Please Help!!! Have first quality prospect.........need advice
Hi everyone, I know I can count on this forum to help me out.
Ive got a homeowner who called me and is facing foreclosure. They are extremely motivated. Here are the details:
1st mtg balance (only lien) - 159,000
Full Market Value - 180,000
Months behind in payments - 24
Payment - $1106 @ 10.75%
Foreclosure date - July 1st
The home is not in need of any repairs.
I currently have no access to financing and would not qualify for any conventional loan.
I need advice on how to finance such a transaction.
I intend on attempting a short sale, but if I can't get one, would it still be a good deal?
I could really use some help with the whole process. If someone could give me a step-by-step layout of what they would do, that would be great. Starting with what I need to accomplish at first meeting with homeowners.
Thanks and wish me luck because this is my first quality prospect!!!
Did I read that right? They are 24 months behind on pmts? Well, if the forclosure is coming soon the only thing to stop it is cash, basically the back pmts. 1106/month & 24 months = 26544 + 159k first lien balance = 185544. If the market value is only 180k it doesn't look like a sweet deal. If you did stop the forclosure with cash and take over the pmts you would probably have to seller finance/ lease option the property to someone with bad credit, but still to cover over 10% interest that is already on the loan you would have to bump up the interest rate a few more points. Is the 1106 piti? If it isn't you need to consider the taxes and insurance. I don't know much about short sales but I know that if you just catch them up on pmts and take over the loan you don't have any room for profit. I'd say try to negotiate a short sale or just leave it alone, a skinny profit margin is not worth the risk. Just my two bits.
PITI not included in motgage payment
property taxes - $2000/year paid quarterly
Insurance - $500/year
I have yet to meet with homeowners but I am near positive, the $159000 balance includes the 24 months they are behind.
Meeting with them tomorrow, so I could really use some more help.
Hey Tonyt33,
If you've yet to meet the homeowners, how can you be sure the house doesn't need repairs?
What about the Attorneys fees, late pymts. due or the interest? also, something doesn't seem quite right with the 24 months....the owners have been living there mortgage free for 2 years and is just now facing foreclosure?
Is there a bankruptcy involved? You stated that's the only lien, are you sure there are no hidden liens, if the owner didn't make their pymts. all this time, I'd wonder about what else hasn't been paid. Sounds like you need to do more research before you plan what type of deal to put together.
Hope this helps.
Clif
I was told by the homeowner that there are no repairs (some paint) needed and that their were no liens. I will most definately do my own inspection and have a title search done.
What I am trying to figure out is how to approach them. And what to accomplish at our first meeting.
I also need advice on a way I can finance this property
One thing you have yet to state is what you want to do with the house...i,e. live in it, rent it out?.....what? Then you can follow up with a plan of action....When you meet the homeowner ask them what would they like to see done....
Find the sellers motivation...24 months behind? has to be something else..once you find this, it's time to come up with a plan that benefits all...the seller, you and whom ever else is involved.(buyer)
Hope this helps
Clif