Silver Spring, MD · Member since 2013 · 6 posts · 0 votes
hey guys,
I am a new investor. I had a potential deal on the line from a personal representative of an estate. He was looking to offload it for free, however, the property was a complete gut (est. ~$50-60k) and the arv would be no more than $50k. I was interested in it one bc it was offered for free and 2nd there are a lot of sec.8 landlords I would have marketed the property to.
The property has an existing mortgage @ $13k that is currently in the name of the Estate but the property has changed hands twice, 1st to the personal rep, then to the personal rep's business.
If I were to proceed to wholesale this, who will pay the unsatisfied mortgage?
Since the mortgage is still titled to the Estate, can the mortgage company still claim the house?
Rental Property Investor · Greenwood, MO · Member since 2013 · 34 posts · 10 votes
12y
From what you described its not a deal as you would most likely have to take over sub2. So after repairs your going to be into it for at least 63k and it worth 50. Sounds like no deal here.
The question is would you keep the deal if you made it? What kind of cash flow are you talking about? It would need to cash flow extremely well to be upside down right out the gate.
Silver Spring, MD · Member since 2013 · 6 posts · 0 votes
12y
Thanks Bill, for responding.
That was my thinking when I saw it. I wanted to confirm my logic for not accept the deal.
So existing mortgages in estates function the same as any living mortgage. I wasn't sure if they would continue to pursue the estate or the personal rep to satisfy the mortgage.
Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
12y
On the surface it doesn't sound like a deal.
But, why do you think that it needs to be completely gutted? Could it be that you're used to high end homes and aren't used to decorative elements that might turn this into a charmer?
I'm just asking, whether the house is maybe not as bad as it may seem?
Is the lot worth something? Any new construction around there? Maybe it's something you could wholesale to a builder, provided any new construction in the area has enough retail value.
I wish it were the case that the area was up and coming with new developments but it's a fire damaged property. Owner said there was little damage so I thought it was OK to take a look and verify. Had a contractor run an estimate and he determined the 50-60k repair. The most this property v could have gone for in the area, if everything was perfect, was about 85-95k but the best comp in the area is well under the estimate, also, the cash flow wasn't there, and there was a lot of see demos taking place on the block. It Could have been a deal but just not at the present time.
I was really confused about the probate issue. The property changed hands twice after going to probate. But there was still a mortgage tied to the estate fur the property. I was wondering if the mortgage lender still has rights to the property BC of the existing mortgage even after changing hands.
Lender · Greater LA/Orange County area, CA · Member since 2012 · 3k+ posts · 3k+ votes
12y
Typically, secured debt (mortgage) survives death of debtor.
That's an oversimplification and there are exceptions, as well as local State laws which can further complicate the question.
However, if the question has to do with buying a fire-damaged house from the owner of record or estate, finding equity could be tough. One play might be to purchase the debt and foreclose. Another is to purchase the property with an assignment of rights to insurance proceeds (although this may be very tricky and require cooperation of the lender, anyway).
This is a deal for a specialist. If you want to become an expert in fixing fire-damaged properties, fine. Me? There plenty more fish out in the ocean.
Silver Spring, MD · Member since 2013 · 6 posts · 0 votes
12y
Whoa!! Thanks Rick! That's great info. On the options I have. I'll save that in the memory bank for future use.
When I was looking into the deal. I did check to see if there was insurance bc I thought well maybe there is some way of getting a payment out, but unfortunately there wasn't any insurance.
I do agree that there are other properties that are better worth your time, which is why I let it go early on, but I would like to try a deal with methods you discussed. I just need to grow into my big boy pants!