High Payment Homes
Is there a good way to take a house subject-to that is 100% but the payment is higher then we would like to take. We have recieved many called lately where the payment is closer to what we would charge not where we buy. I have about six deals sitting like this does anyone have Ideas on what if anything we can do?
Example Worth $124K owes $123K payment $1070 this is what we would charge
Any thoughts
Sire
The only option *I* can think of is to ask the seller if they are willing to make payments until the house is sold to a T/B. The fact that you are getting no equity in the home, and you can't turn monthly cash flow = walk away if they won't pay.
Personally, unless I am getting at least $10k in equity on a house under $150k, I don't consider it. No deal is better than a bad deal.
To your Success,
Sentrex
Sentrex,
Can you explain a bit more about how you can hold the $10K in equity? How do the number stack up to get your equity that you want? Are you making the $10K up front/
Also what does T/B mean?
Newbie questions..
Thanks
Housebyr
Personally, I wouldn't see a problem with this situation as long as there were no other homes in the area with PITI payments of $1070/mo. That figure does not sound bad for PITI. Take the house over for $100-$500, if not no cash. In turn ask for a 3-5% down from your buyer, neting instant cash. Pack your payments $100-$200 if the house allows the room to do so. Next, use your 2 year lease option to add 10-12% for appreciation when you sell to your new buyers. So you will recieve $3,720(3%) to $6,200(5%) upfront minus closing costs/recording fees. $200 per month or $4800 during the life of the lease. Then you will recieve $11,800 to $14,300 in the end when you sell. You can acheive these numbers because the new buyers you deal with most likely will be greater risk, or at least can be. You can advertise no qualifying , no credit check to instantly open up your pool of available buyers. That would be your choice to check credit or not. With this deal, I would say you can make about $20,300 - $25,300 overall. These numbers come based on how much you collect down and whether your area/house supports the monthly increase. I'd say jump on it if you have a bunch of no equity homes. This is a method to make $ from them. Afterall, if the sellers need to sell their home, they can pay $11,000 in comissions and fees or they can sell to you for a song. Good luck.
PS. If you haven't done so, I'd recommend John's sub2 manual. This will steer you in the right direction. Other helpful material I'd recommend is William Bronchick's "flipping properties" ($19) and
Matt Bowmans's sub2 ebook. ($40 I think). Search that one out on the net. Always good to get more than one perspective. From what I've gathered from these 3 books, I would use John's forms for the majority of the deals in addition to a land trust, investor assignment, and a contractors form from William Bronchick.
justmjc,
We would normally take the house, but due to market payments and rent being approximently$950-$1000 mo. there is not the room we normally use to place someone in the house $1070 is what we would charge for the monthly. We have Lockes' subject-to book. We normally take a zero equity house with no problem it is just these payments on new loans are with intrest rates of 8%-10%. This is what we charge for our sales on the ballon notes.
We normally would sell this house for129K with about 4k down but this payment is just killing the deal. As I said we havesix or so of these deals with the monthly just to steeeeep.
Thanks
Sire
sire
When dealing with lemons learn to make lemonade.
We try for 3 profit centers, so here is how to get 2 of them.
We are helping people purchase a home that could not otherwise do so without our help, so they expect to pay for the American Dream this is the way it is.
Instead of asking $4K down ask for $6.5K down. Take the spread of the $2.5K and apply it to the monthly payment. On a $1K a month payment it now becomes $800 a month lower than the going rate. The phone should ring of the hook at that monthly payment.
Since we have the Buyer re-finance in two years on the second year of the Contract for Sale, increase the payment to the actual payment. The Buyer won't mind and because they think short term in most cases it will make sense to them, there are many Adjustable Rate Mortages out there and this is all you are doing.
This method works extremely well when you have a property that you are having trouble selling, most people that we sell to are only interested in the monthly payment think about that for a moment.
You get your down and the backend of the deal so 2 out of 3 profit centers isn't bad.
John $Cash$ Locke
John,
So we could just bump up the purchase price to cover the difference. The house is worth $125K and they owe $124K therefore we push the sales price upto $132K.
Is this correct?
We are getting a LOT of calls on these type properties, and we want to be able to handle all these calls.
Thanks
Sire
John,
So we could just bump up the purchase price to cover the difference. The house is worth $125K and they owe $124K therefore we push the sales price upto $132K.
Is this correct?
We are getting a LOT of calls on these type properties, and we want to be able to handle all these calls.
Thanks
Sire
sire,
Yes, you can sell for a higher price than you purchased the property for.
Remember most people who purchase Non Qualifing are interested in the monthly payment not the price of the property.
If a lender were to give them a loan the interest rate would be so high that the difference in the purchase price you sell for would be a mute point as far as the buyer is concerned. They will pay for bad credit no matter what happens.
John $Cash$ Locke