What do I do with this one ?
A lady called my ad with a 4/1 farm house. They are getting a divorce and she "wants to save her credit". The loan is current but she doesn't think she will be able to handle the payments after the divorce.
Loan amount: 80,000 Payment: 734/mo @ 8.7% Asking 85,000 (although I think she would take 80) House needs approx. 5,000 in work. They gutted it and have it mostly put back together. Just needs some finishing drywall, trim and little things. House is on 2 acres with a pole barn.
I can't find any comps on it since it is out in the "country" but she said it was appraised last year (for refinance) at 96,000 in its current condition. That is probably pretty close. She has not listed it and it is not in the paper. She just has a fsbo sign in the yard that is hanging off the sign (might as well not have one).
I think this should be a 'get the deed' and lease option with work equity. A couple of thousand down, $99,000 and 850 +/- per month. Is that a good plan ?
My main concern is her inability to make any future payments. I might be able to get her to make one more but I doubt any more and after that, the payment is mine. If I don't find a buyer within a few months, I may have to put it back into her hands which could potentially harm her credit (her biggest concern).
Please let me know your thoughts.
Thanks Cliff Boyer
i wouldnt do a l/o with you if i were her. if you are going to do it take the responsiblity. dont put it back on her. if you cant handle the payments untill it sells you shouldnt be doing it. i would sub2 and sell on contract. i might give her 1k and take over payments, i dont know the market there but i would get at least 5 times my investment plus couple hundred a month and probably 10-15k on the backend. if you dont know how to do this check out $cashs$ stuff. later, ron(lv)
Would anyone be willing to help me with this ?
cb, where are you located?
What is the problem with covering your butt. It is her problem not yours. She needs to work it out. You are there to help but don't take her problems and make them yours. Just tell her that you will take the property over when you find a t/b. If she sells the house first than that is fine, you won't record the deed. Just find a t/b and then record the deed. Just be upfront with her about what you will do and let her make the call. I find it funny how people say that "I wouldn't do a l/o with you if you won't take over the payments". Bogus. Just don't lie to her and make false promises. Now if your t/b defaults then you will have to make those payments.
Just my humble opinion,
Tom[ Edited by tbelknap on Date 05/03/2003 ]
I agree with tbelknap,
If you do a sub-to on it, see if she will make at least 1 pymt on it, that'll give you time to find you Buyer T/B.
Perhaps you shoud offer a Purchase Agreement for 30-45 days, will give you time to find what you're looking for (buyer/-t/b) and not put you in a position of needing to make pymts if you don't....
Are living in farm houses a popular thing there? what about any other liens against the prop...are the taxes current? Is the rest of the land buildable?
Maybe you can divide some of the land and work something out like that in your deal...if you don't need 2 acres, perhaps someone else wants to build there dream home next door...
Hope this helps.
Clif
I am in Ohio (Lima) so yes, living in farm houses is very popular. The majority of the two acres is in the back of the property so I don't know if building another house would work. The house sits on one side in the front and the barn sits length wise on the other side.
I'll call her tomorrow and see if these suggestions work for her. Thanks for the advice. If you have anything else to add, just let me know.
CB
How do people normally handle property maintenance (yard work etc) while looking for t/b ? Are you making that the seller's responsibility or hiring a yard crew ?
Also, her soon to be ex husband is still living in the property. How would I handle getting him out after the p/s agreement is signed ?
Sounds like the total level of motivation might not be enough to make this a doable deal. Lingering husbands/ex-husbands can mean big hassles. If he isn't in on the negotiations you may be wasting your time- be careful if he is on the deed. It sounds like you are confident that you can rent-to-own for 850/mo which would cover the payments but can you clean it up and place someone in the time that she will be making the payments? Are places renting that fast there?
As for whether or not she can make the three payments you are asking - ask her this; if she doesn't agree to let you take the payments over in three months who will be making those payments? SHE WILL. So would she rather make three more or an indeterminate number more? This is a little harsh so please phrase it appropriately and gently to her but say something to that effect.
As for when you may be responsible for payments you'll either have a buyer /tennant paying them or you'll have the deposit they gave you which should equal at least the number of payments you'll likely have to make should they defualt and you'll have to evict them. either way you are covered. If you have no Rent to own tenant then just discount the price a little to get a retail buyer "Farmhouse appraised for 96k selling for 90k" and make a little less. Still you will put very little of your own money at risk, only the time and the little bit it would take to clean it up for resale.
I agree with the others who have written that you don't have to take on anyone else's problems and you certinly shouldn't put your money at risk. If it isn't working just walk away -sometimes it is the best way to work the deal. Just wait a little while the seller's motivation will increase and she may find the money for those three payments if she feels a little more pressure. for her this is the only deal she needs to make for you you can go find others that make you money.
GREAT LUCK,
KP