Payments Missed On Sub-To Purchase....what Now?
I have partnered with someone on this sub-to deal where the owners basically needed to be gone, handed over the keys on a practically brand new house and left......my partner was the one who was going to put up the money on this deal to make the notes until property sold....2 payments have been missed and notices have started to come in from the mortgage company/bank. Also, the seller wants to know what's going on and how this could affect his credit.....i have no answer at this time.....any ideas on how to proceed from here on this one.......any POSITIVE responses will be very appreciated.......the Brain :-(
It appears that you've made a mistake when you dedided to partner with the other person in the deal. Are you able to do anything to salvage the situation personally. First, I'd try to get the partner out of the deal. They have defaulted, and let you and your seller down, and you're better off without them. and First again, Can you borrow enough to bring the payments current yourself? If the house is essentially new, and not over encumbered, and in good shape. You need to aggresively campaign to get someone in it to pay the mortgage. You can do this a few ways. In no particular order, For sale by owner, Owner Will Carry with X$ down Payments X$ per month. Do this with a contract for deed, They refi in two years cashing out you and the existing mortgage. -OR- Rent to own, Lease Purchase etc, OR Rent it out until you get things figgured out. Bottom line, the house empty is not a good thing. You owe it to the seller to do what is necesary to make this work. But you have to move quickly. And yes this is affecting the seller's credit negatively, and this must stop.
Good luck,
Jeff
I agree with Jeff. You need to get this partner out of the picture and cure this default immediately.
Only two payments need to be made up so no need to panic at this point. Find a way to get these payments made to show the seller your good intentions to rectify the problem immediately .
Curious what your exit strategy was/is on this property?
Dave
[addsig]
thanks guys for those wonderful responses to that issue, but any ideas on how i can explain this to the seller without sounding like a nimrod who doesn't know what he's doing?????.....and "nice" way to explain what is going on while at the same time alleviating his fears and letting him know that things will be worked out???....HELLLLPPP!!!! :-(
Realestatebrain:
Dear Seller:
My partners on this project have run into a short term cash flow problem. We are taking immediate step to address this issue and asure you that this was an oversight and will not happen again.
I look forward to the successful completion of this deal and any dealing we may have in the future.
[end]
How is the house titled?
LLC, partnership, TIC?
Do you have a partnership agreement to address these issues.
Cjmazur, thanks so much for that!!!....I still would like any and all comments towards the initial post.....John Locke, i would especially like your take on all of this......thanks.....you guys here are SUPER!!!!! :-D
RealEstatebrain,
Glad to meet you.
You are looking for positive responses as you should be, because you have already caused your sellers credit to be affected, not maybe it will happen, it has happended.
You must have known the payments were not being made and you took no measures to correct the situation when this occured. Trying to blame the partner does not take back what has already happended.
How to tell this seller you screwed his credit up without looking like a nimrod, how to tell the seller you have no money to correct the situation, I am sure he does not want to hear the partner story.
But, you want to know how to correct what has been done. Find a 3rd party pro investor who is willing to make the back payments up and take over your position in the deal. If he is a pro he will talk with your seller convince him what has been done, has been done.
In the future all payments will be made on time, he will advise your seller on how he can possibly correct the lates that are going to show up on the sellers credit report. He has a much better chance of reaching an agreement with your seller than you ever will.
Not tomorrow, today get it handled.
John $Cash$ Locke
PS: If I am a tough on you it is because I care and am trying to get you to correct this immediately. What is a major city close to where you are?[ Edited by JohnLocke on Date 06/10/2004 ]
I didn't see the follow-up wrt affecting the sellers credit.
If the bank is prompt in reporting, I would expect that the seller now has a 30 or 60 late on the report. (I didn't follow on the missed 2 payments where the 1st of those 3 was late or not.
This is why I can't believe that people accept sub2 deals so readily. More power to the buyers.
John, no, i didn't know about the missed payments as this was going to be handled by my partner....i find the deals, put them together, his end was to fund the deals..........just wanted to clear that up, and am working very hard to get this taken care of myself, since i dealt with the seller directly, not trying to lose the deal......bank has offered some type of payment arrangements which i will be looking into shortly (as a last resort).
RealEstatebrain,
let me get this straight - you are asking what to do in this situation?
How about pay the missed payments???
You could start by using the money you got in sellers name, as you posted in your post 2 days ago. http://www.thecreativeinvestor.com/ViewTopic28872-34-3.html
Vasiliy[ Edited by vasiliy on Date 06/10/2004 ]
Vasiliy,
Realestatebrain, realized that this was not his money and returned it to the seller, which is why I feel he is a forthright person and wants to do the honorable thing.
To make this situation right in my opinion he needs some outside help to correct it. Being new he got in over his head, I have said it many times, but worth repeating "don't make your first deal your last deal."
In this business you have to learn to say no before you can say yes, everyone wants that first deal so bad they overlook some of the basics that will effect the outcome of the deal later on.
John $Cash$ Locke
I second John,
don't make a bad first a bad last... I lost 50K on my first deal, cash I had saved over 5 years of scrimping etc. If I would have quit I would have lost out on many times that in profits..
Additionally I learned more on that deal than any other..
[addsig]
Quote:
On 2004-06-10 11:52, JohnLocke wrote:
Vasiliy,
Realestatebrain, realized that this was not his money and returned it to the seller, which is why I feel he is a forthright person and wants to do the honorable thing.
John $Cash$ Locke
I didn't know that he returned the money. I take my comments back. I hope you work out the situation favorably.
Vasiliy
Yes, i have since forwarded that money on to the seller, if i wanted to be under-handed and keep the money, i'm sure that i would have found a way.....but i came here to get help, and answers to my questions as to WHO it did rightfully belong to....John answered my question and that was the end of that......again, not looking for any NEGATIVE attacks here, only HELPFUL REPLIES/SOLUTIONS/RESPONSES....i think when some of you do that, you tend to scare away any other newbie who might have questions that require serious answers because they are afraid of the attacks....keep it positive and the focus of these boards, as i'm sure they were intended, will continue to benefit all who use them.
vasiliy,
Not even a problem, he contacted me as what to do with the check and I told him to do the correct thing return it, as it was not his, the way his paperwork was structured, so you did not have knowledge of this.
John $Cash$ Locke
Stockpro99,
You mentioned that you lost 50k on your first deal, would you care to go into detail a little about that deal....It would really help me out.
Murphy