Creative wholesale: Can it be done with this Foreclosure?

Question

Please help me with your creative skills guys!

I tried this foreclosure deal with the usual 65% minus repairs (5% wholesale)

But the numbers don't work. What else can be done with this?

Seller is in foreclosure.  1 month before the sale

ARV is $120K

Owes $50k

Past due $5k

Repairs $30K

No other judgements or liens

= -$7000

What else could be done to wholesale this deal??

Thank you in advance for all the feedback!

Brett Goldsmith · Answer

What is the home worth in its current condition and what is owed on the liens(s)? If it's underwater, it should be reviewed for a short sale.

Brian Gibbons · Answer

short sale

Brian Gibbons · Answer

@Albert Arguelles

There are 2  possibilities, as other people have noted

1 a short sale negotiated with the bank, discounted at least 50 k from ARV

2  A joint venture with the seller agreeing that buyer would buy it on SellerFinancing , give a note for equity, fix it w private funds, resell it, pay off bank at resale,  and pay off private lender for rehab and pay off seller for equity

Robin Wilk · Answer

What your talking about is a subject to and a lease option combination both of which can be done but with the lease option it can not look like a disguised sale or you will have to deal with Dodd/Frank which can be a pain or so I've heard. With a subject to you run the risk of triggering the due on sale clause within the seller's mortgage. Both of those strategies could work independent of the other but I'm not sure if they would work well together hopefully @Brian Gibbons can chime in and set everything straight or even @Bill Gulley

Albert Arguelles · Answer

@Brian Gibbons  I've never done a short sale before.  In talking about this with another investor in town he mentioned foreclosures not being what they used to be.  Especially because the banks 'are wising up' and starting to letting homes just go into foreclosure and doing the repairs and selling them on the MLS.  What are your thoughts on how the banks seem to be responding to doing short sales these days?  Thanks again for your input. =)

Albert Arguelles · Answer

Thank you so much for your replies I really appreciate your time.  Unfortunately the seller was not completely transparent, big surprise right?  Somehow he got duped into signing a loan way above the house value.  Perhaps it was a textbook example of predatory lending.  Once I pulled his teeth and pulled the mortgage statement I realized this was far too gone, or is it?  The note has been accelerated and he now owes $144 and it's $44K to reinstate the note.  The house is only worth $120 ARV based on MLS comps.  So I don't really see a way to make money on this one.  I do highly appreciate your time guys!  Good luck and hope to help back myself soon =)

Albert Arguelles · Answer

The house is in a good amount of distress.  Will need a new roof and the foundation was worked on but not done right.  There are some areas that are not level and it's noticeable by just walking it.  In its current condition the house is worth very little, around $30K maybe?  There are no liens or judgements just the foreclosure situation.   How do we deal with the lender directly? In my past experience they don't talk to anyone besides the note holder.

Thank you for your reply!

Creative wholesale: Can it be done with this Foreclosure?

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