Junior Lien Holder Disaster Turn In to Foreclosure Opportunity?
Everything started with me funding a fix and flip project in Washington state as a junior lien holder. The property was sold during pre-foreclosure undervalue. I agreed to remove the lien with the rest of the debt secured by another property that the borrower owes in Arizona state. Now, the borrower has defaulted on the payment to my note, and I am in the process of filing a trustee's sale. Below are the numbers I gathered.
The property in Arizona was sold at $313k with $22k down payment and the rest of $291k was seller financed with a monthly payment of $1,500. The property was then lease-to-own to the current tenant with $26k down payment, $1,650 monthly payment, and $325k sales price with balloon in 2027. Then my debt of $19k is secured by this property as well. The market value of this property is at $307k.
Based on the above scenario, after the foreclosure sale, I still would not be able to recoup my debt since the estimated market value of the property cannot cover the entirety of the senior loan and my loan. I am considering the possibility of taking over the senior loan along with the tenant on the same term, which will give me $150/mo cashflow for 4 years, which total to $7,200, then plus the balloon payment of $325k in 2027, which will be $34k+. Seems like a better deal than actually selling the property to a third party?