Question On Structuring
I have contacted several people who are in the early foreclosure stage and plan on meeting them next week. Most of these people don't seem to want to just walk away ( Frankly I don't blame them). My queston is how do I get them to understand their options. I have one situation where the owner owes $12k in taxes. He has two mortgages on his house. Balance on one is $34K the other is around $6K on a home equity line. The house was appraised for $140K so he does have equity. He is asking me questions like what would be the rate I would charge him. Do I want to pay off all this debt and keep him in the house on an option or should I try to structure the deal where I buy the house outright and let him walk away with $10-15K. Ultimately he wants to stay in the house. Any suggestions are appreciated. Thanks.
You know I hate to be the one to say this, but have you been reading the forums? This question has been answered several times over and I'm sure you can find the answer in several posts. I'll just make a few points here.
1. do you want to be a bank?
2. they are going into foreclosure - they didn't pay the bank, why would they pay you?
3. why would you loan them money when you could use that money to control another property.
4. there are several potential legal ramifications of keeping them in the house on an option. Check with your RE attorney.
Sounds like you want a quick answer to your question, but I get the feeling if you need to ask this question then you're going to need to do alot of other learning such as how to negotiate with the seller, how to build their motivation, how to sign the contract up, etc. Most of those answers can be found here, but it's going to take time. It's not something you can just pick up overnight. I wish you the best of luck on your search for answers.
Ryan J. Schnabel