I have a messy but interesting first opportunity...
Friend of a friend is in bankruptcy and facing eviction but has good employment and a good pay record. Her name and her father in law (FIL) from a failed marriage are on the note. Father in Law will not return calls and so her entire financial state is tanking. she can not sell because of the FIL. House is 1489 SF 3/2 home built in 2003 shows to be worth 145,572 but might be a window to acquire for $100k prior to repossession.
Thinking of trying to work this deal and keep the wife in the master at 650 with another known renter at 500 and a third at 450 with me paying the utilities and no lease agreement. The deal would be
- Bid $100k
- down $20k
- immediate repair $5k from cash
- Borrow $80k
Mortgage Costs $799.43
- P&I $381
- Taxes = $297.50
- Insurance $90
- Mortgage ins $30
Landlord costs $179
- Repairs 7% = 56
- Vacancy 8% = 67
- Management 7% = 56 Probably me
Utility Costs = $290
- Elect = $110
- Water sewer = $70
- Gas = $40
- Internet = $70
Expected rent =$ 1600 / month
Total costs = $1268 / month
Cash positive $332 per month
It is messy with the situation and might go on to the court house before we can get in but what are your thoughts? First time here so I hope I did this Ok.
Blessings and Thanks
Try a sub 2
Yeah, I wouldnt get a loan for this one. I would offer to take over the debt subject too, and get a quit claim from the father in law.
I would explain to him that I can save his credit from that repo, and that will save his chances of buying a house, car, etc for the next several years
For her, I would take over her debt, place the house into a trust with me as trustee, and have her change the benificiary to my in a few months, once the bank got comfortable with the idea of sending me the bills and getting paid on time.
I would want a lease with the current owner, or she would need to go. Business is business. If she isnt paying the bills now, then she either becomes my renter of she goes. In most states that lease gives you many of your rights as a landlord.
I hope that helps
Lisa - Thank you for the tip on going sub-2. I have begun looking into that. Would you say that I would need more experience or legal council for this route? Is there a resource you would recommend to get me up to speed?
Also if I take over teh payments I believe i will take over around $130k in debt verses acquiring for $100k. Would that still make the best sence to you?
Thank you for the kind response and the structure of the deal. That looks like it might be beyond my grasp as a newbie. Any thoughts on where I would get the help I might need? The trust seems complex - what is the end goal and what are you avoiding in this method than just picking it up quick sale? Seems like the equity opposition is good so I just am wondering what advantages the subv two with the trust will gain me?
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