Cash Buyers

4 Replies

Hello BP.

I'm looking for some advice and possibly an investor. 

As you can see in my profile I'm a lender. I've got a client who reached out to me through one of my Facebook ads. He's looking to buy a different home and sell, or rent, his existing. The problem is he doesn't qualify for financing because his mid FICO score is 504.

He and his wife are looking to downsize. They bought the home in 2009 for $150,000 and they owe about $125,000. The home is located in South St Paul, Minnesota.

My question; is there an investor willing to pay cash for his current property so he can get the equity from it and also finance a new purchase for him? Or possibly find a renter for his current place and do a 2 year balloon on a new property? He'd then refinance with me once he gets his credit repaired. From what he's telling me he makes good money (not self employed) but he and his wife went through a rough period where she lost her job. She's now fully employed again.

He seems very motivated to get out of his current situation. 

I'm not sure this is the right forum to post this so if not let me know. 

Best,

Corey

Corey Blane, Lender in CA (#NMLS 400872) and MN (#NMLS 400872)

Hi @Corey Blane . Have your clients talked to a realtor yet? The reason I ask is because you said they wanted to pull out the equity if possible. The purchase price from 2009 could be very different from the market value today. It will be hard to find an all cash investor if the ARV is to low, assuming the property needs repairs. Turning the property into a rental might be a better bet( this is assuming it is rent ready, in a good rental market, and can bring in enough income to make sense). Also they would have to become landlords or hire a property manager and that's a whole other aspect of the business. I work a lot with sellers in these types of situations and it just requires more information and digging then what is initially provided.

@Cha Yang

They haven't talked to an agent. It was an idea I mentioned to them because they want to get out from under the current mortgage. 

The reason I asked is because I always see these signs on the side of the road that say "We buy houses with cash, any condition...etc.". 

In any case if you wanted to reach out to me via PM I can provide the address and see if there's some type of deal we can help this client with. 

Corey Blane, Lender in CA (#NMLS 400872) and MN (#NMLS 400872)

You are referring to the bandit signs, and contrary to the sign they don't buy any house in any condition. That's just to get people to call. They will look at the deal then decide if they want to offer on the property. I know because I have used bandit signs as a marketing strategy in the past also.

What is the upside for the potential investor? It doesn't sound like there is one, as best as I can gather from this post:

1. They bought a house for $150 and still owe $125 and it has a note. If we assume they want to get "out from under" the mortgage, it's probably at 80% or better, meaning they probably have a note for $110-120. They likely have little equity in the house in its current condition considering the time frame in which they bought.

2. A private investor then has to carry a note for a guy that the banks won't touch and hope he can refinance his way out at some later point in time. The only way anyone is going to do that is if they are making a nice dime on the deal, which probably puts this guy in a worse situation than he's already in.

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