How can I structure this deal?

12 Replies

I just came across a motivated seller and shes 85 years of age. She has 164k left on the mortgage with a payment of $1,029 and only has $700/mo coming in. The ARV is 169k. The repairs are about 30k. The house is in pre-foreclosure as well. I know I can't use the typical wholesaling model on this one, so what can I do to help her out? A few people have said lease option but I am not familiar with that strategy. Can someone give me input on how to structure this deal?

Sounds like she can demonstrate financial hardship for a short sale. She stopped making payments?

If the mortgage balance and value are the same, a short sale may not work but it will probably buy her time.  If I were her I would just delay as long as I could. No payments, save as much as possible.  Who gives an 80+ yo a long term mortgage she can't afford anyway?

 A couple years ago I was trying to help a family in pre foreclosure. I submitted a low offer to the seller to give the bank just to slow them down.  I think it bought them an extra 6 months as the bank sent the offer to one dept after another and didn't really know what to do.    The family saved up a pile of cash over the months it took for the foreclosure to happen and were prepared to move on when it finalized finally.

Originally posted by @Doug Pretorius :

@Steve Vaughan Man that's a great story haha!

 Thanks , Doug.  If you got something out of it at least it wasn't a complete waste...

@Josh Rogers

I second a short sale. With 164k on mortgage, 30k in repairs, and an ARV of 169K, you are 25k upside down if you pay out the mortgage in a purchase.

Unfortunately, most, if not all, banks require a RE agent to process a short sale.  So your first step would be to contact a RE agent who specializes in short sales.  You have probably less than a 25% chance of success with that strategy and a very long road. 

Alternatively, you can gear up to get it through the auction process. Make sure you do a good title search before the auction.  You may be buying 2nd position unbeknownst to you. 

Well then if the auction does not work out, you can get it as an REO. Numerous times, I have followed properties through this cycle. Typically, an REO does price reductions every 30 to 60 days. So they may start high, then gradually reduce it to an amount that is sensible.

It looks like a low percentage of success, so I would be hunting other deals while monitoring each step of the process of this particular parcel. 

@Josh Rogers geez theres no room in that case. I agree, try a short sale or just let the bank take it. This will hurt her credit score so she should start saving money now to move. Maybe you know some landlords or property managers with vacancies. I dont think theres a lot of profit in it for you but lots of good karma points for helping her out.