What do I do now?
Hello, all. I'm so glad I came across this web-site. I have a question about the best way to structure a pre-forclosure deal. I would appreciate any input you may have. I found a duplex with a basement in the city of Chicago. Three rentable units. The owner is 6 months behind on his mortgage and owes the bank almost 8000.00 in back payments and fees. His lawyer informed him that he needs to do something quick about the building otherwise he will be going into forclosure soon. The building was recently appraised for 220,000 and he is willing to take 175,000. I currently have enough to cover his back payments and fees but I'm not sure what the best way is to get title to the property so that I can rent it out then re-sell it. I've read some about a quit claim and land trust but I'm not sure how or if I can apply them to this situation. I know instinctively that there is money to be made from this deal. I'm just not sure how to put it together.
IMHO, "how" to acquire is not as important as "should" you acquire...
You'll need to know more information about the property. The very first thing that I would want to check on is the zoning. Is it a legal 3 family dwelling? Or a "2" with a nonconforming 3rd? And financial data including, for example, how much is owed on the mortgage(s)? How about back taxes? Any other liens on the premises? Any outstanding code violations?
Then, you'll want to examine the leases. You might be buying the building, but you'll inherit the leases. Is it rent controlled? Are the Tenants Section 8?
TheShortSalePro I appreciate you taking the time to respond to the post. I do have some of the information that you replied about. I was able to find out that the balance on his mortgage is 122,000. He currently doesn't have any of the units rented because, according to him, he was trying to re-hab the entire building in order to be able to sell it.
How would I find out about the zoning? Would I go to the city directly to find out about any code violations? I'm assuming that a title search would show any back taxes or liens on the property. Is that correct? Assuming that everything checks out. What would be my next step? How would I structure the deal?
I know that I'm asking for a lot, I really do appreciate any input you could provide.
Oh yea, I'm trying to locate good training material that's affordable on this stuff. Can you recommend any? It seems that a lot of the stuff that's out there is pretty expensive.
Thanks again,
Sam