Need Advice
I received 2 calls today. Here are the stats for both.
The young lady purchased her home 8 years ago for 161k. She is in forclosure behind on payment 24k. She owes a total of 161k - 1st mortgage and 18k - 2nd mortgage. The sherif sale date hasn't been set yet. I've done comps for the area and they between 245 and 270k. Can I do a sub2 on this and a refi to pay off everything? I really need to know how to work this one.
A young man that owes exactly what he paid for his property 2 years ago. He is also in foreclosure and hasn't made a payment in a year. PITI is $2,000. Any ideas of how I can help him out?
I really appreciate it.
Check the first deal out carefully. $161,000 plus $24,000 arrears plus $18,000 second equalls $203,000. What condition is the property in. If you have it sold and ready to close to another buyer you may do OK if it is in perfect shspe or you sell as is without commission and very little other costs. Also what about the 2nd, is she behind on that mortgage too. There may be thousands in attorney fees too.
The second deal looks like a negative equity deal. He owes more than the house is worth. You may be able to do a short sale and make some money especially is the house is in bad shape. At only two years old that may not be too likely. Just a few thoughts
Good LUCK and HAPPY HOLIDAYS
Hope this helps some
Ted Jr
Opps. The 24k shouldn't have been included in her info. She only owes the 161k and 18k. Oncem y due diligence pans out, what would be the best route. Convential mortgage, flip to another investor or sub 2? Thanks again.
Tedjr is right on target. What you will do with the properties is up to you. There are so many options.
Hi Keedaah,
First, before you buy a property, you should certainly know your exit plan in advance! Also it would be helpful to have a firm understanding on your entrance position as well. If you have cash or money partners, your purchase options increase greatly.
As for your first example, I believe that in New Jersey, foreclosures can be completed in about 3 months. With that in mind, you have time to work with . . . but not that much. If you are going to take title to this house and resell it on the market, subject-to is one option, but in order to reinstate it, it would take a big chunk of money to do so. It may be easier to get a money partner to close this one out and share in the profits with your private money partner. There would be plenty of dollars here to work with!
As for the 2nd example, Banks will still discount or SS newer houses, just like they will a house that is 40 years old. You would still need to justify why the property is worth less, (Comps, House was ransacked, Needs big repairs, etc). Even if the house is in good condition and does not need work, the bank may still discount. If your seller is still in a financial hardship, use this as a stron postioning point. The bank already knows that if they foreclose and have to resell, they are going to lose X amount of dollars in this case. This would be there motivation in working with you, to get it finished and over with right now! You will just have to present your position to the bank. The worst they can say is no!
Best of Success!
BAMZ
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Thank you for the advice.
Yep, that looks like the closest thing I have seen to a deal by a newbie. A partner is a good idea. I would get her current and offer her 2k to move out, and another 2k when she is moved out. Give her the balance when you sell. The balance? I think it is fair to conservatively estimate EVERY expense and split the profits 3 ways. One way for you/investor/lady. If that does not fly, half for lady, and half for you and investor. If you were in Cali, I would invest and close the deal with you tomorrow.
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