Wholesale or Sub 2?

Question

I have a seller in desperate need to sell in higher end development. Property is headed to auction with a 237k judgement. ARV is 325k and updating costs at 30k. Suggestions and debates are welcome.

Ned Carey · Answer

If the property already has a 273K judgement I don't see how the seller can sell cheaply enough to make it a deal unless the judgement holder will accept a short payoff.

Is the seller willing to walk away with nothing? If so the best option may be to ink a deal with the seller subject to being able to negotiate a deal acceptable to you with the judgement holder.

If the seller is expecting anything out of the deal, he (or she) is being unrealistic. In which case your best option may be to go directly to the judgement holder and buy their judgement for a price that makes sense and then take the property via the judgment. The property appears to be upside down so the judgment holder may have reason to negotiate.

Good luck - Ned

Aaron Mazzrillo · Answer

So you are at $267K as long as no surprises show up. By $237K judgement, I am assuming you mean a $200K+ loan and quite a few back payments, late fees, etc. It would help if you had provided more info on how much to bring the loan current and what the monthly payments are, whether the taxes and insurance has been impounded or not.

If you can bring the loan current and buy it subject to, AND your estimate of repairs is on budget, there could be a nice $25K check at the end of the road.

Many of the flips I have done were situations just like this. Taking a property over and bringing the loan current is much less expansive than borrowing hard money or going all in with cash.

Make sure you get on the phone with the borrower and verify all the loan details. A prepay could wipe out your profit.

Don Konipol · Answer

Can you clarify your interest in this deal?  What does "I have a seller" mean?

Wholesale or Sub 2?

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