All Forum Posts by: Tom Pearsall

Thanks, but this is all hypothetical just help grasp the underlying principles. I'm not interested in making an offer on, or purchase this property, mostly because it doesn't exist. I was just trying to sort out a few questions that had been bugging me. I appreciate all the good info you all have given.

Ok great, thank you everyone for the great info. That pretty much clears everything up and supports my original thinking. The original owner would have to take the money from the sale to pay off whats left of the mortgage and then he can pocket the leftovers. And if he happens to owe more than it's worth then it is possible to short sale the property in order to get a discount from the bank if the property isn't worth what is left on the mortgage. That way the bank gets some of its money back on a non performing note.

So another question about a possible exit strategy in this case. If the new buyer were to make a subject to deal with the owner, pay off the $5k in missed payments and take over ownership of the property could they then refinance in the new owners name to pay off the existing mortgage before the due on sale clause takes effect (if it even does) and to pull the money back out that they put in? Now they have the property, the original amount they put in (minus any holding costs or down payment), and fixed monthly payments amortized over the next 30 years. Then they could put a renter in and move onto the next deal? That is basically the BRRR method right there, yes?

Thank you for the response. So let me know if I am getting this, so while listening to the podcasts I hear all these people who are doing direct mail marketing and they are looking for two things, motivated sellers with equity. So the old owner signs over their equity to the buyer and at that point the buyer is on the hook for making those mortgage payments if they don't want the bank to foreclose? What would be the next logical step for the new buyer? Refinance to pay off the old note?

What is the strategy for these direct mail marketing guys (and girls) when they find a motivated seller with a large amount of equity but still have a mortgage attached to the property?

Hello,

I've been trying to wrap my brain about how all this works and I have a question that should be easy enough for someone with experience to answer. I have been looking around my neighborhood on zillow trying to practice analyzing and finding deals and I'm a little foggy on how this works with existing mortgages. Lets use a hypothetical, say I found a home on zillow in pre-forclosure. The original loan taken out was for 200k about 10 years ago. The owner is now $5k behind in payments and has about $150k worth of equity in the home. If someone where to want to negotiate a deal with the owner to buy the home for cash how would they deal with the existing mortgage. Would they have to offer enough to the owner so it would pay off the remainder of the mortgage, or just enough to get his payments caught up plus however much they work out? Would the potential buy be able to offer say $40k or would the offer have to be AT LEAST the amount of the balance remaining on the note? Say the owner accepts the offer of $40k, what happens to the mortgage at that point? Would the buyer then officially own that home and the previous owner be on the hook still for the remainder of that mortgage ($10k at that point), or would the new owner be responsible for the remaining amount. If the old owner doesn't end up paying the rest of the mortgage off after the deal can the lender then take the property that you now own, or is this impossible and the deal would never even happen if it was less than the remaining mortgage amount?

I hope this question made sense. I appreciate any attempts at helping me grasp this idea. Thank you.

-Tom

Hello,

I am a new member in the Sacramento area, Citrus Heights to be exact. I am also a licensed and insured painting contractor and own my own business. I have worked on a number of flips, everything from SFH, duplexes, mobile homes, I even specialize in high end cabinet refinishing. I decided after painting all these properties and hearing how much they were acquired for, and then what they sold for, especially those crummy mobile homes (bought for $1k, sold for $90k before it was even finished) that this was something I definitely wanted to explore. I am 29 years old and I'd like to get started in one way or another before I turn 30. I'd really like to meet some folks that I could have a working relationship with to learn more about the business. I believe the type of work I do gives me an edge because honestly, no matter what you do in real estate what is the one thing you ALWAYS need to do... Paint! And if I can make those mobile homes look good enough to sell for what they sold for, I can make anything look good haha.

Anyways, I would be interested in talking to/meeting/working/partnering with anyone in the area who can teach me more about real estate.

Thank you,

-Tom 

Lic# 1019373

Insured. Bonded.