Tight Deal? Any Ideas?
I have a couple that is facing foreclosure. The balance on the loan is 305K and ARV is 380K. It needs approx. 30K worth of repairs. The numbers are tight because the owners want to walk away with about 20K. 80K to bring the loan current (this is included in the 305K). Any ideas on different ways to handle this deal would be appreciated. :-?
You are looking at an initial investment of investment of $345K (purchase, rehab, and closing costs) just to acquire the property and make it ready for resale.
Look at another $2500 (or so) in monthly carrying costs which will total $15K if you need six months to flip the property. Should you decide to list the property with a real estate agency, you may end up paying another $22K in sales commissions if you only get $375K for the property.
Let's add up the costs. Purchase for $305K, rehab for $30K, settlement costs at $10K (3% of contract price), $15K in holding costs (debt service, taxes, insurance, maintenance,.upkeep), and a $22K sales commission. If you sell for just $375K, your profit on this deal is only $3K. This is probably the most the sellers will get if they list the property for sale and manage to sell if for $375K with a $30K repair concession There is no room here for the sellers to walk away from a traditional sale with $20K in their pocket. Why should you give it to them?
Perhaps you can successfully purchase the defaulted note from the note holder at a 40% discount. Then offer the sellers the opportunity to give you the deed in lieu of foreclosure.
I would never give a person who is getting their house foreclosed upon what they want.
I would give them sound advice about how to get them out of their situation. Tell them what I would be willing to offer and let them decide. Remember you control your destiny, if youmlet people tell you what they want, you will lose. You should be fair, but not get yourself foreclosed on should be your primary purpose.
good Luck
Lori
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Find out who is the listing agent and ask them
lori
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