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.