Getting Sizeable Discount From Bank
I'm working on negotiations for two 4-plexes side by side on separate tax lots where the zoning is Multi-Family 5+
Commercialking, you mentioned on a separate posting that I should be able to get a bigger discount on commercial property than I would on residential. These 4-plexes are in kind of rough shape, but after the "mildew house" I've been working on, they don't seem that bad.
On a residential property I normally offer the 2nd 2-3% of the amount owed. If the house is in pretty bad shape, I offer the 1st 50% of the amount owed.
What percentages do you recommend for commercial properties? Or is there even a guideline? These units are in foreclosure. The previous owner is in Chapter 7 bankruptcy. He deeded the properties to a corporation owned by the developer I am working with.
I would like to acquire these for no more than 200K each, total price (1st & 2nd included) for both no more than 400K, but preferrably less.
Is this even remotely possible with a commercial situation such as this?
(The amount owed on each is roughly 316K)
Are these 4 plexes financed with non-FHA compliant mortgages? If so then this is essentially a standard short-sale opportunity and you should review the posts in that forum.
I'm a little confused. The debtor is in chapter 7 but has deeded this property. If the property is no longer his then it shouldn't be part of the bankruptcy proceedings, but in your prior post I thought you said you were going to the creditors meeting to try to buy it. Are the creditors in this case the mortgage holders? Has some prior sale to the Developer been overturned?
Is it possible? Yes. Is it a commercial situation? Depends on the nature of the loan.
I'm not sure about the "non-FHA compliance" status, but I spoke with both 1st Mortgagees (each 4-plex is financed by a different 1st, but by the same 2nd) and they will both consider a short sale.
My question is, when they do their due diligence, will they be looking primarily at the condition of the properties or the occupancy rate? Should I be approaching this from a cash flow standpoint or a property condition standpoint ? Maybe both?
The units are 90% occupied, but the condition is pretty bad - cockroaches....etc.
Also - what do you think of the idea to send them a couple sample cockroaches with the short sale package - a little larger than life, maybe...
First the Borrower deeded the properties to the Developer because he owed him 150K. Then he filed his Chapter 7. I agree that it seems weird that his mortgages would still be held up by this - but maybe it's because the mortgages are still in his name? So now the Developer has the title & wants to acquire the mortgages at the actual value of the properties - the two bldgs together are only worth about 350K, but there is approx. 632K in mortgage liens.
The 2nd mortgage says they won't consider selling their notes until after the bankruptcy. Can you think of why this might be? Should I tell them that their borrower no longer holds an interest in the property or do you think these mortgages are truly included in the bankruptcy? The Borrower says they are included because of the fact that the money is still borrowed by him.
Quote:
On 2004-08-26 06:57, commercialking wrote:
Are these 4 plexes financed with non-FHA compliant mortgages? If so then this is essentially a standard short-sale opportunity and you should review the posts in that forum.
I'm a little confused. The debtor is in chapter 7 but has deeded this property. If the property is no longer his then it shouldn't be part of the bankruptcy proceedings, but in your prior post I thought you said you were going to the creditors meeting to try to buy it. Are the creditors in this case the mortgage holders? Has some prior sale to the Developer been overturned?
Is it possible? Yes. Is it a commercial situation? Depends on the nature of the loan.