HELP!!!! First Week, First Deal ,in New Jersey - Posted by J and J

Posted by Tim Fierro (Tacoma, WA) on June 30, 2002 at 11:29:07:

If you are not going to use any of your own money, at least not yet, have you figured out a way to work that $16k in back payments? Will the seller pay that before deeding to you? Will the lender roll those lates into the back end of the loan and bring it current again?

You may get the deed, but you still need to take care of those back payments and taxes. You don’t want to get it, then have it foreclosed because of those back payments not take care of.

HELP!!! First Week, First Deal ,in New Jersey - Posted by J and J

Posted by J and J on June 30, 2002 at 10:13:00:

HELP!!! We have a situation and are not sure of the best way to work it, if at all. We are meeting with the owners again @ 4pm today.

A house appaised at $430k in Nov. 2001. The owners NEED to move by the end of July due to job transfer.

They have a balance of $220k on 1st mortagage and $95k on 2nd mortgage= $315k ( these are not assumable) They are current on 2nd mortgage BUT… 3 months(almost 4) behind on 1st mortgage and $9,000 behind on property taxes=$16,200 behind in payments.

The first 2 floors of the house are fine, the third is a mess and needs work, but is very liveable while the work gets done.

The owners are willing to just walk away, therefore deed us the property. We want to try to make this work but do not want to invest any of our own money ( atleast not yet). This is our first week doing this and this is our first deal, do you believe it! ( we now know that people really do give away their houses) WE NEED HELP!!! ASAP

Speaking as a fellow NJ Investor - Posted by IB (NJ)

Posted by IB (NJ) on July 01, 2002 at 16:08:25:

J and J:

If you’re in NJ with a property that was appraised at $430 last year, chances are it could fetch close to $500k today (especially if it’s anywhere along a rail line into NYC). This is providing that the appraisal is official and accurate. Most $400k areas in NJ have only gone up within the last year.

With that said: GET IT UNDER CONTRACT IF YOU DON’T HAVE IT THERE ALREADY! NJ is a hot market and chances are that ‘vultures’ are circling as you meet with the sellers.

You stated that the third floor is a mess. How much of a mess? Cosmetice mess or more serious?

Do what you have to do to get the money. Find a partner/investor with the cash. Tap the credit cards. If this house is worth what you say and in NJ, then you could get it under contract and turn it around for at least $20 cash profit without doing anything but getting the paperwork signed. GET IT UNDER CONTRACT NOW!!!

Re: HELP!!! First Week, First Deal ,in New Jersey - Posted by Ronald * Starr(in No CA)

Posted by Ronald * Starr(in No CA) on July 01, 2002 at 14:47:53:

J and J---------------

It sounds like you have a “live one” here.

However, iIt is hard to advise you, due to a lack of some important information.

What would be your intention if you do get a deed to the property? Move into it for your own home? Sell it quickly to a real estate fixer-upper investor? Fix it up and resell to an owner-occupant buyer?

How long does it take to do a foreclosure in your state? Has the foreclosure process started for the first loan? If so, how far are they from losing the property?

Even if the foreclosure sale were scheduled for soon, you could probably do a “wholesale flip,” whereby you get a fixer-upper investor to buy the property from you. You price it low to attract a right-now, all-cash type buyer. The buyer could just catch up the back mortage payments, and perhaps the back taxes, take the property over subject to the existing loans, then fix and resale the property.

You could do something similar yourself, if you have the resources to pay the mortgage delinquency and pay for the repair work. It probably will not be necessary to pay the back taxes, unless they have been unpaid for several years and a delinquent tax auction is eminent.

The property does not sound like a good candidate for a longer-term hold rental property. Too valuable, and probably could not command enough rent to pay for itself.

There is a technique called lease with option to buy. Once you have the deed, it might be possible to pass the house on to a new occupant/renter/future homeowner with this deed. The issue is the amount of monthly payment. It might be too expensive a house to allow you to hold it for a few years, with the optionees/leasees paying you a premium rent. That would depend upon what the property would rent for without any option.

You don’t say where you are, so it is hard to know if a property of this value will sell soon or would take many months to sell. Here in Northern California, where I live, the market for properties in that price range is very hot, and it would sell soon. In other parts of the country that is a very expensive house, with few buyers in that price-range, thus very hard to sell.

Please, do not believe that “appraisal” from 2001 as being accurate. Never believe an appraisal you get from a seller. Appraisals are opinions of value and the indicated values can be greatly influenced by who the person is requesting the appraisal, the money paid to the appraiser, the reason for the appraisal, etc.

You need to know the value by checking comparable sales in the area or by having several real estate agents in to see the house and give you their opinions of the value, or pay for your own appraisal by an appraiser that you believe to be honest.

It would be good to get a contract to buy the property, with the right to close about the beginning of September or earlier. The contract also should allow you to withdraw should your inspections of the property cause you to think that it is not a good enough deal for your to buy. This might be an excellent purchase.

Good Investing***********Ron Starr*************