for the reply. I intend to reach out to the owner and make an offer ( combined terms you mentioned). Regarding the slow activity, my realtor friend indicates that home owners tends to remain in the area without selling.  Those homes that have sold go back a few years but not a lot of recent sales. I don't know if this nails  it completely but it does speak to all of the comps in the area being about the same. What factors create that dynamic who knows! My focus is to meet with the owner and make an offer.   Thanks for the share and reaching out, Josh.

HI Josh! Thanks for the reply. I intend to reach out to the owner and make an offer ( combined terms you mentioned). Regarding the slow activity, my realtor friend indicates that home owners tends to remain in the area without selling.  Those homes that have sold go back a few years but not a lot of recent sales. I don't know if this nails  it completely but it does speak to all of the comps in the area being about the same. What factors create that dynamic who knows! My focus is to meet with the owner and make an offer.   Thanks for the share and reaching out, Josh.