Friend Has No Equity, But Is Preforeclosure - Thoughts?
I have a friend who is about to go into foreclosure, and is trying desperately to sell her place, but she has no equity in it at this point (she re-financed last year) and so can't afford a RE agent. Can I help her at all? I don't think her property is terrifically marketable right now at the price she needs, although possibly as a Lease-to-own.
TCCate
Work a short sale with the mortgage company showing that it is overleveraged and repairs need to be made to bring the property up to the current market level. You get equity and title this way.
I have an investor that would buy her place and lease it back to her. After negotiating with the investor she will have the opportunity to buy it back later. What area is she in? Marian
She can't afford the payments, so leasing it back to her would be a no-go. (She became unemployed a few months ago)
Maybe a sub2 deal? if the monthly payments are right and a willing buyer...it may work...just my thoughts...
Hi TwinCitiesCate,
This may be a very good candidate for a short sale if indeed the foreclosure process has already started. This may be a good opportunity for you to help your friend out of a mess and at the same time earn a handsome profit. Read more of the Short Sale post and if you have more questions you can ask the board or send me a private email. Best of Success!
BAMZ
A good way would be to sub 2 the deal from your friend and then do a lease option with someone and collect a option consideration fee for what ever you want to charge. Example: House value $100,000, your friend owes $100,000. Find someone to lease option from you for $105,000 with 5% down for the option fee (which would be $5,250 -yours to keep) subtract that from the $105,000 sales price and the borrower can finance the balance of $99,750 in a year or two. By then values should have gone up some
You can make extra cash with monthly payments of (whatever you want to charge for a rate)
hopefully your friends rate isn't that high where you can make some extra cash on the monthly lease fee. $105,000 minus $5,250 would be $99,750. If you charge a rate of 10% to your tenant you will make $875 per/month to cover your friends current payments. If it doesn't, go up a little higher on your rate.
Hope that helped~
Thanks for the great ideas! I'll see where she's at and whether it makes sense to try and lease it or not. Current value is ~$185K, mortgage is ~$177K, so there's a tiny bit of squeak room there, but not if she uses a realtor, but she's not doing well trying to sell it herself.