Any Potential In This Deal?
Hi there,
The beginners forum suggested I should repost my question here, b/c this might be a short sale possibility:
I came across a motivated seller who wants to avoid foreclosure (wants to get out of payments/obligation etc), but I'm not sure if there is a profit potential in this deal. I'm learning to think creatively in REI and this might be more of an exercise right now. What do you think:
2 Y.O. 3BR, 2.5BA house, owner *says* value of property is $325K, the combined mortgage balance is $291K, monthly payments are $2800. No leins, according to owner. Owner says mortgage payments are current, house is in excellent condition, but backyard is only partially finished.
For the time being, let's assume the owner is correct with all the info (I wouldn't do this in reality of course). For a real deal, I know I need to do a comp on the property to determine actual worth, etc..
Someone I know says rent for a 3BR in the area would be max $1600.
Since the property is 90% LTV and the mortgage payments are so high for the area, at first I didn't see any profit potential, although I do see some equity.
Would the best idea be to wait for a foreclosure or something? Do you see any profit potential that I'm missing? Could this be a short sale deal?
Thanks in advance for any info!
This doesn't impress me as being a terrific ss candidate... especially of the property is marketable, and really worth $325,000.
My thinking will be that the mortgagor could sell this conventionally.... and walk.
I'm sure that the mortgagee will have that thought, too.
But... if the value isn't there, and if the mortgage is delinquent... and the homeowner can demonstrate a financial hardship... perhaps you might get some ss consideration.
[addsig]
Actually, someone I know just looked up on the mls about similar properties which sold nearby. Adjusting for 1998-2003 solds, a house a block away with the exact same square footage sold for $280K
in Oct. 2003... so it is possible the place is worth less than she owes anyway.
After/if the person forecloses, would a place like this become an opportunity for a short sale or any kind of creative REI?
I think so. If it's in the lender's best financial interest to accept your Offer today... then go thru an expensive and time consuming foreclosure process... then it would make sense for them to consider an application to consider a preforeclosure short sale.