Possible First Deal?
Hello. I don't know if this looks like deal for sure yet...cause I will be meeting with the owner on Mon.
The guy bought the house a little over a year ago...and just got a divorce.
Sale price: $66,900
Owes: about $66,000
Might sell for $68,000 now (comps are all over the place)
Could probably ask the new buyer for $75,000?
Oh yea, built in 1951...but needs only very minor repairs (I think) - many updates.
Does this look like a potential deal? Should I ask the buyer to pay ME a little bit to take it off his hands? How does that work?
Thanks for the help,
Brian
Because he bought it for 66, a little over a year ago, there is little to no equity in it. You want to attempt to puchase the property at a discount from the bank (short sale). Get the sellers approval, and contact the bank. I would over 45-50k to assume the property. this way, you now have 15-20k in equity to play with.
[addsig]
Quote:
On 2003-12-04 20:45, Birddog1 wrote:
Because he bought it for 66, a little over a year ago, there is little to no equity in it. You want to attempt to puchase the property at a discount from the bank (short sale). Get the sellers approval, and contact the bank. I would over 45-50k to assume the property. this way, you now have 15-20k in equity to play with.
Birddog1 -
Not trying to put you on blast here but if you're not sure about the questions people post...don't give advice!! Bth126 did not mention anything about the Seller being in arrears or foreclosure. You attempt a shortsale once the lender has sent out a notice of default against the homeowner. The whole shortsale process could take anywhere from 6-8 weeks. Ask me how do I know? This seems like a great opportunity for Bth126 to do a Subject To deal since especially since there is little equity involved. So basically what I'm saying is don't give advice on things that you don't fully understand yourself. If one doesn't know it would be wise for them to zip it!
bth126,
Like jonesoe30 mentioned, there is very little equity here. It appears the seller would have to come out of pocket to sell conventionally at $68,000.
Depending on the repairs needed, I would offer to take title subject to the existing loan. You could give him something for his equity, but I wouldn't give more than a few hundred bucks if I offered anything (again the repairs are a factor here--I might even ask him to kick in for repairs).
Let's take a look at how the numbers work on a sub to (you didnt mention what the payments or interest rates were on his loan, so I just used 7% which is reasonable given the loan is a year old):
You buy subject to existing loan:
Home price: $66,000.00
Down payment: 0.00
Interest rate: 7.00%
Payment amount: $439.10
You sell on the following terms:
Home price: $75,000.00
Down payment amount: $6,000.00
Total amount financed: $69,000.00 amortized for 30yrs
Balloon payment: $68,798.36 due to in 2 years
Interest rate: 10.00%
Payment amount: $605.52
Your profit centers:
Downpayment from your buyers: $6,000
Spread on monthly payments: $3,827.66
Backend: $4187.70
----------
Gross Profit $14,015.36
Of course, the repairs will eat into your profit.
If you could sell it for $75,000 conventionally, then you probably could bump up the sell price another $5K or $10K (depending on your market) due to offering a no qualifying loan.
Lease Option is also another way to go. But the main thing is the motivation of the seller.
Hope this helps[ Edited by Rogue on Date 12/07/2003 ]
Quote:
On 2003-12-07 00:17, Rogue wrote:
bth126,
Like jonesoe30 mentioned, there is very little equity here. It appears the seller would have to come out of pocket to sell conventionally at $68,000.
Depending on the repairs needed, I would offer to take title subject to the existing loan. You could give him something for his equity, but I wouldn't give more than a few hundred bucks if I offered anything (again the repairs are a factor here--I might even ask him to kick in for repairs).
Let's take a look at how the numbers work on a sub to (you didnt mention what the payments or interest rates were on his loan, so I just used 7% which is reasonable given the loan is a year old):
You buy subject to existing loan:
Home price: $66,000.00
Down payment: 0.00
Interest rate: 7.00%
Payment amount: $439.10
You sell on the following terms:
Home price: $75,000.00
Down payment amount: $6,000.00
Total amount financed: $69,000.00 amortized for 30yrs
Balloon payment: $68,798.36 due to in 2 years
Interest rate: 10.00%
Payment amount: $605.52
Your profit centers:
Downpayment from your buyers: $6,000
Spread on monthly payments: $3,827.66
Backend: $4187.70
----------
Gross Profit $14,015.36
Of course, the repairs will eat into your profit.
If you could sell it for $75,000 conventionally, then you probably could bump up the sell price another $5K or $10K (depending on your market) due to offering a no qualifying loan.
Lease Option is also another way to go. But the main thing is the motivation of the seller.
Hope this helps
<font size=-1>[ Edited by Rogue on Date 12/07/2003 ]</font>
Hi, I was wondering if you could help me out. I'm working on a similiar deal almost exact numbers (67k at 7%) My question is if I assume the title with the existing loan what exactly would that do? Will the owners' name still be on the mortgage? The owners are willing to leave it in their name, but not for long. What can I do? Thanks for any information!!!
Sorry about the delay...
I hadn't checked this thread for a couple of days.
If you obtain the deed 'subject to' the existing financing, then you are the owner of the property while the underlying loan remains in the seller's name.
How long will then seller's keep the loan in their name?
The main thing to remember is ALWAYS be honest with the seller. Let then know that in order for you to help them out, you need the loan to stay in their name for X months. This will allow you to find a buyer and get them refinanced. In the meantime, you let them know that you will make sure the payments are made (Don't do the deal if you cannot guarantee the payments--even if they come out of your pocket).
Always remember, you do not have to do the deal. This must be a win/win for everyone. We are not out to screw anyone, nor is this a charity business. They have the problem. You do not.
Feel free to e-mail me if you like.
Good luck!