Re:sharing Equity
I am looking for some advice on the possibilities of sharing equity in a Sub2.
Situation- A guy owes $10,000 to get reinstated and then owes $110,000 on the mortgage. The problem his attorney advised him to do a Ch13 and he did( I am sure I don't have all the details on why).
With that said, the comps in the area are $230-$330. He could sell it today for $200,000- but needs some work.- say around $15K then he could sell it for $275K.
He does not have the $10,000 to get reinstated or money to fix it up and the sheriff sale is in two weeks.
Is it possible to do some type of equity sharing, where I put up the $10,000 and then I would get a small percentage of his overall deal. I would do a sub2, but I would have problems with the Ch13. Please advise...thanks in advance.
Joe
if he is in a ch. 13 the sheriff sale wouldnt be able to go through unless the bank motioned the court to get the stay lifted where in that case you can have the attorney withdraw the bankruptcy petition and go forward with your deal.
as far as equity sharing yes it is possible. he signs the deed over to you you reinstate. you give a 2nd mortgage to seller for whatever equity you both agree to less 10k and less any repairs. once you sell the first mortgage gets satisfied the second mortgage gets satisfied (your sellers equity) and the difference is your profit and the money you layed out.
The back sound be more than happy to postpone thing and get $$$ rather than an REO.
Why not "buy" a 30% interest, contingent on the money to bring the loan current.
They get there credit saved (?), and you get 30% of 275 for 10K plus the 15K rehab, not bad.
The problem if that you have the issue oc co-tenancy and all the joys of it?
I may be different in my thinking but I never make equity share or partnership deals with an owner that has foreclosure or bankruptcy problems. Sounds like you need a solution that would motivate him to sell, get him out of the picture, and not make him a "partner" in any sense of the word. Just my opinion. Good Luck!
If you're going to do this equity share thing-
Get a contract that states how much you get, he gets and other terms of the agreement. MOST IMPORTANTLY --GET THE DEED IN YOUR NAME (OR CO NAME) ONLY!!!
If the seller decided at the last minute that he would not sell to the end consumer- after you put 15K into the house- there ain't a damn thing you can do about it. GET THE DEED.
Best of luck.
Sam