Is This A Good Candidate For Subject-to?
Hello REl,
I have a owner who's in preforeclosure but wants to keep ownership of the house. Here's what we dealing with:
Loan Balance: $250K
Loan payment(PITI): Not Sure (Will Verify)
ARV: $360K (According to Comps)
Back Payments: $15K
For the experince investors out there, does this look like a good deal.
The home is fairly new was built in 2001. I really can't handle this deal but someone else may be interested.
Thanks in advance,
JM
It could be a good deal depending on what he wants for his equity. Also it might be a lot better deal if the owner wanted to sell the house.
If you are sure about the 360k; then yes, it should be doable - my minimum is 20% 'equity' - after ALL buying expenses. 360k *.8=$288 less 15,000 back paytments and $2,500 for misc (just in case atty fees, title search, etc) you are at 270.5k -
I'd try to encourage this person to move as whatever got them into this is probably still going to be an issue - but that said; as long as they are willing able and prepared to make the payment ON TIME. Write an adder into the lease back (if that is what you end up doing) that says that if they are more than 10 days late in their rent that you have the right to enter the unit during regular business hours to prepare the property fro sale. - i find this really seperates the people looking to continue living there (off of my generosity) from the people who can solve their problem but need a little help.
I'd probably write up the agreement so that if the property is bought sub2, that you'd pay 10,250 to the seller after you sell for his share of the 'profit'
hope this helps a little
Hello JM,
as feltman wrote;
"I'd try to encourage this person to move as whatever got them into this is probably still going to be an issue"
The point of subto is to buy the prop. and resale, sounds like the seller is looking for a bail out and buying time, that looks like he is running out of. I could be wrong because I don't know the situation like you do. To me 15k in arrears I would not let them stay.
Marv
It sounds like the owner is looking for a sucker to bail him out, while he gets to keep his house. If he managed to get $15K behind (probably 5-6 months of missed payments), and into foreclosure, I wouldn't trust him to pay you. Can you eat $2500 a month while trying to evict him? Can you sell it? Does it need repairs? What's your exit strategy?
Now, the deal could be good if you can give him a little to move ($1K or less) and get the deed. You'd be saving his credit by paying the note until you sell it. I wouldn't offer more than moving money, because you are taking on lots of risk, with that big a mortgage payment.
If you can get the deed from him, try to get the lender to put some/all of the $15K on the backend of the mortgage.
Good luck
Peter
I'd give him 5,000 to move, have him pay for appraisal, get the warranty deed, pay up the arrears,give him note for half the equity payable when your buyer refi-ed ,sell it sub 2 or#2: offer him 310,000 for the house let him pay off arrears sell the house sub2 & make the appreciation for 2 years plus pack the interest. But I'd walk before I'd let him stay in house. Maybe buy bad note from bank. I done that www.once.took deed in lieu of payment
Hay thanks for your remarks.
jm