Considering A Pre-foreclosure....See If This Sounds Like A Deal (long)
Hi folks,
I'm a new face to this board and creative real estate in general. I'm coming from a rehab/ground up/rental unit background. So, I'm not new to RE just the CRE side of things.
I'm trying to determine whether I've got a potential property deal. Here is what I know.
Individual is going to default on the loan.
loan amount = $145,000 (lender is Chase)
FMV=$80,000
Comps= $74,400 (average)[ lo=$62k hi=$82k]
Manufactured Home, 4/3, 2000 sf, 2 car detached, yr 2000 model, 1.8 acres
Home located in a subdivision approx 2 miles outside city
listed with a RE agent
Property is in great shape, figure some minor repairs - $500 at the most
The owner has discussed the issue with the lender. The lender has asked the owner to bring an offer. Short sale was mentioned. There is only 1 mortgage and no leins, no arrears, no back taxes. Clear title (I have not verified yet).
You may be asking what happended that the owner is so upside down. Devaluation of the property. Here is what I think happened. This subdivision started out as one of those "going to be an upscale place to put a MH" with big lots and decent landscaping. The MH's are set on concrete pads and the earth banks are built up in the front so that they look like they are on the gound. Detached garages and concrete driveways and sidewalks to boot. Very nice stuff. Well, they got about 6-10 of these and then started putting small spec homes all around. These are siding not brick and have about 1700 sf. After a handful of those, they expanded a 2nd phase and started doing really nice brick spec homes and no less than 1800sf. Anyway, all the MH's at first sold for the $130s and up. This one was bought for $145K. Now most of the MH's have gone foreclosure and are on the market for much less. My thoughts are that the developers changed the dynamics of the area and thus devalued these properties. Also, the recent changes in Tx law have depressed the MH market. Also, lenders are increasingly not financing MH's. My mortgage agent can get me a deal b/c we do so much business with them.
Questions:
What do you see in this deal?
Should I go for the short sale and flip?
Should I wait until default and the process starts? Wait for the auction?
The way I see it the property is only worth about $50k wholesale, land is valued at $25-30k and I figure the home and improvements are worth only $20-25. If they accepted my offer 50 and I sold for low 70s, that would be a pretty good deal. I think it would go fast in the low 70s, slightly below FMV. It would be attractive to an owner/occupier. I don't feel that I could offer anymore than $60k for this type of scenario.
I could buy/hold and rent it out for $1100/month. That would let me go up to $70k on my offer.
Sorry for the long post. I hope someone can shed some insight on my potential deal. Thanks in advance. Other possible scenarios are welcomed.
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