Less than 30 days to try and help a vet in preforeclosure!

7 Replies

Hey BP,

I'm a newbie and need some help with a wholesale deal. Owner is in pre foreclosure, auction date is set Dec. 12th. Owner purchased home in 2014 and currently has it rented out to a tenet who lost their job. The bank is asking $119k to payoff or pay past due balance of $5k. The ARV for the area is $135k-145k. The house itself isn't in terrible condition, just a few cosmetic updates. The owner is in a tough situation, he's a military veteran and he's going through cancer treatments, needless to say I would love to help him out but I need some ideas. There isn't enough equity to wholesale or flip. Rental rates for the area are around $1k. If anyone has any suggestions I'm all ears! Thank you!

@Andrea Parsley for a quick response; sounds like the only option is a subject to, getting the mortgage current and renting it out again, but you may already know that. What does the seller want to do? What are they asking? Are the current occupants planning on leaving? Do they know or are related to the owner?

Hi @Andrea Parsley . Yes, this sounds like a tough situation, but the real loser here will be the tenant, not the owner, who doesn't actually live in the house.

Is the issue that the tenant is not paying rent, and therefore the owner can't pay the mortgage? If so, why hasn't the tenant been evicted? Assuming the loan payment is less than $1K, this situation has gone on for at least five months...

What I hope is not the case is that the tenant is paying rent but the owner is not making mortgage payments. That's a straight-up crime (rent-skimming) and you don't want any parts of that.

What is the actual monthly mortgage payment? If there's sufficient spread between that and fair-market rent, there might still be a deal here, even without equity.

@Ray A Delfi thanks for the response. To be honest I’m not all too familiar with subject to. I know the mortgage stays in place but how are the past due balances and fees paid? The seller doesn’t want to profit, he just wants this weight taken off his shoulders. Current occupants are allegedly going to be out Dec. 1st. Owner and tenant are friends which is why I guess an eviction never occurred.

@Andrea Parsley if the owner wants to walk away then, to put it simply, mortgage stays in their name you make the payments to the mortgage company (set up at escrow). You have title then BRRRR it. If you default on any of the payments the seller gets their property back plus improvements. Here's a few steps, but to get you on the right path but definitely read up on this and consult with a realestate attorney.

-find out what they need to get the Tennant out, if it’s a simple Cash for keys, continue, if it’s an eviction, you may not want to get involved. If your going to do it, approach the Tennant’s with caution, don’t be a hero.

-coordinate with the seller to make a call to the servicing company to confirm the amount to bring him current. Get a copy of the mortgage statement.

-do your due diligence and run the numbers,

-if it’s a good deal you’ll have to get it under contract,

-send a check to the loan company to stop foreclosure,

-assign the contract to an investor that you have met in one of your REI meetings, you know personally, or keep it for yourself.

P.S. everything you do involving money is done through escrow! Never put up your own cash in hand, but cash for keys may be the exception, you’ll have to get creative on that one.

@Andrea Parsley :

Hey BP,

 he's a military veteran 

Does he have a VA mortgage? If yes, you might want to check if the lender would let you assume it. VA loans usually have lower interest rates and closing costs.

@Andrea Parsley The best solution for the owner of this property is to:

1. Get the tenants out if they're not paying.

2. List the property for sale with a realtor. (There's enough equity to pay real estate agent commissions and transaction costs. He might even walk away with a few bucks when all is said and done.)

You're right. It doesn't look like there's any room for you but it's the cleanest way for the seller to get rid of his burden. He doesn't need to worry about this stuff while he's dealing with cancer.