All Forum Posts by: Rufus McLaren

I appreciate all the feedback. I certainly agree that if a property is underwater, I probably would not be interested.

One of the properties I plan on acquiring happens to be an old friend who at her age, has no interest in purchasing a new house in the future. I calculated that she wouldn't walk away with much money. I was going to give her more, because I'm interested in the 17 years left of a 30 year mortgage. The way I look at it is. I could get about $300 a month positive cash flow, and I own the property free and clear in 17 years.

So I guess the real question is, besides rare circumstances like this - what would be a reasonable reward, payment, etc. to make it beneficial for me to dig someone out of a hole and make it worth their while to trust me for the next 15 years. Or perhaps... how can I give them a powerful enough guarantee that I will make their payments.

Because if they were guaranteed, the mortgage payments would actually build their credit back up, but may hold them up from being able to do future financing. (Debt to income ratios)

So no doubt it's a tough question. But have any of you seen how fast a balance gets paid off after about 13 years into a mortgage? Even if I did a five year lease option, where I give them money up front, dig them out of a hole, and pay off the only the REMAINING BALANCE of the mortgage 5 years down the line, I would either take over the property at a steep discount, or I can re-lease the property (I think that's a sandwich lease) and make money.

I appreciate any thoughts.

Alexis, 

Thanks for your response. The properties I am targeting are non-owner occupied properties. Usually they are rentals where the tenant stopped paying and the situation dragged out long enough for the owner to be too far behind on the mortgage to catch up. Obviously they can short sale and walk away, but I've heard that lately it is becoming more and more difficult to get a "complete release" of all debt obligations. So, they could potentially end up with already bad credit, worse credit after a short sale, and a possible creditor waiting to strike. (Note: judgment liens in FL can last up to 20 years.)

On the flip side, I own a brokerage that has been around for over 25 years, and can guarantee the mortgage will be paid. Obviously they assume the risk that my guarantee is good. I suppose I could lease-option the property for a shorter period, lets say 3-5 years, but I would still want to take over the mortgage, so that I can benefit from the rapid pay=down of the balance.

Thanks in advance for further thoughts.

Bill

I am a broker in Ft Laud, Florida. I'm also an active investor. Florida is notorious for foreclosure scams and modification scams.

I was wondering, however, if any one has had any experience with approaching a distressed homeowner with the following proposal: If they don't want to do a shortsale, and they have little to no equity in the property, I would be willing to take over the deed and the mortgage. In essence, I would bring the mortgage current. Guarantee the payments, and use the property as a rental. Of course the potential rents have to exceed the mortgage, otherwise, the property would not make sense.

Here is my logic... Where I live in Fort Lauderdale, there are a lot homeowners that bought properties in 2004-2005 that are just now worth what they owe. In fact I have a client right now that is almost at break even, but does not want to bring money to the table, and does not have enough money to catch up the mortgage. So basically if they sell, they either have to short sale, or bring money to the table. I wanted to propose taking the property off their hands as follows: I'll bring the mortgage current, which will save their credit. I would take over the property and remaining payments for the remaining 17 years.

Here's my logic. Right no the owner is losing. The owner doesn't want to do a short sale, and there is no equity in the property. MY REAL INTEREST is in the 4.75% mortgage that has only 17 years left. Most of the payments at this point are toward principal. I could bring the property current for about $10k. The property will rent for about $1,350 and the total of the monthly payments are about $1,000.

It's clearly not a cash cow, but the equity is building rapidly because of the age of the mortgage.

Has anybody done this before? I want to fully disclose my intentions to the owner. It appears to be a win-win.

I welcome any help. Thanks.