Need Help With This Pre-forclosure
335,000 as-is value
2100 piti monthly
10000 behind
289,000 balance
house require no repair. I could probably influence the BPO and get it to come in at $310,000. This would give a 85% offer of $263,000.
Besides a questionable short sell - what other options do I have with this property?
Brenda
This looks like a potential sub2 to me.
Do you have $10k to bring the house current?
Do you have some other misc marketing and holding costs?
Will the market support a sale at $345k, 15k down, 8% interest, 30yr amort making payments $2421+estimated tax/ins $466=2887/mo?
If yes, you could get into this property for a few grand up front, a healty $750-800/mo, with a $40k back end profit.
The key for sub2, as I see it, is what the market will support in terms of monthly payment and down payment. How many people out there can afford $2900/mo & $15k down?
GOOD LUCK and I think you found yourself a pretty nice deal!
(I wouldn't short sale)
The homeowner is willing to "let the house go", but does see that there is some equity. Although I explained that by the time there is closing cost and realtor commission, the "equity" is pretty much gone. but still, the homeowner will want something. probably some money now and some when the house is sold.
I have done quite a few short sells, but have not done a subject to. Guess I should buy and read John Locke's material.
Any ideas how to structure this so that the homeowner gets some financial benefit?
Be careful, as it sounds a little like you want to fall in love with this deal, and the numbers are narrow. Even as a sub2, you'd have a decent chunk of cash to come up with to make the payments current, and I suspect this seller isn't an ideal sub2 candidate.
I would suggest, if possible, you go a little more on the offensive here. There is plenty of "financial benefit" in it for the homeowner, if you are willing to cover their $10k late payments and help them unload the place. The alternative is they lose the house, equity, everything, and their credit is trashed. Sounds like they don't clearly see this. Show them.
If you want to complicate matters and tease them a bit, you could offer them some kind of back end incentive, say, 20% kickback on the diff. between your buy price from them and sell price to your buyer. I'd recommend charging more interest, like 9.9% with two year balloon if you can. Gives you better cash flow and more $$ due at refi time when balloon kicks in. Get a good down payment in case your buyer flakes out.
The presence of a Realtor makes it worse deal-wise, since s/he'll need to be paid too, unless you sniffed the deal out on your www.own--e.g., seller called you--and the Reator contract can be cancelled. Compare the out of pocket $$ with worst-case payoff (remember, there's a reason it's not selling now) including time values, esp. if you will count on the two year balloon refi, which isn't a done deal until it actually happens.
Don't know your market, but you might be trying too hard on this deal.
I am definately not in love with this deal. Just my exit strategy is almost always a short sell. Trying to learn other ways to work pre-foreclosures. In this case, the owner has time to list it with a realtor
335,000
10% closing and realtor
10,000 back payments
289,000 loan amount
---------
2500 in the home owners pocket
the home owner knows this and I am trying to show an alternative that also makes me some money.
brenda