How Would You Structure This Deal!
Homeowner is in pre-foreclosure. She is 7k in arrears to bank, 4k to builder. Home appraised 45 days ago for 260k,and has a balance of 171k. The home is in immaculate condition, and no repairs are needed. She has a 11%interest rate with $1676/mo payments, so sub-2 is not attractive. Is there any way this could work out to be worth the time and effort? No foreclosure date has been set yet.
Any suggestions and or comments would be appreciated.
td
Does the homeowner want to stay in the house or does she want out? You have to either re-fi or sell to someone that will get their own financing.
The homeowner is moving out as we speak. Her credit is shot , so she cannot not re-fi. Ihave a potential t/buyer that can put 15k down, but market rents are only 1500-1600/mo.
Have you considered a short sale?
Scott
If you are up for a buy and hold, you could do a new loan - yes try for a short sale, but might be a tough sell.
then in 6 months refi and take cash out. - of just sell it. You should be able to cash-flow and have a payday in 6-12 months.
a short sale could be difficult with that much equity in the property. i'm not sure about georgia, but in florida, they could have anwhere from three months to three years from the lis pendens filing date to the actual sale. if the sale has not been scheduled, you prob have at least 30 days (in florida) b/c there is a hearing around 30 days prior to the sale where they set the actual auction date. notice is then sent to the homeowner telling them when the sale will take place. i'm not certain what market you are in or how much you need to make off the deal, but with that much spread, i'd seriously consider getting it under contract and assigning the contract for ~20-30k. you could list it in mls, ads in the paper, or even hold an auction, or whatever your favorite method is to sell. if you really want to squeeze out every nickel, you could try a short sale, but with that much equity, you will prob need some more ammunition like a looming bankruptcy, some problem with the neighborhood (recent crime wave, dry cleaner going in next door, etc), or something similar that doesn't show up on an appraisal. even the sub2 doesn't sound like too bad of a deal. put up 7k to cure the arrears, get her to move out, fix the minor moving dings and show the house. you stand to make 75k or so on the deal at full market value, at that point it's just a function of how much money you need to make it worth your while.
The bank would also have not too much motivation to do a short since the house is in perfect condition. Remember - they would take the house at auction & they would make the profit. I like the last poster's ideas.