Bankruptcy Eminate. Need Advice Please
Hello All,
I am working with an investor that moved out of the area leaving their personal residence and a rental house in their wake. Both are still empty.
I am working on buying the rental property "subject to" the hardmoney loan of $70900 and refinacing with my broker. I already have a lease option buyer in place. They owe about 10k to the person that did the repairs on the house for them, so I would give him a note of some sort for this. Would like to arrange it so it is not due until I refinance or later if possible. (Cash-Out, 80% of 110K or 88k)
Problems:
1) How do I convince these folks to sell the house to me SubTo and that I will refinance out of it before they begin bankruptcy proceedings in a couple of weeks? More importantly, any other ways around this that might be better for us?
2) I am considering attempting to short sale their primary residence. They do have a 1st and a HELOC. How do I approach the lender about this? Before or after they get the letter from the attorney?
TYIA,
JohnCl
If you're going to refi the house in a few weeks anyways then why not just get approved for the loan and buy the house the old fashioned way. Just set the sales price so that the guy can cover his hard money loan and the contractor? Or just buy the house for what he owes and give the contractor a note for the 10K payable according to negotiated terms - you could always use the equity or the down payment from the lease option buyer to satisfy the note.
steeler19,
My problem with the "old-fashioned way" is coming up with the 5% down. My idea is to get money from the bank, not give it. Any ideas, besides artificially inflating the purchase price and getting the seller to cut me a check on the side?
JohnCl
What exactly is his objection to the Sub2 proposal? When you say refinance in a few weeks do you mean sell the house to the L/O buyer? Or straight refinance? If you do a straight refinance you'll incurr closing costs - which granted you could roll into the loan since you'll have the equity room to cover it. But you can't roll 100% of them - there'll be a few hundred dollars you need to have on hand for closing.
You could always right the contract such that there is a balloon payment due at the end of the month (or whenever) - that should satisfy the seller but it puts you in a tight space if something goes wrong with your L/O buyer. Perhaps you could get the deposit from the L/O guy and that way if he bails on you at least you'll have the money to cover payments for a while which will give you time to find another L/O buyer.