Upside down mortgage/Possible opportunity? - Katy, TX

13 Replies

Hello All,

So I've been thinking about this for a while but I have limited knowledge real estate investing. I'm going to try to keep this short and sweet.

My mom and her husband live in Katy, TX. They bought their SF home (4b/2ba) when the market was high (before the crash) and they are now upside down with their mortgage. They both want to move back to Los Angeles but their current mortgage situation is holding them back. They have played with the idea of renting their home and moving out here but can't workout the property management aspect.

Flipping over to the Los Angeles side and my story, I'm still trying to acquire my first investment property in LA but have had a difficult time as multi families are out of my price range (FHA 3.5%).

An idea I've pondered is to buy my mother's home and then rent it out to tenants which should allow my mom and her husband to move back to LA. The property management would still be a challenge, though. I do have family out there near by but they work FT and I don't want to rely on them too much.

Is this a feasible idea or just a newbie tragedy waiting to happen? I'm trying to think my way through it but with my limited knowledge of REI, I'm not sure I can accurately plan this out without covering all the bases or if it'll even work.

Thanks for taking the time to read!

You stay classy, BP.

@Dilthon Ramos  How will this help your mom and her husband? What you are suggesting is them doing a short sale to you. If they had wanted to do that then they would have. Their only option would be to get some sort of loan modification. This would be only available to them, not you.

Upen Patel, Mortgage Banker

Federal NMLS# 1374243

If you're going to buy in Katy, why not find a house that is undervalued or at least valued properly? Why would you take over their overpriced house unless you're considering a short sale?

No.  Don't even think aout a sub2, it won't work out well.  As for a short sale, there would be no advantage to you buying it, and the bank won't allow a family member to buy it anyway.  They could try a short sale if theyreally need to move.

@Dilthon Ramos

I'm having a hard time wrapping my brain around anyone in Katy being underwater. We didn't have the severe crash in Houston because we didn't have the crazy bubble beforehand. As I recall things slowed down and home values dipped a little, but not like in other states. And they certainly have rebounded since then.

I experienced the Katy market first hand this summer when I represented a couple buying a home there. The homes were being scooped up within a day or two of going on the market. There were always multiple offers, always for higher than list price.

If you need some assistance in sorting this out, I would be glad to help. PM me for more information. I'm actually really curious and would love to get the details of the situation.

Originally posted by @Fred Heller :

@Dilthon Ramos

I'm having a hard time wrapping my brain around anyone in Katy being underwater. We didn't have the severe crash in Houston because we didn't have the crazy bubble beforehand. As I recall things slowed down and home values dipped a little, but not like in other states. And they certainly have rebounded since then.

I experienced the Katy market first hand this summer when I represented a couple buying a home there. The homes were being scooped up within a day or two of going on the market. There were always multiple offers, always for higher than list price.

If you need some assistance in sorting this out, I would be glad to help. PM me for more information. I'm actually really curious and would love to get the details of the situation.

You are correct.  Unless they paid way over market price they should not be upside down.  They should actually have a fair amount of equity.

Originally posted by @Carolyn Morales :

How did this work out? Any Remedy? Dilthon Ramos?

 Hi Carolyn,

It's been a fiasco but, in the end, a short sale was the best solution. This is because as we looked more into the paperwork, more details from the loan arose and a short sale was the best option.

I will say this: Fred Heller, here on BP, was a great help.

Thank you,

Dilthon