Re: Update after talking to seller - Posted by Joe Kaiser
Posted by Joe Kaiser on August 12, 2007 at 22:02:50:
It’s too easy. What am I missing?
Joe Kaiser
253/459-2937
Re: Update after talking to seller - Posted by Kristine-CA
Posted by Kristine-CA on August 12, 2007 at 20:54:07:
If it were me? I’d take the property subject to the exisiting mortgages
and lease/option to my buyer. I’d use the 60K deposit (not down
payment) to pay off the arrearages on the 1st, about 18K. I’d payoff
the discount on the 2nd, 15K. You didn’t mention what kind of
payment your buyer can make. This is important.
There are other ways of selling–wrapping with an all inclusive deed of
trust, for example–that you may want to consider
Let us know how it works out. Kristine
Re: Alright Now Joe… - Posted by David Alexander
Posted by David Alexander on August 14, 2007 at 09:27:43:
I think Trump… is doing ok,… and I think he’s much better off then when he personally guaranteed the debt the first time around…
Re: 2nd lien getting paid… - Posted by Richard
Posted by Richard on August 12, 2007 at 19:26:13:
Hi JT,
Thank you for all help. Here is the update after talking with the sellers and my buyer.
The brother with the $29K lien was there. He is willing to take $ 15K and release the lien as paid in full.
As for the loan with the sellers, it is $157 + $17,599 to bring it current. They are willing to allow the loan to stay in their name and my deed it to a company…They have an interest rate of 6.25%, payments of $1321 with taxes and insurance.
I also talked to the buyer on the way home. She is willing to meet with a $60K cashier’s check in hand tomorrow morning. She would be buying it for $275K…
This property is in the neighborhood of $600K houses all the way around it. The tax assessed value is $223,900 (I know that doesn’t mean much with today’s market).
I called an appraiser friend of mine and he said if I spent 12K and added a garage he would appraise it around $250,000 easily, as it sits right now $225,000…
I’m a little concerned about what to do here…
Option 1: Take the $60K and use it as a down payment to get the loan into my own name, then continue to lease with option to my buyer or;
- Take it subject 2 their financing…
Thank you for all of your help.
Re: 2nd lien getting paid… - Posted by Joe Kaiser
Posted by Joe Kaiser on August 12, 2007 at 16:40:14:
The property taxes in WA state would not come into play.
They’re already well enough secured they don’t need to be messing
around here.
Joe
Re: 2nd lien getting paid… - Posted by Richard
Posted by Richard on August 12, 2007 at 16:22:28:
Thank you for the information.
Do you know if I get the deed, if it can be refinanced in a year or two with the deed in my name, but the loan still in the owners name? Or would it have to be an entirely new purchase?
Why payoff 2nd… Take assignment - Posted by JT-IN
Posted by JT-IN on August 13, 2007 at 17:08:10:
From the Brother for 15K… He could probably care less whether he signs a satisfaction or an assignment to Richard. That way Richard can be paid off when his TB gets her financing, to the tune of 29K plus accumulated interest… No sense in leaving that on the table, IMO.
JT
Re: 2nd lien getting paid… - Posted by JT-IN
Posted by JT-IN on August 12, 2007 at 20:30:25:
Richard:
First and foremost, add nothing in the way of improvements… garage, carpet, paint… none of it… You are not doing a value added deal here by adding anything but a SOLUTION… You are the guy with the PLAN, not the someone who is trying to add value thru a new garage or other means. This will only alleviate you of dollars from pocket, and those are YOUR dollars, so protect them like they are currently in your account.
The next question comes in is, How did you arrive at the 275K for the purchase price…? If it is not worth that figure, then I wouldn’t sell it for that number. My belief is that I never want to put someone in the position that failure is the most likely scenario. There is nothing wrong with advance pricing in a future deal but in this case the buyer is clearly bringing 20-25% in cash to the deal, and there is plenty of profit to be made here w/o throttling her. Others may disagree, but I would likely sell her the place for the 246K. Here is what I would do…
You could go one of two ways with this deal… 1) being ownership 2) being lien holder. Let’s look at each approach…
-
Ownership, means you would have the owner transfer the deed to you or your entity, subject to the existing 1st mtg or TD. You would accept the buyers 60K cashier check, in exchange for owner financed (either wrap or L/O or CFD structured purchase). From those proceeds you would cure the default with the lender, in the amount of the 17,599 and I would also purchase the 2nd lien from the Brother for the 15K, as opposed to having him release the lien… You are simply buying the paper at a discount and the mtg or TD is still of record, assigned to you, or another entity, as long as it is different than the entity who hold title to the property. Distinct reasons to keep this separate, but too detailed for this post, but suffice it to say that Merger of title and TD could be a problem if not kept separate. The balance of funds, less whatever you sending the way of the seller is your immediate profit, directly in your pocket; (appx 27K, less whatever you are paying the seller. I would be paying her something, but that is your call).
-
Lien Holder: With this approach you avoid being on title, or in an ownership roll, as Joe Kaiser suggested. Essentially the deed would transfer to the buyer, subject to the existing financing. You would cure the default of the 1st TD in the amount of the 17,599, and again, I would purchase by assignment from the Brother the Jr. TD at a discount, whereby you pay him 15K and he assigns the 29K lien to you… still in tact and still owed at some future point… also accruing whatever the term of the interest rate happened to be. In this transaction you would receive now the net of the difference of the 27K remaining of the 60K, less whatever you might pay the seller), plus later the payoff of the 29K Jr. lien.
The only potential advantage of ownership is IF the buyer defaults or cannot get financed in the future, you would have some control over the property… With the Lien holder approach you are out of that loop, and if she defaults you could lose your back-end of the deal, the remaining 29K at risk… but it is at risk in either deal, with some element of greater control in the ownership approach.
Confusing enough for you…? It really isn’t that bad. The main elements that you have here are participants that are motivated and they want to play ball. The rest is a piece of cake. If you need help with this deal, have Joe Kaiser put it together for you since he is in your area, and by splitting the proceeds with him you would get far more education of “hands on how-to” than doing 20 deals via trial and error. Just a thought and you don’t want to screw around with a deal like this one and have someone else lift it from under your nose. These need to be put to bed pronto. If you can do it on your own, then so be it, and get it done NOW>
Wish you all the best on it… it is a nice deal. Congrats.
JT-IN
Re: Why payoff 2nd… Take assignment - Posted by Kristine-CA
Posted by Kristine-CA on August 13, 2007 at 19:16:15:
Good point. Assignment for 15K, face value 29K, absolutely no sense
leaving that on the table. Kristine
Re: 2nd lien getting paid… - Posted by Richard - WA
Posted by Richard - WA on August 13, 2007 at 08:18:08:
Hi JT,
I was thinking about the garage if I were to go in and just buy the property - I was thinking of a higher appraisal amount.
I came up with the $275 price because she had the property listed on the open market for $275, it sold last month for that amount, but they couldn’t get the financing through…
I have one more question, thanks for your patience. The owner went through a divorce last year - the husband is still on the loan, but he quit claimed her the house. So for purposes of doing this Subject 2, would his signature be required on the documents as well?
Thank you.
Garage addition = Really BAD idea - Posted by JT-IN
Posted by JT-IN on August 13, 2007 at 17:15:59:
Richard:
It almost seems that you have an issue here with making this much money and not doing much for it… so you will add a garage. Not a good idea… If you have a problem with making that much money, then just donate half of it to your favorite charity… and you will make less, sans the garage. Charity is a way better idea than the garage, IMO.
No, you won’t need the X-husbands consent in order to do the deal, and take it subject to, but it wouldn’t be a bad idea to have a POA from him so you could interact with the lender on his and her behalf if needed in the future. If he is amiable to the deal then I would get his signature; if not, then it is not needed, since you are taking the Title/Deed to the property and he conveyed away any interest in the property to the X-Wife, who you are dealing with.
Good luck with this thing, but something here makes me uneasy… Enough said on this…
JT-IN
Re: 2nd lien getting paid… - Posted by Kristine-CA
Posted by Kristine-CA on August 13, 2007 at 11:40:07:
Richard: you say the property sold last month…sounds like it didn’t sell
but that the buyer received an offer to purchase for $275K. There may be
a reason why the financing didn’t go through, and one of those reasons
could be appraisal related. I suggest getting as clear on value on this deal
as you can. Kristine
Re: Garage addition = Really BAD idea - Posted by Richard - WA
Posted by Richard - WA on August 13, 2007 at 18:41:03:
LOL…Thanks JT. I like you’re forward straight and honest opinions.
I’m not gung-ho to build a garage. I was just trying to think of worst case scenario that I would need to get it refinanced myself. A garage would raise the value, but I think it might be hardly a scratch.
I wonder what’s making you nervous. Is it my lack of experience or something to do with the wife/ex-husband?
The seller called me today wanting to explain further on the divorce.
They were divorced in August 2006. The divorce decree states that he quit claim the property to her, but she owed him $38K if the house sold as his equity.
He knows that the house is being sold with no equity. He is okay with that, just wants the house to be paid off and the loan out of his name within the next few years.
After she told me this…It began to make me uneasy.
The bank sent her a notice that the $17K had to be paid by tomorrow and the auction is on Friday. It seems to be fairly quick deal.
I have the $17K, but dont’ have the time to get the title insurance issued.
Anyway curious about what your opinion is…
Re: Garage addition = Really BAD idea - Posted by JT-IN
Posted by JT-IN on August 13, 2007 at 19:09:36:
Richard:
I am not concerned over the divorce in the least. It is a non-issue in this deal. I would prefer to have the husband sign a POA regarding the loan… but not essential. Of course I am referring to taking the property subject to the existing financing… NOT getting any new financing, NOT putting in a garage for appraisal purposes, NOT passing GO, BUT collecting a whole lot more than $ 200.
I have a concern (for you or about you… in this deal) that you are going to get this done w/o any problems here. You are introducing the garage, as example, and continue to discuss doing this garage thing after being advised not to do so… I know you think that it adds something, and the only thing that it adds is an unnecessary element. You are concerned about getting the house refied… Why…? You don’t need to refi the thing, you already have financing in place. Stop there… No need to discuss things that you don’t need. You just need a PAYDAY, and that shouldn’t be more than a day or two away, if all things are done correctly here.
The other concern, and this is a new concern, about a statement in the most recent post… “I have the 17K…” Good for you, keep it. You started out with the Buyer going to give you a 60K cashiers check… today. Where is that…? I would NOT be paying 17K out of my pocket to cure the default unless I had the T/B on board… unless I had lots more than 17K…
and it was a terrific deal. So far it has been terrific because we had the 60K in hand, at will… now has that changed…? You see why I am concerned here…?
I am concerned that you don’t have a strangle hold on this deal… and the clock is ticking. What makes deals like this one work is when people say they want to do the deal, you wrestle the cash NOW… not next week, or tomorrow, unless tomorrow is as soon as it can happen. People who have extra time to think about stuff like this deal, talk to other people, and these other people usually know little about the subject matter. So what do they do…? They offer their 2 cents worth, and that doesn’t bode well for you Richard. Why do I say these things…? Cause this is what happens 10 times out of 9.
Don’t ask me to tell you what is going to happen here… It could involve an ugly pic if you don’t get things done timely and in the proper sequence. Almost good deals don’t taste all that good or buy many groceries.
Just the way that I view things…
JT-IN