How should I proceed?
I got a call from a lady today in response to an ad I had on Craigslist. She moved out of the city a year ago and has a tenant in her house (his lease is up in May). She said the magic words on the phone "I just want out. I don't care if I make any money." =)
According to her, she has $70k left on her mortgage. From the analysis that I've done (which was through RealQuest), I think the house is worth ~$90k. In fact, there's a house just 4 doors down going for $93k. She said that there shouldn't be anything to fix up, but she hasn't been to the city in that year she's been away, so she can't confirm. I did a drive-by today and everything looks really nice. Roof looks perfect and the yard is even nice!
Her mortgage is an ARM and is about to adjust. She is afraid of going into foreclosure. I think that fact rules out a lease-option, correct? I'm not sure rents would cover her newly-rated mortgage.
Is this a good time to option? This would be my first deal, so I'm just looking for advice on how to proceed. What questions should I be asking?
as my brother told me... "it is all about the cash flow" ... what is the cash flow on the property? What are your plans i.e resell it or keep it?
Well, like I alluded to in my post, the property is cash-flow negative right now and is going to be much worse when the ARM adjusts in May. I think that rules out lease-options and subject-tos, correct?
My ideal exit would be a quick resell at retail. I want as little money in this as I can have. None sounds nice. =)
First thing you need to do is inspect the house and see if it does need anything. People say “it doesn’t need anything” and yet it turns out that it needs a lot of work. If it needs nothing you might be able to make money flipping it. If it does need repairs there probably isn’t enough room for any profit and you should walk away.
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