Can I make this a good deal? - Posted by Roger

Posted by Michael Morrongiello on May 10, 2006 at 20:12:42:

I think you have pretty much addressed some of your concerns here. If you are going to buy that 2nd lien you need to acquire it for not much money at risk and contingent upon you clearly determining that a workout solution with the VA 1st lien lender can be put together.

$5K +/- sounds about right in my book.

Best to your success,
Michael Morrongiello

Can I make this a good deal? - Posted by Roger

Posted by Roger on May 05, 2006 at 14:42:56:

I talked to a guy yesterday who is facing foreclosure. The VA insured the 1st which they want to restructure to incorporate all the lawyer fees etc. and make the payment lower, but the holder of the second won’t do a subordination to allow it. The 2nd Mort. will not get close to it’s face value ($20K) if the sale happens. They would likely get 5K.

Should I offer to buy the 2nd (steeply discounted) from the bank, then I can do the subordination and enjoy the cash flow. The owner has put his life back together after a divorce, and nearly losing his business (His employees stole his customers and became the competition). He has proof of income, but no W-2s.

What is the most I should pay for this note? I realize that if he does foreclose. I am last in line I could lose everything. So I don’t think I should pay much. I would not proceed unless I got a commitment from the first to restructure and cancel the sale. The upside is a potential $250 a month cash flow for nearly 8 years.

All comments welcome.