Need Ideas For Situation Outside Our Experience

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Here's the skinny:

Got a condo owner who's between jobs, who's got a 2 bdrm townhouse condo he wants to sell since his latest job offers aren't panning out. He is single, has visions of starting his own business, bills are getting tight. He wants out of the condo since it doesn't fit his needs, and it's older, etc.

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Condo value: $90-100K

1st Mortgage: $56,300/$528 PITI

Home Equity Loan: $16,000/$65/month minimum payment
(This loan paid for upgrades/improvements done in 2000 & 2001)

Association fees are $170/month

We have hard data on rents in the complex at $800/month avg. for 2-bdrm.

So the basic existing numbers are:

Current amounts owed: $72,300
Current obligations out: $763/mo.
Possible rents: $800.00/mo.

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Our investing experience is typically in buying distressed properties for rehab or wholesaling, or buying nicer properties for lease/option or land contract sales.

We don't typically hold/rent (except for lease options).

This property doesn't fit our criteria for distressed properties. It's in good shape, with little work needed, and we have no experience in lease/optioning Condos, so we don't know the feasibility of that.

Our best thoughts right now might be to see how close to the $72K owed we can option for, and then turn it to a landlord for $90K, but again, most of our sales experience is to rehabbers and lease/option occupants -- don't know if this is attractive to landlords -- obviously our market is specific to us, but I don't want to waste a lot of time and money trying to figure it out.

Amount owed has us scratching our heads . . . we have no desire to refinance that much debt, and "subject to" it's too slim for the rents to cover, particularily because of the monthly association fees.

Looking for fresh, creative thoughts, the seller really wants out, but he's not willing to take less than he owes -- yet.

Just want to make sure we're not missing something . . .

Comments(2)

  • commercialking16th April, 2004

    I quickly see two solutions, but for either to work you'd need a little more info.

    How confident are you about the $90-100K comparables? Assuming you were confortable here talk to a realtor who works the condo trade in this area about market times at $85,000. Enter into a contract to purchase from your seller which includes access to show during the period to close and 90 days to close. Even after you pay brokers commission of $5,000 you put $8,000 in your pocket.

    Other possiblity, What rate/terms is the sellers first and second mortgage at. If you can lower the rate or get a longer term (via a refinance or by negotiation with the lender look at the HOE line here especially, it seems to be either at a pretty high rate or a very short amortization) the cash flow as a rental may improve.

    Good luck

  • JohnLocke16th April, 2004

    4,

    Glad to meet you.

    Here is the true skinny, why are you thinking rents as this is typical lease/option (renting) thinking.

    Sell the condo with a Contract for Sale for full price, set your interest rate and down payment to yours and your buyers needs.

    Remember selling where the home owner can declare the interest and feels true pride of ownership is much different than making them feel like they are renting. It has nothing to do with rental market rates. Everyone understands that a mortgage payment is much different than rent.

    John $Cash$ Locke

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