Do you think there is a way to work this deal

5 Replies

I attended a investor club last night and was talking to an investor about a deal he was working on. Here is the details as best I can remember.

Vacant 3 bed 2 bath home with a  $86,000 1st Mortgage that hasn't been paid in 18 months. Payments of $700 a month.

$20,000 lien on the property that the lien holder has agreed to settle for $3,000

After repair value of $135,000

Repair Estimate of $25,000

Houses could rent for 2,200 or more.

I am working on rebuilding my credit. Currently have a 610 credit score that is slowly going up. My wife has just started  a small business an have little for a down payment right now.

Is there a way to structure this as a lease option? Come up with and pay the $3000 to satisfy the lien, negotiate with the bank to move missed payments to end of mortgage and take over the payments, and structure something with the wholesaler to pay him his $5,000 wholesaling fee when we close in 1-2 years or come up with some kind of financing deal.

I should add the idea would be to move out of the house we are renting for $2,400 an live in and fix this house. Any Thoughts?

Hey @Adam Anderson  !  Good job networking and coming up with a deal to review.  When a home is 18 months behind on payments, a lease option would not be the first tool I pulled out of my bag. Sure the wholesaler will take the fee, the lienholder will take $3k and (wait a minute!  Where'd everyone go??)  you'll be stuck with a house in foreclosure and big bucks required to bring current.  All of this after you've fixed it up.  Maybe a short sale or cash for deed.  18 months is quite a bit of arrears.  See if the bank can add it to the back end so you can resume payments maybe.  Anyone else?  

Originally posted by @Steve Vaughan :

Hey @Adam Anderson !  Good job networking and coming up with a deal to review.  When a home is 18 months behind on payments, a lease option would not be the first tool I pulled out of my bag. Sure the wholesaler will take the fee, the lienholder will take $3k and (wait a minute!  Where'd everyone go??)  you'll be stuck with a house in foreclosure and big bucks required to bring current.  All of this after you've fixed it up.  Maybe a short sale or cash for deed.  18 months is quite a bit of arrears.  See if the bank can add it to the back end so you can resume payments maybe.  Anyone else?  

 The whole deal would have to hinge on negotiating with the bank to move payments to the back end of the mortgage. I have heard of people doing it but I don't know if they will do it with 18 months arrears. Would I need to get something from the current owner giving permission to talk to the bank?

Adam, the most profitable 4 letter word you can learn is, NEXT.

Is the $86k before or after the 12k in back payments, pulse interest and late charges. It almost doesn't matter.

Make a cash offer to the wholesaler of $56k, including his fee, let yourself get talked up to $62k if you must. (never start with your highest and best offer).

Or tell the wholesailer/ seller you would be willing to take over payments if THEY get all the back payments re structured with the bank.

Make these two quick offers, then move on. Look at many deals and do the easy ones, dont work hard on any one deal. "if it aint low hanging fruit I aint eating".

The numbers look like they would stretch you a bit, i'd hate for you to get into this deal and worst case scenario, the bank calls the due on sale clause and you are out of a house and have wasted money... If it were me i would find someone willing to do a seller finance that either owns it free and clear, or isn't behind so much. This one seems like an okay deal, but pretty risky if this is your first one. 

I bet with some searching you can find a better deal for you with less risk. 

Jordy Clark, Real Estate Agent in UT (#8992415-SA00)
Originally posted by @Judah Hoover :

Adam, the most profitable 4 letter word you can learn is, NEXT.

Is the $86k before or after the 12k in back payments, pulse interest and late charges. It almost doesn't matter.

Make a cash offer to the wholesaler of $56k, including his fee, let yourself get talked up to $62k if you must. (never start with your highest and best offer).

Or tell the wholesailer/ seller you would be willing to take over payments if THEY get all the back payments re structured with the bank.

Make these two quick offers, then move on. Look at many deals and do the easy ones, dont work hard on any one deal. "if it aint low hanging fruit I aint eating".

 The issue is I don't have the money for an easy one right now. Two years from now I should have cash and credit for easier ones.

$86,000 is the remaining balance on the mortgage. I don't see how he could take $56,000. How could that even work with a $86,000 mortgage short of a short sale. The problem I runs into is low credit score an low down payment funds.

The owner as resigned himself with the bank foreclosing. Will a bank restructure the late payments? Is there additional incentive is there is damage to the property?