Put Your Thinking Caps On..... Problem For You..
Problem seller facing foreclosure. Owes 9,000 plus in back payments and fees. You don't have 9,000 to get owner current. How do you buy this house.
To help you:
Paid 56,000
Owes 65,000+
FMV 90,000 +
Sale 1 month away.
Now lets see how your minds work. I run into this type of deal all the time. I would like to do ever deal like this without cash or for as little as 2 to 5000. Any takers?
Talk to the sellers lender see if they would be willing to restructure the loan if you could give them 2-5k of the back payments and have them roll the rest of the back payments into the mortgage balance and adjust the payment accordingly. They might even roll all the payments into the mortgage if they were confident that the payments would start being made again.
Nathan
Greetings James,
I have couple of ideas on this one. But first -- Is the owner trying to keep the house? Or, do they just want out?
This is what I would do:
1. Take it subject 2.
2. Get a HELOC and bring it current
OR Refinance and payoff delinquent loan.
3. Sell it, Rent it or lease option it.
If you have a buyer lined up already, then get it under contract and assign it to the buyer for a fee. There are many ways of getting around this. Other ways of getting $9K are cash advance on credit card, personal loan against a CD you may have with the bank, put a HELOC on your home (if possible), cash out/loan against 401K, or find a financial partner and split net profits when you sell. It all depends on how bad you want it...
Tanya[ Edited by tanya1215 on Date 02/27/2004 ]
Tanya has given you some excellent ideas (and told you mine as well ), but this should be fairly easy to do if you numbers are correct.
As Tanya said, take property Subject to. Then working thru a good mortgage broker you should easily be able to refinance the property for 80% of appraisal/FMV of $90K (which, btw, is $72K minus closing costs). After paying off the old loan closing costs, you should still have $3-4K to put in your pocket.
Roger
'll give it a try! Need to start thinking like an investor
sooner or later.
This contact would have 2Phases before completion. It will take approximately 1 year to execute.
Phase #1 (Seller's Contract Signed)
Assuming I already ran an ad in the paper, "Rent To Own With Only 10% Down," and had a motivated buyer who can afford a home priced up to FMV $90,000 with a down payment of 10% ($9,000) but, does not have the credit history to finance. I'm now in business!!!!!
The seller understands that there is not much time left for him, he has to do something quick or his house will go into foreclosure and he will lose his house and credit. He owes a total of $65,000 with a PMI of 6% , of that $65,00 he owes $9,000.00 in back payments. He agrees to take a lost and just be thankful he will leave after one year with his credit intact. He enters an agreement with me to allow me to lease his home to a couple who is interested in buying, but doesn't have the best credit history. He understands that this contract is for one year, enough time for the buyers to establish payment history and for me to find them financing. The seller understands that his $9,000.00 back payments due to the bank will be brought up to date. He will move out at the end of the month to let the new tenants move in.
(Buyers Agreement )
The house will be sold at FMV house $90,000.00 at the end of the one year option lease contract. The buyers have paid there 10% down payment of $9000, the bank has receive the $9,000.00 for back payments due. The house payments is now up to date. The seller can now breath easy.
The monthly lease payments have been calculated off the $90,000.00 FMV and the new tenants will be paying $540.00 a month rent. The sellers bank payment is $390.00 a month. In one year the bank has received $4680.00 in payments and I have received $1,800.00.
Phase # 2 (property transfer )
The year has passed my new tenant have done a very good job at paying all there payments on time and I have found financing for them, $90,000 PMI 6% and I agreed to allow 25% of the monthly rents ($1620)to be applied towards the financing of the $90,000.00 loan. That would make the buyers loan amount $88,388.00.
At the end of the year the bank is owed $60,320.00 and is paid off. The sellers loan is paid off remember he owes $65,000 per our lease option contract.
That leaves a total commission for me of ($1,800.00 difference between sellers bank payment and renters lease payment agreements and the difference between $60,320.00 owed to the bank to pay off the sellers loan. That leaves a profit of $28,068.00 plus my $1800 1 yr. rent proceeds for a grand total of $29,868.00 all for me and the IRS......
Now that I'm brain dead, can anyone point out where i may have made a critical mistake and loss some or all of my hard earned profit. I've been working on this problem all day. I 'm not sure if I even know what I'm talking about when it comes to a Lease Option but, I gave it a try.........Will be interested to see how close I was in all my calculations.
Thank you to everyone who responded.
To answer some of the questions.
1. This is just a summarry of some of the phone calls I get.
2. I think this is a post to make us excersise our brains. We offen forget all of the great options we have when we think outside the box.
I like the talk to the bank idea but are most banks willing to do this with the sale only days away? Also there is always the beg borrow idea if the deal is right.
Thanks again lets see if anyone else has some ideas. Remenber this is just an excersie and not a real deal.