What would you do?
Hi. I've been studying for around a year, but am new to the real estate investing business from the perspective of advertising and talking to people!
I just got a call from a guy who needs $40k in cash for his equity. According to him, the property has around $80k (needs to be verified). It's a condo in S. California with a full ocean view.
His 1st mortgage is one payment behind. His 2nd is two payments behind, but this lender wants all of it now (around $80). He's about $1,300 behind on his HOA dues. Taxes are current.
Here's the problem -- he doesn't want to move. He is willing to do whatever it takes to keep his property, but can't refinance on his own.
Other than telling him he'd get his cash once I flip the property, how else could I get "creative" on this deal so we both get what we want? Mainly, him staying in the property with a loan in HIS name (I'm assuming renting back to him is not a good idea).
What would you do?
Thanks!
There's really not enough info given to give you any good advice on actually purchasing the property, but IF the seller wants to stay in the property, then IMHO, he ain't a seller. I'd give the guy your number and tell him when he is ready to sell and MOVE, give you a call.
I'd never leave the seller in the home, and I think that most other experienced REI's will agree with me. There is simply too many possible problems with the scenerio to be a good deal, regardless of the potential profit.
$80K sounds like a lot of equity, but it depends on the FMV of the home. I can eat up 20% of the equity by using the values for the normal costs involved with selling a home thru a RE agent. On a $300K house, that's 60K and a $500K house, a $100K. (if you're curious about this, search for Bill Youngs articles on financial judo here at TCI)
Roger
Hi Californiagal,
I agree with Roger. Until the owner is ready to become a seller and move out, I wouldnt invest much time or thought with this guy.
As you say he is behind in payments, the property will soon (if it is not now) be in foreclosure. Owners in foreclosure dont have a lot of bargaining power to demand how much money they want for there equity. When and if he is ready, do your homework on the FMV. And then make him an offer that you feel comfortable with.
Best of Success!
BAMZ
listen to those 2 guys
if the seller isnt paying the bank why would he pay you he simply wont.
unless maybe your looking for a loss
Thank you ... and I agree! That's exactly what I was thinking - if he can't pay his bills now, how can he pay me later? Then it becomes my problem.
He's convinced he'll be able to find someone to do it his way. I told him to give me a call if it doesn't work out.
Thanks again for your input!
Can I get an "Amen" on that one. I echo the other's advice, NEVER leave the loaf(er) in the oven.
Here's the deal (for you). Offer him the $40K, in one month it goes down to $38K, in two $36K, and so on. Put it on the back of a business card but don't make a contract, don't sign it. The closer he gets to foreclosure the better your deal will look. When he's ready to jump you can run him into BK court to stop the FC, and being the nice gal you are, offer the full $40K. It'll give him a sense of urgency. -MakoShark