I met a sweet little 87 year old woman today in her apartment. She owns a beat up house in Largo, FL. Somehow she owes Wells Fargo $96K (HELOC?) but the tax office says it's worth $53K. It probably needs $30K in repair. The neighborhood is not too bad although it does have some rough spots pretty close by. She's living on a few hundred dollars a month. I'd like to help her and she wants to work with me but I wanted to see if my ideas would hold water with you guys.
Would you go to Wells Fargo and explain that they'll probably never get their money then offer to pay them $26,500? $53,000? Or walk away because a short sale is a lot of work?
I do wholesales not buy and holdls.
I have rentals, but usually the tax estimates are not right. They especially are not right when there needs to be alot of work on the house. They are usually by square foot not condition. Don't get me wrong if you have a sweet house with bling, they will usually increase it. Typically and awful internal condition house isn't decreased.
So the first thing I would do is get a comp, me personally would get one from a realtor. Most banks are going to do a BPO. I have no idea how you would do a short sales as a wholesaler. Hopefully someone else can comment on that. The real key is what is the house worth fixed up. Banks have gotten VERY stingy latly in my markets.
There is very little information here so I will also speak in generalities.
The tax records are never the true market value. The tax assessor takes the budget requirements, divided by number of houses adjusted for the area and improvements.
She has a $93k mortgage on a property that is worth less because she either bought at the wrong time or used her home as a cash register. I see a few options:
1. Refer to a good Realtor that can handle a short sale, there are a number of them in our area.
2. You could get the property under a master lease and then sell your interest in that lease. Guessing at PI on a $93k mortgage I would say it is around $500/month, TI another $250. This would leave about $200/month rental spread.
$30k would do amazing things for a small house. The rent ready would likely be much less than that. No one will hit a home run from this deal but it could solve her problem, put some cash in your pocket abd get someone else a low cost of entry rental.
As others have said, tax values are not accurate. For the properties I've looked at in Monroe county, the tax value seems to run about 50-60% of value, as a Very general rule of thumb. There is no way to avoid the short sale process of you're looking to short the loan.
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