How To Help Seller?
In knocking on doors I keep finding problems I cannot solve. One in particular "smells" like there is a deal, I just need to find it. It definitely doesn't look like it, but that's what creative investing is all about, right?
ARV: 150-155K
Condition: Great - nothing needed to retail or l/o.
The seller just got a new loan in Jan for 144K (took some money out). Tried to rent it out, but lots of problems. Now, he just wants out for what he owes (he has already stripped the equity).
His payments are $1400.00/month. (30 yr. mortgage at 8%)
He is now 1 month behind. He is willing to hand me the house "subject to" for the $1400.00. I could probably get him to pay this and just take over the house no money down. The house is worth 150-155K. Rent would be $1200/mo. Might be able to pull off $1300/mo in a lease option scenario.
The payment of $1400/mo is the kicker. This obviously has to be dealt with. There isn't much equity, but no cash out of pocket ('cept for advertising and holding) until I get a new T/B in there (with $5000 down).
So, besides advising him to just stop paying for a few months and then try to negotiate a short sale (not really interested in this), what other creative ideas are there without bringing new money?
Any ideas?
JohnCl
Hey,
First I'd check his monthly mortgage payment. My math says $144k at 8% for 30 years is around $1k per month, not $1.5k. I can't imagine that PMI, taxes and insurance are $500 per month on a $150k house.
I would try to go the L/P route. Get an option fee of $5k and add $300 per month to the rent. This should give you some cash and cover your outgoing.
Add a clause to the Purchase Contract that the sale is contingent upon you finding a renter.
Truthfully, this is going to be tight no matter what you do, and as this is your first deal you might want to walk away.
Bruce,
Thanks for the advice. Not my first deal. Just looking to see if anyone else had any other ideas besides refinance or short sale. Maybe some sort of note to me from seller, secured by their primary residence to make up the spread? After all, they have already "cashed out". They would just be paying back some of their loan, kinda like a credit card. Does anyone know if this is legal?
Maybe I would shoot for this as well as enter into a non-commiting contract and try to find a T/B. I have another property for sale in the area and have turned down several potential T/Brs with 3-5K because I need to get new money from a retail sale on that one.
It will be very hard to get a TB'er to see past the monthly payment. Around here it seems they all expect their payment to go down since they are putting in money. Buyer's market.
This brings me to my next question. I have a tenant buyer that is willing to work with me to help them find a house. I see a property I think they will be interested in. How can I lock them into some sort of contract with me so the owner of the house and the buyer cannot take me out? If they like the house, I would approach the owner and work the deal backwards. Subto, AFD, or Sandwich Lease Option.
Any ideas anyone?
JohnCl