Fellow Investors - Newbie asking advice .
Owner needs 17k to stop foreclosure / ARV 120k / min 50k rehab / owner will sign lease for 2 years $1100 per month.
Can this be presented to a money lender? I ran the numbers -ROI potential 20%
It looks like you would be all in at 76k, if that is correct, There are a few lenders out there that will do this type of deal. Lima one capital would be my first call.
The first question I have is how much time do you have to get this done before the bank takes it?
You want to make sure that you get the deed to the house and any sort of redemption rights are granted to you. I don't know FL law well enough to be able to tell you what those rights are, so make sure you close with a RE lawyer.
I'm not too keen on the seller staying for 2 years. Can they make the payments? did they damage the house? I would rather they just go away and would be willing to pay them to go away (cash for keys) before I did this deal
I hope that helps
Nothing in the post mentioned what the balance owed is - just the amount to stop the foreclosure which could just be the arrears.
My guess is that the monthly mortgage payment was less than the amount they proposed as rent; if they couldn't make that amount of payment while THEY owned it, what makes you think they will pay that every month when YOU own it?
Josh and Steve
I think that you both gave me food for thought. I will go the site Josh recommended and pay the owner to give me the keys without a lease. The balance is 65K.
Let us know how it works out. or if you pass on it, please. We don't get allot of data on the near misses.
Welcome to BP @Sylvia Harris ,
The numbers that have now been posted read "no deal". 120K ARV less 65K owed less 50K rehab leaves 5K. That 5K could be eaten up quickly by repairs that were not visible up front, and then there is still the fact that there will be closing costs too that will consume that 5K (even flat fee listing on the resale with a 2.5% commission to buyer's agent will take more than 3K alone).
Maybe this can work as a "subject to", but that is another topic - and it might not be a good candidate for that approach because you still have that big rehab number.
This is a Phila property and I see your reasoning and understanding that this may not be a good project. The numbers do not work. Too much debt and my rehab costs are conservative.
Thanks guys for helping me to better understand how to look at a project. Work the numbers!!! It has been interesting to overcome my fears, step out there and make the attempt. I will keep evaluating properties and now with a better understanding of what I am looking for. Brandon says in the webinars, that every project has the potential to work with the right number and this is not that one. Tally Ho, On to the next. (:-)
HAPPY NEW YEAR GUYS.
I submitted the numbers to a financial group out of Ohio, they got back to me within 36 hrs. They said what you guys did about there not being enough of a margin for profit.
The guy said they liked the way the numbers were presented (thank you - Brandon) (:-)
Property lost to foreclosure, owner not bothered by it.
I have just begun to learn about "Subject To"
Like Brandon says 90% of the time, the numbers do not work.
I appreciate the help extended to me.
Let's make deals in 2018!!
So now that the property has been foreclosed and it is bank owned, you should be looking to see when it gets listed on the MLS if you still want to pursue this specific property. Of course the owners are not bothered much - they knew this was the likely outcome, so they are accepting it because they were somewhat prepared for this outcome. Of course, they could have become upset and trashed the place - but then again it already needed quite a bit to be spent on the rehab.
The property was bought an auction which is a sheriff sale in Pennsylvania. The deed took 30 days to transfer during which time the owners moved. I am no longer interested in the property because the new owners are going to rehab it and then make a decision whether to sell or to rent. Thanks for the input, it's always good to talk it over with others.
There's been an update:
it appears I underestimated the value after rehab.
I thought $125,000 but it appears I was off about $27,000. Had I realized that there was a profit to be made this deal might have worked?
The property now listed for $152,000 it last sold for $2 and before that for $24,000
new owners modernized it and found out that there are 1 1/2 additional bathrooms. It is now listed on ZILLOW as a 3 bdrm / 2 1/2 bath - this is considered a rare find because no properties have been sold on that block in a very long time.
Whatever it sells for it has now raised the neighborhood property values up
I'm late to the party but your original post raises red flags to me. The current owners were defaulting on their mortgage, but you were willing to rent it back to them? What makes you think they wouldn't default on you as a newbie Landlord?
If they do it to a bank, they'll do it to you. I wouldn't have touched that deal without getting them out first.