first deal Foreclosure money and ah no money - Posted by tom kirby(pa)

Posted by Stan on March 07, 2006 at 13:08:36:

Are you prepared to close on it if you don’t sell it? If not, why enter into the agreement?

first deal Foreclosure money and ah no money - Posted by tom kirby(pa)

Posted by tom kirby(pa) on March 07, 2006 at 05:47:56:

My friends place is in foreclosure. It’s a commercial/w apartment on top.He owes 40K and 20k in arrears and needs 20-25k in work. He paid 105k in 1987 and a private lender holds the note. I want to take it over sub2 and payoff the arrears ,fix it up. Here’s my problem. I have a home equity line 46k, room on both credit cards 20k, personal credit line 10k and I’m able to borrow about 20k from a 401b and pension and 5,000 cash in the bank. My credit score is 801.

My problem is I have 2,300 worth of bills a month with 1,980 a month coming in. my tax return and e-bay usually saves me until the end of the year. Now if I where do the take over I would be hard pressed to pay back the money in a couple of months. It could take many months to fix up and sell. A hard money lender would be an option, but I can’t find one. Oh fixed up value on this property should be about 120k - 140k.

P.s property sold at auction last year for 80k but my friend filed for bankruptcy and the courts reversed.
Thanx, Tom

auction? - Posted by Chris (WI)

Posted by Chris (WI) on March 07, 2006 at 22:15:36:

If it got $80K at the auction the first time your friend would have walked with $20K ish? Usually sheriff auctions are poorly promoted and populated by frugal investors with the occasional wild eyed, motivated, newbie “investor”. A properly promoted auction should be able to generate a better crowd, have open houses and fetch a higher price. Why not take it sub 2 and auction it? You could be in and out in about 4 weeks. IF the note holder is reasonable you might not even have to catch him up until after the auction.

Re: first deal Foreclosure money and ah no money - Posted by Tom(MI)

Posted by Tom(MI) on March 07, 2006 at 10:20:26:

Talk to the private lender, they may be able to fund you for this property. This could be a great chance to get someone to fund your other deals as well.

Tom

Re: first deal Foreclosure money and ah no money - Posted by John

Posted by John on March 07, 2006 at 07:01:56:

The only thing I can see here is the private lender may not want the property, and may just sell the note at a discount or for balance less late fees. You might approach it this way. Otherwise I think I would run from this.

Distance yourself! - Posted by Clint

Posted by Clint on March 07, 2006 at 06:22:24:

Don’t do this deal because it’s a freind; Don’t do the deal, do the math:

$40K owes
$20K behind:

Total: $60K
Rehab: $25K
Add 20% 4.5K
Total $89.5K
After Repair Value: $120K
Subtract Total: 89.5K

Potential Motivated Byer Profit: $30,500!!!
Holding Costs?
Marketing Costs?
Insurance?
Realtor Fees?

LET THIS GO, save yourself, time, headache, money. Your freind, overpaid, in 1987, You don’t say if commercial brings in any $, your freind, if you let him stay isn’t going to pay you, if he isn’t paying a hard money lender. Run, don’t walk away from this deal!

Re: Distance yourself! - Posted by tom kirby(pa)

Posted by tom kirby(pa) on March 07, 2006 at 06:46:04:

My friend is not living there, he has left. He’s not paying a hard money lender. It is owner financed. @7% LTV is roughly 70% My problem would be having money to make loan payments after aprox 4 months. Having all the credit in the world won’t help make monthly payments back. Maybe I’ll get it under contract,put it up for sale and see if I get any takers.

Tom