So at the the height of the boom, I did the unthinkable. I purchased a condo with an ARM and have since needed to modify the loan. It is not a Freddy or Fannie and the modification lowered the payment and interest to a nice 2.75% for 3 years (which I have one left). I have a combined 240K on the prop and other units are going for about $170-180k. I currently have a renter in the unit who is covering the mortgage and has expressed that he would love to buy the place (without me losing my shirt on the deal) in the next 6 months. Is there any creative way of doing this and still getting a small ROI?
Now, some might say you could do a lease/option with this renter. But your ARM adjusts in one year. And it will take many years before the payments knock down the loan balance to the point where you could sell for more than the payoff. Further, it would be, IMHO, wrong to sell a property worth $170K to someone fro $240K, even if they were willing.
But, what are the terms of the loan? Is the current payment interest only or amortizing? What's the recast rate when the year is up?
Now, what you might be able to do is a short sale. If this tenant can actually get a loan and has some down payment money, the bank might agree to a short. Especially to an OO, since an OO probably isn't looking for the same discount over fair value than an investor would want. Have you approached the bank about a short sale? Do you have some hardship that could be used to justify a short?
The short sale is going to be a big hit on your credit.
Is this the same property you posted about previously? There you said you did a refi two years ago. Now you're saying you did a loan mod. You also said it was purchased as an investment. That makes it tougher, though not impossible, to do a short sale.
Thanks John, the prior post was about another property. Looks like short sale will be the only way to make it work.
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