Can you Help Someone with Zero Equity? - Posted by Maria

Posted by Jay - MI on August 01, 2003 at 08:33:33:

That was better than the Top 10 on Lettermen last night :slight_smile:

Can you Help Someone with Zero Equity? - Posted by Maria

Posted by Maria on July 31, 2003 at 21:20:55:

Is there any way to help this person:

FMV $429K (I think its more like $420K)
LOANS: $420K
PAYMENTS: $3000/month
CURRENT RENTS: $2200/month
The house, which is actually called a duet (one connected wall, two houses together) is only 4 years old.

The only possibility I can think of is a lease option, although I would not want to be in the middle of this one. I think property values are going to fall in this area, long story. Is anyone out there who is more creative? The lady needs immediate payment relief. She is about to lease it for a year to the housing authority who will only pay $2200/month but at least it helps her somewhat on the payment. I think this is one of those people who cannot be helped but I wanted to see if someone else out there can see something I can’t.

Re: Can you Help Someone with Zero Equity? - Posted by Eric_Tx

Posted by Eric_Tx on August 01, 2003 at 08:54:02:

The one thing I see that was not mentioned would be a shortsale with the bank. Provided they would be willing to give you what you would be willing to pay for it. Being that I am still new with only a few deals under my belt I would (a.) call other investors to see if they had an interest in it, or (b.) run away very fast… Those kinds of payments are more than I could handle.


Re: Can you Help Someone with Zero Equity? - Posted by Jasonrei

Posted by Jasonrei on July 31, 2003 at 23:38:51:

When you can’t see a solution I think it is smart to ask others if they do. There are so many ways to twist things. Unfortunately, I don’t see one here… but if you really wanted to get creative (and since you only put so many constraints on this deal) I would suggest the following possibilities:

  1. get a bunch of illegals to pay exhorbitant rents
  2. set the place on fire and cover up the job (maybe hire a pro)
  3. sell the house, like Ronald said
  4. turn the house into a commercial property (whether that would be illegal or not)
  5. see if the mortgage company will take a deed in lieu of foreclosure
  6. find someone that is terminally ill, but can qualify for a loan. get them to buy the house and walk away from it. the seller can pay (cash or services performed) them a few grand for their service.
  7. work with the lender on terms of repayment.
  8. walk away.
  9. run away.
  10. keep it, take the loss and report it on tax returns and maybe soften the loss. if it’s a rental you’d also get depreciation. that’s SOME consolation.
  11. get an adjustable rate mortgage with a ridiculously low rate.
  12. find a private lender that will make a 100% LTV, 1% interest rate loan with interest-only payments.
  13. find one that will loan 110% LTV or better.
  14. find one that will loan over 100% & do a negative amortization loan! with deferred payments!
  15. it is late and I need to go to bed soon. goodnight.

too valuable of a property - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on July 31, 2003 at 22:26:40:


In my view, this should not be a rental property. It is too high priced. The rent is something like 1/2 of 1 % a month of the property value. That is way too low. This is why I recommend people buy properties in as low priced an area as they can stand.

I’d recommend that she sell the property. Since the loan is the same amount as the value of the property, she could do a subject to FSBO sale and be out from under the payment. The buyer would have to pay the mortgage payment every month.

Good InvestingRon Starr*********

Every deal is not a deal - Posted by gerald(tx)

Posted by gerald(tx) on July 31, 2003 at 22:23:10:

Don’t try to force it. The more experienced RE investors usually walk away from over half the properties offered them.

But the newbies just out of Seminarland will try to use some creative technique they have just learned, (like having the seller make forward payments) and want a deal so badly they will jump into these things.

There are too many good deals out there to waste your time trying to make a bad one work.