your thoughts?

12 Replies

Hello all, seller is behind 8 months on his mortgage ($3000). The home is vacant but in good condition still. ARV is 65k. Mortgage has a balance of 23k (including past due). Piti is $400 a month. Seller just wants out. First deal. How would you approach? Ps. I would rather a big payday over rentals but am open to strategies. Thanks.

This sounds great to me with the rough numbers. What repairs (including dollar amount) would you need to do to get that 65k value?

Hi Nicole, this property minus a good cleaning is move in ready according to seller. His son was there last month to check on it for squatters and animals, and cut the grass. I dont have the 3k cash to bring current.

Hi- Rick Jabour here. These numbers sound really good. I live in California. So your numbers are quite different there. If you

don't have the money to bring the payments 

current you need to bring in a partner to

close this opportunity or tie up the property with a contract to purchase then quickly wholesale (flip) the house before it goes into

foreclosure. If the owner will cooperate with you, you might go to the lender to see you

can take over the mortgage, (with the condition that the mortgage is brought

current).

There are any number of variations for this deal with a motivated seller,  but you need a little cash to make

this happen.Rick Jabour,  Vacaville, Ca.

so if time is on my side. I write up a purchase agreement for the amount of mortgage with my name, assigns on it and sell my contract to another investor for 10k more? @richardjabour

Banks don't like 'or assigns'.  Gotta bring the mortgage current somehow.  Get a partner for now who has actually saved a buck or two.  In the meantime check the amount of cash you are throwing away eating out & drinking lattes, your car payments, etc to figure out why you have no money.  Work more and save. Can't invest with nothing to invest!  

Originally posted by @Steve Vaughan :

Banks don't like 'or assigns'.  Gotta bring the mortgage current somehow.  Get a partner for now who has actually saved a buck or two.  In the meantime check the amount of cash you are throwing away eating out & drinking lattes, your car payments, etc to figure out why you have no money.  Work more and save. Can't invest with nothing to invest!  

 Good advise @Steve Vaughan/all. If the mortgage was current wouldn't It be smarter to do a double escrow strategy and use transactional funding with the end buyer or private lender once free from foreclosure? If the seller agreed to the assignment prior to foreclosure and an investor paid the mortgage off I wouldn't need to bring it current.. Correct?

@Scott Titus , in a normal transaction you would be correct with your double escrow strategy.  That can work very well if your not in a 'transfer tax to the hilt' state like WA.  My fear for ya is that banks will want the purchaser to follow through and not allow an assignment.  What lending company is it?  Maybe a more experienced wholesaler that deals with banks can help?  

If you have not seen the house go take a look at it. If its in the condition the son claims it is have a title company do a title search. If the owner is behind on his mortgage he could be behind on taxes or have some liens on the title too. 

Then try to lock it up with an assignable contract. Some banks will accept assignable contracts and some won't. It won't hurt to try. If you get a contract on it, you can assign it. 

If the numbers are what the owner says they are, this house works for a 65% LTV hard money loan all day long with some extra $$$ for a little updating. Despite what the seller says it probably needs some work. Once you get it under contract you could get a hard money loan from on of the lenders who advertise on BP.

Don't put too much on the assignment fee. I assign it for $7K, unless $10K is normal in your area.

Good luck & keep us posted.

Originally posted by @Jeff Morelock :

If you have not seen the house go take a look at it. If its in the condition the son claims it is have a title company do a title search. If the owner is behind on his mortgage he could be behind on taxes or have some liens on the title too. 

Then try to lock it up with an assignable contract. Some banks will accept assignable contracts and some won't. It won't hurt to try. If you get a contract on it, you can assign it. 

If the numbers are what the owner says they are, this house works for a 65% LTV hard money loan all day long with some extra $$$ for a little updating. Despite what the seller says it probably needs some work. Once you get it under contract you could get a hard money loan from on of the lenders who advertise on BP.

Don't put too much on the assignment fee. I assign it for $7K, unless $10K is normal in your area.

Good luck & keep us posted.

Update. The seller was off by ALOT. He owes 55k. With ARV of 65k. It is in foreclosure but no auction date has been set. I did see the house it IS in good condition (surprisingly). Because of the condition being good (with inspections) would you offer the bank 65% or move on?

No deal with those numbers. 

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