FHA Pre-foreclosure
Found a motivated seller in preforeclosure with an FHA loan. Are there any pitfalls I need to watch out for? The seller is saying Wells fargo already agreed to a forebearance for the 8 months arrears but he needs to come up with 2600 in attorney fees/ late fees for them to do it. Here are the details.
fmv 148k
1st bal 131k
late fees/attorney 2600
monthly payments (piti) 1050/mo (the area will support rent of 1150/mo) I was thinking of paying the 2600, taking subject to and then maybe giving the seller some u-haul money and then selling this on a lease option. Any comments or suggestions would help, I'm meeting with this guy tomorrow. He also has another place in NJ he's behind on...will that affect my deal?
This would be a very slim Lease Option Deal. You may get a bit more than the $2600 as an option fee, and $100 per month cash flow?Not agood deal. If you have a bunch of houses, I would understand, but if you only have a few, I would stay away.
thanks for the reply, thats what I thought too. But if I can write the lease option off an estimated future value, of lets say 157k, do you think this would be worth pursuing?
You can Short Sell (negotiate a reduced payoff from thelender) an FHA, in fact I have the best luck with FHA SS. If he has given up the house then do a SS. Once you are approved you can try to wholesale or you can purchase with hard money, rehab, and retail.
Brenda
dont forget the 8 months of back payments are in forebearance - not foregiven. I'd be very wary of sub2 on this one.
He's 8 months behind - go for the SS.
I actually think this may be a decent sub2 property. In my area I like to sell on land contract (contract for deed). You can offer a pretty good deal to some new people:
$8000k down
$140k financed at 7.9% = $1017.53/mo
I estimated your taxes and insurance at $235/mo.
Assuming your payoff is correct you would make:
$5400 up front
$260/mo
$9000 back end when your buyer refinances
Assuming this takes two years this is a total profit around $20,640. Decent deal. Even more you can take the property sub2 and pay off the $2600 when you get the money from your buyer.
$20k for nothing sounds like fun. Do one of these per month and you'll be just fine
Thanks everyone for all the input. I'm going to meet with the seller tonight to see the condition of the house and get an "Authorization to release information" form signed so that I can speak with the lender to verify all the amounts. I've never negotiated a ss before and I don't think I'll have enough time with this one. I may attempt subto and sell on a lease opt or land contract. When you do this, don't you base the purchase price off of an estimated future ARV? If so, should I just apply a conservative appreciation rate to today's ARV to come up with that price?
Thanks again
Ryan
myfrogger,
How do you get the $260 per month cash flow when the payment is $1050? Also, I do 4 to 5 L/O and L/C deals per month, and rarely do I get 8k down right away. If you are doing this on a regular basis, give me some pointers. Thanks[ Edited by miraclehomes on Date 07/22/2004 ]
Personally I handle deals of this type by bringing the loan current, have the owner sign a note for the cost and file a lien on the property.
My next step would be to have the home owner deed the property into my trust and give the home owner an interest into the trust and give them a percentage of any profits made, I also name my self as an interest into the trust and have my account as the trustee to cut the check.
Thanks for all the info guys. Here's an update. I met with the seller and looked over his ppwk. I'm confused. He's been working with Hud and it looks like they need 2600k to reinstate and it almost looks as if they've issued him a no interest loan for the 8k in back payments. Is this just a forebearance or could it be a forgivance? The sheet from the lender showed he owed 131k +8 k in back payments. Hud's sheet showed he only owed the 131k. Any insight as to whats going on?
short sell it. although you won't be able to make them a partner like johnmichael suggests, b/c they will probably have to sign an "arms length transaction" form as part of the short sale, which it would not be. i like the idea of making them partners on the sub2 deals though. good idea jm.
John Michael...how do you determine what percentage to offer owner...C.Walker
Quote:
On 2004-07-22 19:30, JohnMichael wrote:
Personally I handle deals of this type by bringing the loan current, have the owner sign a note for the cost and file a lien on the property.
My next step would be to have the home owner deed the property into my trust and give the home owner an interest into the trust and give them a percentage of any profits made, I also name my self as an interest into the trust and have my account as the trustee to cut the check.
Do you think the lender would accept a short sale even though this place is in really good condition?
Quote:
On 2004-07-23 21:57, cwal wrote:
John Michael...how do you determine what percentage to offer owner...C.Walker
Quote:
On 2004-07-22 19:30, JohnMichael wrote:
Personally I handle deals of this type by bringing the loan current, have the owner sign a note for the cost and file a lien on the property.
My next step would be to have the home owner deed the property into my trust and give the home owner an interest into the trust and give them a percentage of any profits made, I also name my self as an interest into the trust and have my account as the trustee to cut the check.
This is all based on the dollar amout I have to invest, the projected return on my investment (time for return).