Creative Ideas Needed!!
Hello again everyone,
I have a lady that would walk away with $1000 cash to her. Here's the numbers
She owes $94K house is worth $105K She is not behind on payments, just wants out!
I know this area very well and was thinking of just getting a Quit Claim deed, giving her $1000 to leave and then sell the house for $105K.
Now I know there is not a very big profit margin here, but I KNOW I can get this house sold in less than 2 weeks. If not, I can still make her payments, and worst case scenario I could L/O it out if I can't get it sold.
But if I got it sold in 2 weeks, with a conventional buyer, I would make approx. $5K to $7K depending on the closing costs on the selling side.
Any other suggestions?
Thanks in advance
Kristy-AZ
Why not L/O it after all? You will get more in the long run. 3% option consideration fee up front, plus a monthly cash flow for say, two years. Check to see if the property values have been going up in the area and then adjust the price of the house accordingly, you’ll end up getting 5% to 10% more this way. If the values of houses have been going up then L/O it out for $110,000.
Looks like a subject-to deal to me.
What is her payment and what can you get for rent on a L/O?
Hey Kristy,
I agree with mlicc, this is a classic Sub-To deal.
Is she also willing to leave the loan in place?
If so GET THE DEED, with a lease option you're only controling the property NOT owning it.
I would think that a L/O would be a secondary option if she's not willing to leave the loan in place. plus a L/O is basically a rental and the occupants may not keep up the house as they would if they had a valid stake in it.
Why get 3% percent dwn with a L/O when you can possibly get 10% dwn and a large monthly spread...and ...lets not forget the back-end payoff when they re-fi. and...there are NO CLOSING COST paid. You get it all!
A L/O means YOU'RE RENTING, a Sub-To means YOUR OWNING....you do the math.
I plan on moving to AZ soon and would love to network with you.
E-mail me at: pbodys@ameritech.net
Hope this helps,
Sub-To, it's what I do!
Clif [ Edited by pbodys on Date 05/22/2003 ]
Hi Kristy,
Be careful not to become a motivated buyer. While the woman seems motivated the deal is tight. But you know that.
The thing that scares me the most is that you stated you "KNOW" you can sell the home in two weeks. I've sold many homes now, and I have come to learn that I don't "KNOW" much. I often "BELIEVE" that I can sell homes in two weeks, but I don't ever say "KNOW" anymore.
Now that I "BELIEVE" that I can sell homes in two weeks, it really changes the way that I look at a deal. If for some reason or another it does not happen like I believe I have to have other exit strategies that are acceptable to me. Not all exit strategies are acceptable.
In the case of the deal you are looking at, 'subject-to' could be acceptable, but you need to evaluate your best case and worst case scenarios. I'm really glad that you did not say, If I buy for $95k and sell for $105k I'll make $10k. You realize that there are other costs, but they add up really fast if you don't get the home sold in 2 weeks. Your sub 2 deal gets tighter all the time.
If you are happy with a tight sub 2 deal, then go for it. If you would be disappointed if you don't get the home sold in 2 weeks and settle for a sub 2 then don't do it if you can't live with the numbers.
[addsig]
Everyone has already posted a lot of good advice on this one, but a few questions still come to mind.
Does the house need any repairs? The last thing you want to do is rush into the deal and find out you need $5000 of repairs.
Have you tried to short sell it? Depending on the property and the situation of the seller, the Bank may be willing to take a small loss on the mortgage, giving you more profit.
Saying that you know you can sell the property in two weeks also caught my attention. I'm not saying you can't, but turnaround time is rarely definite, and it sounds like one of your primary motivations for buying the property is a quick resale. If it takes three months to sell, is it still a good investment?
-Dural
You may be able to see if she (or you) can be the donor for the replenishment requirement on a HomeGrant gift fund? You can sell the house faster. The amount of replenishment will be the amount gifted to a buyer for them to use for thier DP and or CC.
You list for appraisel value, sell it to someone who has been approved for a mortgage product that accepts gift funds ( like FHA or perhaps RBMGs product or another one) its a faster sale by virtue of the fact that more people can afford to buy it because they will not have to come up with the CC and DP cash. All they need to do is credit qualify.
If you need my help ask. kim@cdsgrants.com <IMG SRC="images/forum/smilies/icon_biggrin.gif">
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I want to help people with no down payment and/ or closing costs.[ Edited by kdc66 on Date 05/23/2003 ]
Hi all,
Thanks for the responses. I guess I should gve you some background here, since most of you don't know me.
I have been investing for quite some time, but usually buy at the auctions. Since the auctions have been over run by people bidding the properties too high, we have gone in other directions to find properties.
Usually we buy, fix and re-sell. We do most of the work ourselves. Our last rehab we made $30K on.
We just bought a house last week for $115, it is worth $145 to $147, we wholesaled the house to another investor for $122 and made $7K for an assignment fee.
I am also a Realtor. I have been on RE for 10 years. So when I say I know I can get it sold in 2 weeks, that's what I know. Listings are my specialty. I know the area for this house. The last 4 I sold in that area all had contracts in less than a week.
My main thing is....I'm not used to buying real creatively. We have several credit lines and usually buy all cash! But this particular house is tight and I wanted to find ways to avoid paying closing costs on the buying side. the only cost I would like to incur is the recording.
If, for some reason I can't get it sold in the time I need, then we would L/O it out. Getting 10% down around here is almost unheard of. If someone can put 10% down, then they will be able to get financing with no problem.
I am thinking of just having her quit claim the property to my company, with us taking over the payments till we can get it sold. I guess basically a sub-2 deal.
Thanks again, to all.
Kristy-AZ
Hi Kristy,
Even doing subject to, get a general warranty deed. A quit claim offers no protection to you.
And though I'm sure that you know this, but you have to inform the seller that you are a RE agent and that you think the property would sell within a month or less at $105K. Otherwise, she would have legal grounds to say that you did not represent her fairly.
Roger
Kristy,
Good to see you again here at TCI.
As you are aware I have invested in your market and have done quite well.
I just can't get you past the creative vs the conventional thinking.
You have three profit centers with this property doing it the Subject To way.
First the down payment, then the increase in the monthly payments by increasing the interest rate, also do not forget the amount of appreaciation you place on the backside when your buyer re-finances.
This is not a $10K deal it is a $25K deal done the Subject To way.
Just don't give me the Albatross story after you purchase the property.
I will be down your way shortly, looking forward to the Bar B Que, I have a very successful real estate agent at my workshop in Las Vegas right now, she was fighting the conventional vs creative way, now she understands the difference.
You agents are tough to turn around .
Outside the box Kristy, outside the box.
John $Cash$ Locke
rajwarrior,
Not much chance of the Lady netting the $1K Kristy, offered her after all the fees involved, so disclousure in this case is easy.
As a matter of fact this Lady could wind up coming out of her pocket to sell her house.
John $Cash$ Locke