Posted by Brent_IL on April 05, 2002 at 08:33:50:
What I meant was that, based upon my local ratios, I don’t believe it will work.
Appraisers will try to justify the value you need if possible. In my area, actual house sales have been at 91% to 96% of realistic listing prices for decades. The $21K was based on your numbers. I looked at your deal to sell at ~ $120,000. That’s a negative $14,000 on top of $15,000 in back payments. VA will probably not agree to a short sale. It isn’t the way that they do things. You’d be starting out with $29,000 + closing costs in the hole; all but $14K in cash. Most likely, there will be negative cash flow as well if rents aren?t 1% of FMV, or more. You will need a few years of appreciation, never guaranteed, to break even.
If the current owner wants to avoid foreclosure, my suggestion was to have him subsidize your purchase for a period of time as your condition to bail him out. $300.00 a month reducing by $75.00 annually for four years might be a talking point.
IM-sometimes-HO, you would be better served by using your $15,000 for CRE education, marketing and advertising expenses, and buying cash flows or property at a significant discount, in that order.