Is This Seller A Crook Or Just Dumb??
Whew. I don't start small. Hubby and I have been planning to start REI for a few months, decided last week to jump in. He's knocking on doors of foreclosures going to sale July 6 and also in August.
We got one going yesterday, another today... but here's the numbers on a guy I talked to tonight. I'm supposed to go see him at noon tomorrow and I need some INSIGHT bigtime!!! He's an "investor" but not a very smart one, as you'll see.
It's crazy, please bear with me...
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HOUSE 1 - his personal residence
Market Value = appraised at $225,000 in fall 2002 when he refi'ed, which looks pretty good according to comps of what's sold in the past year
1st mortgage = $180,000
2nd mortgage = $45,000
(this is with the same mortgage co. - a 80/20 refinance - and it's too new to be paid down hardly any)
both mortgages behind, first is foreclosing - going to sale August 3
also owes $2300 in taxes and $500 to homeowner's association
besides some wallpaper my husband says "isn't his taste" - in great shape.
**OK, the plan is to get the 2nd way down (to 10%), give the 1st a go down to 90% (or not is OK) - try to buy at least 30 days & sell it retail 10% or so under market, or less w/double closing to investor.
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HOUSE 2
Market Value = $185,000
current on $140,000 mortgage (he does owe $1400 in taxes on it though)
I need to find out his payment
He's selling it on Land Contract as follows:
sales price $190 K
30 yrs. at 8.5% - the people are 6 months into it
they paid $10 K down
10% prepay penalty
$1352 month payments
* Plan would be to get the deed, take a fee (how much??) to sell that deed as we will not hold properties right now. This seems like a real good deal to me, getting in w/owner financing buyers in place for $6400-10,000. Don't get the big downpayment, but real good cash flow and good terms on land contract I think.
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HOUSE 3 - the big bad stinker!
Market Value = $230,000 (very recent sales)
credited with tax value of $203,000
1st = $148,000 is current (!)
2nd = $69,000 is 5 months behind
for a total of $217,000
Here's the STUPID part -->>
He's selling this on land contract too, but the people have been there 1.5 yrs. and are READY TO CASH HIM OUT AT $202,000. Yeap, they are approved for a loan and could close as early as July 1, but for less than the sucker owes.
* There's several problems here:
1. don't think 2nd will be motivated with 1st current
2. would have to get it down to at least half to make it work and worth it
3. don't know how/if I should contract it to work a short sale with his commitment to the "owners" of this house!!!
4. their proof of funds would show the $202 plus some they're getting cash for at close (they think) so it won't help me negotiate the short sale.
5. i don't feel right (even legal??) about contracting to buy under this circumstance, even to try to negotiate the 2nd down enough to keep them from loosing the house and what they've got into it!
This is insane, and the more I look at it, WHAT WAS HE THINKING going behind on the 2ND!! on this one??
I don't start small. I am debating whether I want to deal with him at all, but that the first seems really good. The only reason I'd touch the 3rd is if I could very legally and TO BENEFIT the poor folks that are clueless that he might loose THEIR house!
Please, please, any and all help is APPRECIATED!!!! Thank you!!!
Lisa
Lisa,
You might try on the first one but I would pass on the rest, life is too short for those kind of problems and in the air is the faint tart smell of a lawsuit as someone comes out of the ether.
I know, I know, I am a little conservative, but I hate being drawn into a lawsuit which was caused by a prior miscalculation of which I was not a party.
The woods are full of deals. Lucius 8-)
"1st mortgage = $180,000
2nd mortgage = $45,000
(this is with the same mortgage co. - a 80/20 refinance - and it's too new to be paid down hardly any) "
If the second is with the same bank then I doubt if you will be getting a discount.
Of course, it never hurts to ask.
Quote:
On 2004-06-18 08:40, tbelknap wrote:
"1st mortgage = $180,000
2nd mortgage = $45,000
(this is with the same mortgage co. - a 80/20 refinance - and it's too new to be paid down hardly any) "
If the second is with the same bank then I doubt if you will be getting a discount.
Of course, it never hurts to ask.
Sometimes, with the bigger banks, you might have two mortgages, but they're each out of a different regional office. I have heard of cases where neither the 1st or the 2nd realized the other was with the same company, and they agreed to short.
Ha, I read somewhere to act a little crazy when dealing with people. That way they will be more likely to accept crazy offers because what kind of offers do you expect from a crazy guy? Maybe this guy confused crazy with lack of logic and took it to heart