Re: 2 pre-foreclosure deals - Posted by Ed Garcia
Posted by Ed Garcia on April 04, 2002 at 10:34:50:
You’re right, not only have I been backlogged. But I’m working on one of Mr. Gutierrez’s loans. His wise cracks about me napping, puts me in a mood for a point hike (Smile). After going through partnerships, LLC’s, BBV’s, and XYZ, I still can’t find Angel in the deal. I know he’s here somewhere in his deal because he told me he is, and I will continue looking until I find him. I’ve got 2 skip tracers, and 3 private investigators helping me look for him on this deal and we feel confident we should find his name somewhere in the deal by Friday.
Meanwhile Linda, Angel gave you good advise on how to acquire the properties you have mentioned. When you are doing deals with little or no equity as you are, you should never put financing in your name. However, he should have spent a little more time looking at your deals.
Linda, before you do any deal you should have a game plan. I won’t kid you I’m not fond of your deals, especially in Ohio. I see deals in Ohio at 50 and 60 cents on the dollar. As you said many times appreciation is flat and so you must make your money on the buy or with cash flow.
Deal #1 has a debt service on it of $600+110 for T&I, which totals $710. On the high side you tell us you can get $800 a month. So with your numbers you’re showing a positive cash flow of $90 per months.
I’m a little more conservative. I’m going to use the $750 figure and take 25% off the top for T&I, expenses, vacancy etc, which by the way is very conservative, because the expenses or vacancy if experienced could be higher, and that leaves me $563. I see this deal with no real equity and a $37 negative cash flow, so I don’t see a deal here.
Deal #2 is appraised at $184,000. The first is $152,000, back payments $6200 and $1700 for taxes, which totals $159,900. So on this deal you’re at 86% LTV. On a leveraged deal, this could work. You don’t mention what this property will rent for in the event you get stuck with it just like the current buyer. That would definitely be a consideration to me. Remember Linda; you make your money on the buy. You want to make sure that in the event there is a change in the economy and you get stuck with it, that it will debt service and help you weather a storm.
Now you must excuse me, but it’s time for my nap. Oh and by the way, if you should run into Angel, tell him that I said interest rates went up yesterday.