Does This Sound Fishey??
I received a call from a homeowner in NJ that is in pre-foreclosure. He owes approx: 215k on the house and the bank is charging him 60 bucks a day on the note. The owner says that he has brought the note current but the only way he would have gotten my number is from my lis-pends mailing. The house is listed in a real estate for 470k they estimated the value of the house at 429-439k. The 470k number was suggested to test the market (they say). I negotiated a sale price of 350k with the owner. The owner said that he wants to sell me the house for 350k and live in the house for 4 months @2500 a month and than buy back the house for 395k. I can not think of a reason why he would want to do this and would like some suggestions and opinions from some of the more seasoned investors.
Thanks
John C.
Check out his credit and see if he is in a position to buy it back from you. Maybe he is planning on filing BK. Maybe he is
planning on getting you to go for his proposition and then not paying you rent.
You need to do your homework on him. Start with a credit report. If he wants to rent it back and has decent credit where he can get another loan, then maybe it might work. I would suggest a deposit
if this is the case and a lease agreement drawn up by a professional.
Best Riches,
Jeffrey Adam
[addsig]
Likely he's done some research (or has experience) in milking the system? Does NJ have a redemption period following the sheriff's sale that occurs when his foreclosure 'matures?' If not, especially, he may be trying to leverage his foreclosure payment "holiday" into a tenant's rental payment "holiday." Could take months to send him packing.
Beyond a credit check, you might want to check court records for criminal records. At the very least, verify employment and his story when it comes to how he will pay you but cannot pay the bank. Maybe get a lien on his car or other property too, make the deal contingent on that. Maybe ask him to carry a big fat note for his equity, that should flush him out.
Foreclosures can drag out for a long time--a year or more--and since he's close to the end of his rope that's allowed him, he may be trying to re-up to get a few more free months--at your expense. That may not be a total red flag, though, if you can get it cheaply enough, and don't mind waiting awhile (and employing lawyers) before the final payoff. Proceed with care.[ Edited by loon on Date 03/06/2004 ]
I think its a great Idea. Tell him he has 3 months to get financing. If he doesn't oh well, you sell the house for what its worth, and make a 100k instead of 45. I say go go go
[addsig]
Sounds like you have something worth looking into a little more. Someone mentioned to do a credit check and see if he can even re-purchase the property, that would be my first priority. Always remember that 75%+ of homeowners who are in foreclosure always want to keep their house. If he stops paying you the rent, just evict him and resell for more money, or you could "flip" it to another investor and be done with it. Good luck with it, and let us know how it turns out.
If I were in your situation I'd be real careful. It's when you listen to some people on the site that you can get in trouble. I will be the first to tell you that I'm not an attorney but when someone tells you "go ahead with the deal and then just evict if they don't pay" you've got to be careful. It may not be as easy as this to evict. I'd really recommend asking an attorney about this. It's about a 10 minute phone call that could save you ALOT of money and trouble. Homeowners could claim they were under stress and that you took advantage of them. A judge might see things in their favor even if you were only trying to help. All I'm trying to say here is BE CAREFUL when keeping owners in a property that is foreclosing.
Ryan J. Schnabel