Deal of the Century - Posted by Chenel Moore

Posted by JD on January 20, 2000 at 10:55:14:

What deal? You keep using the term ‘deal’. As far as I can tell you inherited a property with a lot of equity that needs to be remodeled and refinanced. What am I missing?

Deal of the Century - Posted by Chenel Moore

Posted by Chenel Moore on January 19, 2000 at 22:30:10:

I live in DC. I have a NY property that has been in the family for 20 years. The property is in foreclosure. The remaining mortgage balance $3000. Total money needed to pull the property out of foreclosure and payoff the existing mortgage is $7800. \

I had the property quitclaimed to me last week. I have applied to get a 40% loan to value 1st mortgage on the property. I did this because I don’t have the cash right now to pull the property out of foreclosure, plus it needs minor cosmetic work. The property is in a neighborhood where homes sell for $150,000 to $200,000.

The property will command a rental income of at least $2000 monthly. I believe the repairs will total $11000. I need to update plumbing, electric, new carpet, paint, repair minor holes in walls and floors and install some new appliances and fixtures.

What is the best way and the fastest to generate the money for this property. By the way, credit is low.

Re: Find a New Buyer - Posted by JohnWe (NoCA)

Posted by JohnWe (NoCA) on January 24, 2000 at 11:00:26:

Chenel asked…If I find a new buyer with new financing, do I still have to cure the foreclosure?

Chenel,

Probably not. Get the lender involved (the one foreclosing), and let him know what you’re doing. If you have to get the sale postponed to work out the new financing, don’t worry, it happens all the time.

L/O as a fixer - Posted by JohnWe (NoCA)

Posted by JohnWe (NoCA) on January 20, 2000 at 13:02:40:

Run this ad in the paper:

U-FIX
THEN RENT-TO-OWN
15K DOWN, $2K / MONTH
123-555-1212

Don’t use your home phone because you’ll never get to sleep. Here’s the rest of the details that you negotiate with the potential lessor:

  1. Option price at the end of 1 year is 200K.

  2. Rent credit per month, maybe $300-$400.

  3. Make sure your tenant is a qualified contractor, and not some wannabe that’s going to end up doing more damage.

  4. THERE IS NO DEAL UNTIL THE WORK IS DONE! DO NOT GIVE HIM THE KEYS TO THE PLACE UNTIL THE WORK IS COMPLETE TO YOUR SATISFACTION. THE CONTRACT IS CONTINGENT UPON YOUR APPROVAL OF THE COMPLETED WORK, AND IF YOU’RE NOT SATISFIED – NO DEAL. THIS IS VERY IMPORTANT.

  5. Fixups are done at his expense, and will be credited to the final purchase price at the end of one year. Have him submit his receipts for materials for verification.

With this deal, you’ll get 15K upfront to cover your costs of pulling it out of foreclosure, plus some. At the end of 1 year, he’ll have say $4800 rent credit plus $11,000 for repairs for a total of $15,800. If he can produce $4,200 at this time, then he’ll have a total down payment of $20,000, and you can carry him on a 90% loan for $200,000. If you need the cash flow, great. If not, cash out with notebuyer.

Hey, you’re getting me excited with this deal!

Good Luck!

Re: Deal of the Century - Posted by Paul_NY

Posted by Paul_NY on January 20, 2000 at 24:10:19:

Chenel,
Unfortunately the property is not near me or I would help. (No prop’s around here worth 150-200K)

My suggestion is to get a ‘no doc’ loan with a mortgage company. A ‘no doc’ loan means minimal paper work and relies primarily on your credit and equity. They’ll raise the interest rate if your credit is so-so. Someone somewhere will lend you money on this. Its a matter of persistance.

Re: Deal of the Century - Posted by Chenel

Posted by Chenel on January 20, 2000 at 09:39:27:

Thanks,
I think that’s what I have applied for. I am trying to figure all ways possible to do this because I want to make sure we get this deal since it will afford us with the opportunity to to begin investing.

I also want to do this the quickest way. Interest rates don’t scare me because with such a low loan to value ratio, I will still end up with a positive cash flow.

I guess I am trying to form plans B and C. I have learned from experience in placing deals on properties only to have them fall through that I need to be prepared with other lenders and other resources.