Advice On How To Structure A Deal.
Hello to all,
I need some advice on how to structure this deal.
Here goes:
Seller is 260 days behind on mortgage payments and bank has moved to foreclose. Mortgage is for $108K, payment is $862 per month, house is appraised at $185K.
Seller is planning to file Chapter 13 this coming Wednesday to avoid being evicted unless some white knight (like me) comes along.
Seller would like to stay in their home but if they have to move would like to be able to walk away with $100K so they can buy some cheap land and put up a modular home.
House is a pretty home in a nice "country" section of town with 7 acres, 200 foot driveway, dead end street, 5 beds, 2 baths, fireplace and many homeowner upgrades.
What is the best structure to either create a positive income stream for myself with a minimum of capital risk, or else fund the current homeowner's exit at some number close to their stated $100K and then flip the place?
I don't want to go through any bank sponsored, conventional closing, as I am already deep into a another closing and could probably not get approved going the conventional route.
Thanks folks, I get the gut feeling this one is a home run if I do it right!
-presley
I can tell you exactly what and how to do it, I'm doing it myself right now on a home I purchased this last weekend.
Your only problem will be getting any cash out of the home without re-fi'ing it with a new loan in your name but try this:
Buy the home with a sub-2, I'd give the owner a note for 50k amortized over 30 at a good interest rate, with p&i or ****Must Reach Senior Investor status before posting URL's***y payments (whatever you can afford depending on rent rates in the area and all your expenses) such note to be a balloon in 10 years would give you ample time to re-fi it down the road and bu then the property will have greatly appreciated.. Throw in an early payoff benefit to you as well.
Next you WILL have to make three or more months of payments to the bank and negotiate with them the remaining past due payments and that you (the borrowers) will continue making monthly payments from there out..
If the lender has already filed an NOD and incurred legal expenses you may have to pay those to stop the foreclosure depending on the lender, get an auth filled out by the owners, and get on the phone with the lender and your financial offer to get the loan performing and brought current!!
Call me on the weekends if you want to chat five four one nine four one nine eight six two
Good luck with it,
You'll need to do an offer to pur., deed, and p.m. for legal docs to do the above.
Chris
The above blocked out section was not a url, here is the missing text:
with payments and interest or interest only payments
Chris
With that much land, I would try to flip that one...It will be hard to find renters that will want to take care of 7 acres
I may be missing something in your deal. With a 185K value and 108K plus back payments of +/- 6-7K owed to the lender, I do not see where the owner could walk with a 100K. At 260 days into forecloser, the home has to be getting close to sale date. After the sale, the owner will net 0. 185K - 108K - 6K = 71K - buying, holding, selling, repair costs and YOUR profit.
I talk to people in forecloser all the time and a lot of them do not get the concept of getting 0 after the sale.
The important thing is that you are looking and trying to make things happen. Keep up the good work.
appraised at 185k
balance of 108k
you buy sub2
seller gets moving money
no way they can get 100k out of this...
maybe on a good day 5k out of my pocket to help them move...
they cant make a house payment now....of less than 900/month
and the are 9 months behind.....[ Edited by DaveREI on Date 10/04/2003 ]
There is no way the owner can walk away with 100k. But, what you could do creat a note. We would then turn around and purchase the note at a discount. Give me a call: 972-296-7436 and we can brainstorm on a way to make this deal work out for all the parties invloved.
My name is Kassandra
It's been a busy weekend so I'm only now getting back to the forum.
Thanks to everyone for the interesting replies. I'll get in touch with the couple of folks who offered to brainstorm, next few days.
Upon further reflection, I think the bottom line is, the homeowners can't get what they want so the place will probably foreclose and I should focus on buying the foreclosed property either at the auction or after. Place has a lot of equity (108/185) so it's feasible a bargain can be had at the auction. Post-auction is a lot more competitive since with big banks, post auction REO's are immediately outsourced to firms that specialize in unloading foreclosed properties and you can't make deals with these outsourcing firms, in my limited experience. They won't even talk to me and when they do they insist they must list the property with brokers, at which point it's a feeding frenzy.
Onwards and upwards,
-presley
Having the current owner net a 100K is absurd. Not only is he going be foreclosed on, but as you mentioned, he is contemplating filing bankruptcy. Does he have any idea as to the ramifications of both actions. If indeed, he files bankruptcy , the house will not be forelcosed upon until a termination is filed. Have you tried explaining these variables to him? if done properly, you might be able to persuade him to listen to reason and take a significantly less profit ie. 5K. This way he can save face and still have a repairable financial future. Just some thoughts. Good luck.
Matt