- Dear BP Friends, I recently found a FSBO in a great location, the owner wants to sell his property as is for what he owes the bank. The reason behind this is because the house needs fixed up---new carpet, water heater,all new flooring throughout and the bathroom needs renovation as well. the gutters are falling off and the fascia boards are rotting...with that said I can buy it for what he owes the bank with 2k additional for him to walk away happy. However, I will use a trusted local title co to complete the transaction with a FSBO contract made legal with the county.
- I make his payments each month...I collect rent each month...i make small $200 profit on 15 yr left. However, he recently called his bank about the situation and they told him that they have an assumable loan for him to use if he is ready...I am trying to avoid 20% down as I need to repair the property with my cash reserves.
Should I use his banks assumable loan contract or should I go with my local title companies FSBO contract? Sorry about the bullet points--I cant seem to delete them.
If your credit and income qualify, you won't need the 20% down, IF you plan on owner occupying. If his loan is assumable it's likely an FHA loan (or a VA loan) which is owner occupant only. If you plan on renting it, this won't work. You could do a sub2, as you were describing, with the inherent risk. A title co. Can give you a standard local contracts.
I plan on renting it only...thank you for making up my decision and thank you for taking the time on Sunday evening to help me out!
Just because someone is willing to sell for what is owed does not mean it is a good deal. Many an investor has lost a LOT of money buying only for that reason. Do your homework first. It may or may not be a smart buy.
You are exactly right. By the time I'm finished the property will fit within the comp range in that neighborhood. Its no home run but worth the investment.
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