911 PREFORECLOSURE - Posted by Carl

Posted by Carl on October 11, 2003 at 23:09:40:


911 PREFORECLOSURE - Posted by Carl

Posted by Carl on October 11, 2003 at 08:12:34:

Bank foreclosing on 84000
Comps are 102500
Unpaid Prop Tx 3600
Second Mort. 3000

Owner is about 3 months behind in very early stage of pre-foreclosure. Monthly payment is $838.

No other liens or judgment recorded. The house is a 3/2 1337 sq. ft. on a 6550 sq. ft. lot. Single female occupant is the owner who also owns the home ac-cross the street. Her finances have changed and she can’t afford this payment any longer. She is extremely anxious and motivated to get away from this foreclosure. I just got off the phone with her and she says, “I sell you the house on Monday if you want. Even if I don’t get nothing.” She then caught her self and said, “I’ll walk away with 1 or 2 K”.

Any feedback or suggestions would be greatly appreciated!!

Re: 911 PREFORECLOSURE - Posted by Hank FL

Posted by Hank FL on October 12, 2003 at 14:45:40:

I try not to answer questions around here as I think others do a much better job of it than I can but I see this thread sittimg out here and I think I’m gonna add my 2 cents for what it’s worth.

Random thoughts/questions:

-How long can you hold off paying that property tax ?

-That $838.00 monthly nut, is that the whole ball of wax ?

-What will this house rent for ?

-Are your comps good? You didn’t mention a garage. For instance, let’s say this house is a 3 bedroom because the garage was converted. You wouldn’t want to campare a 3/2/1 with a 3/2/0 as near equals.

-Repairs ?

-There isn’t much equity here.

-It’ll take a little time to get somebody in that house so you’ve got 3 back payments + legal fees and other B.S. costs, 1 or 2 payments while you are looking for a tenant, so I’m thinking 5-6k out of pocket at least to get into this deal.

-Again, what about repairs ? Did you miss anything ?

-If you can talk with the bank, will they do a “work out” or forebearance agreement. If you can pay off these missed payments over time, or even better, get them put on the back end of the loan, that would make things look better.

-Do you know any new investors at your REIA that want a house but don’t have time to find one ? These guys don’t have LeGrandian standards if you know what I mean. One of these guys could step into your shoes after you work out the details with the seller and the bank. Why would an investor get involved in such a skinny deal ? Well, what’s the alternative for a guy that’s been going to meetings for a year or so but has kids and a full time job? He could find a skinny deal through a Realtor and go down to the bank for an investor loan. That’s about 20% down. Provided this house is not a wreck, he could do worse than to pull approx 8-10k out of his pocket (that’s the money mentioned before plus a couple thousand for you) for a deal in which he’ll get back that amount in a fairly short period of time even if the T/B doesn’t buy. The tax benefit will shelter a few thousand right there. Assuming it will cash flow, he’ll get that too. The appreciation and amortization he’ll realize when a tenant/buyer refinances, but it happens every month and kinda adds to his return before he sells. See what I mean ?

-This lady is getting nothing out of you but peace of mind. If she were to list her house she’d pay 10% in fees and other costs. Worse, providing the Realtor finds a buyer, this buyer may not be able to get a loan in time and the house might go to auction. Her credit will be ruined and she might even be stuck with a deficiency. She has to understand that you won’t be there to help her at the last minute because the costs will be too high at that point. The time is now.

  • Having said all that, this really is one skinny deal and may not be worth “forcing” it.

I’m just thinking out loud here, and don’t forget, I’m no expert, but I did hunt FCs for awhile, and did what I described, so take my words for what they are worth.

I suspect a more experienced guy like JT would tell you not to bother with this deal. Perhaps you should ask him directly on this board. He’s very generous with his time that he puts into this newsgroup.

Re: 911 PREFORECLOSURE - Posted by Randy

Posted by Randy on October 11, 2003 at 10:20:31:

Do you know how to take it over ?Subject to Existing Financing? if so that may be an option, if not buy a course or find someone who does. One concern is the $3.6k property taxes with a payment of $838. Does this mean she is not escrowing taxes and insurance and this $838 is the first lien PI only? What is the payment on the 2nd? Taxes? Insurance?

Also what is your exit strategy? Are you looking to rent it out, if so what is the market rent and will it cash flow?

Overall I don?t think a short sale is possible. A critical part of a short sale is the owners financial distress and the subject property needing repairs (hence current condition far below market values) this does not seem to be the case based on the information you have provided. ?She owns the house across the street, is that one in trouble too?? Find out more info on the items mentioned and there may be some solid suggestions here.

Re: 911 PREFORECLOSURE - Posted by David B

Posted by David B on October 11, 2003 at 08:38:59:

At first glance, there doesn’t seem like a lot of profit here–$90, 600 owed and the property worth about $102K, for the hassle involved. Is the house in good condition or does it need work? What will it take to sell it? Could you negotiate with the bank and lower the payoff for the first mortgage? Negotiate with the 2nd holder, too?

Re: 911 PREFORECLOSURE - Posted by Timaay

Posted by Timaay on October 11, 2003 at 18:39:37:

David B that is $9,600 on a house worth $102,000…don’t know about you but i’d jump all over that any day of the week and twice on saturday!!

Re: 911 PREFORECLOSURE - Posted by David G.

Posted by David G. on October 11, 2003 at 15:56:58:

Where is the property located at?

david G.

Re: 911 PREFORECLOSURE - Posted by David B

Posted by David B on October 12, 2003 at 08:36:17:

I know what you’re saying, but what are the risks here? How is Carl going to sell the place? There must be some costs in selling, however Carl sells it. And what if it takes 3 to 6 months, then there are holding costs? And if I’m correct, Carl must pay regular tax on the gain, no reduced capital gains because it’s been held less than a year. So I guess when I look at the whole thing, I wonder if it’s worth the effort.