My First Deal- Preforclosure???
I've heard of these deals, but I never knew one could fall into my lap like this. The property owners are divorced and own a home that has been cosmetically damaged by kids that they let rent it. It's vacant now and the payment is only 15 days late. It was appraised for 138k a year and a half ago. They owe about 92k on it and their payments are about $990 per month. They want out and are willing to sign it over to me if I just take over payments.
My questions is...
"What is the right way to take over this property (i.e. contacting the mortgage holder to assume the mortgage or offer cash at a discount, etc.) "
Thanks- J
my goodness ... man, do it subject to and that way no note is in your name (so you can keep the amount of ur credit in tact to buy others) - then get it sold.
just my opinion. actually the best way to take it over is to let me have it! i promise i'll sell it to u after i make $10k on it - u can have the rest!! hehehe
Get the deed....then figure it out. This looks on the surface like a very nice deal.
Have a title search done, and do not forget that Fed Tax and State Tax problems may not show on the search. You don't want to become the owner of past tax problems.
Go For It......Good Luck
I don't want to sound so "New" but since I am, would you give me the run down on how I would work the subject to...
Thanks J.
You said it needs some repairs. How much are the repairs? Also, if your not sure how to do a Subject To then I would suggest that you learn before you jump in. It could get messy if done wrong. Maybe you should birddog the deal out to someone who knows more about it. Have the investor walk you through it as part of the bird dog fee. That way you set yourself up for the next deal and still get paid in the meantime.
Good Luck,
Tom[ Edited by tbelknap on Date 10/16/2003 ]
The repairs total about 5k and I can do them myself. That includes roof and repainting the outside.
One more thing...I'm also not sure what financing I would use. I thought I might go with a hard money lender and then flip it after the repairs. My credit is good but my debt ration is high. Any suggestions on doing the deal with this in mind???
Thanks for all the help guys! - J
Hi Mettinvest,
There are a lot of pros on this board that could answer specific questions on the subject that would help you.
However, if you are serious about getting into the Subject-To business you should order John $Cash$ Locke's training package. He "wrote the book on subject-to"! You can buy it at http://www.thecreativeinvestor.com/Product19.html.
By completing this one transaction successfully, it can place you on a whole new level! . . . and then you keep going!
Best of Success!
BAMZ
Mett, there are hard money lenders that don't look at your debt to income ratios. Most of the ones I talked with do check your credit. They will lend upward to 65% LTV on the house. It looks like your close but there are fees that you will have to pay. Most of the time you have to pay them upfront. There are some HMLs that will roll the fees and closing costs into the loan but I found them harder to qualify. The owner already stated that they will deed you the house. Doesn't cost much to do that. The HML is one route but that route will cost you more money. Also, you will have a harder time due to lender seasoning when you try to cash out if you try to sell it outright right away. Some things to think about.
Good Luck,
Tom
mettinvest,
If you go with an HML, just remember that you will generally pay monthly payments of interest only. However, the HML in my area charge 15%. This would make it extremely difficult to cash flow, and perhaps difficult to cover the monthly note payment.
I would and do consider HML's a good option to keep in my back pocket if I am going to quick turn the property.
Best of Success!
BAMZ