Help With Possible First Deal - Posted by Bill K. (AZ)

import · March 22, 1999, 6:52pm

Posted by Bill K. (AZ) on March 23, 1999 at 17:44:06:

Reif,

I believe that his properties are in LA and San Diego. I’ll keep your information and be sure to let you know when he’s ready to sell them.

Thanks for the reply.

Bill K. (AZ)

import · March 22, 1999, 6:52pm

Help With Possible First Deal - Posted by Bill K. (AZ)

Posted by Bill K. (AZ) on March 22, 1999 at 19:52:33:

Hi All!

Thanks for taking time to read this.

I’ve got a seller with a property pending foreclosure. He just wants out from under the existing mortgage and fees associated with the foreclosure.

Here’s the mortgage scenario…

Mortgage: $71,700
Monthly Payment: $745
Late on 5 or 6 Payments: $3,725-$4,470
Trustee Sale Date: 4/15/99
Penalty/Attorney Fees: Unknown at this time

Here’s the property scenario…

Basics: 3/2
FMV: $98,000
Monthly Rent: $950
Equity: Approximately $22,000

I want to L/O this property, but need to forestall the foreclosure (only a couple of weeks away). The seller owns many other rental properties, and he has agreed to look into finding some equity in those properties to bring the loan current.

NOTE: By the way, if I can help him get out of this property, he has expressed an interest in ridding himself of his other properties. Some are in my town; others are in Las Vegas and Southern California. If this deal happens, and he wants to sell the others, I’ll be looking for folks in Las Vegas and Southern California who can help him out. He likes the concept of L/O.

Question 1: Is there anything I can do to help the seller bring the loan current, short of sending his mortgage company a check for about $5,000.

Question 2: How would you advise writing an offer under these circumstances? Should I make him an offer at this stage to encourage him to find alternate financing to bring the loan current, or am I wasting my time at this stage of the foreclosure process?

Thanks, in advance, for your insightful responses.

Bill K. (AZ)

import · March 22, 1999, 10:09pm

Re: Help With Possible First Deal - Posted by Bud Branstetter

Posted by Bud Branstetter on March 22, 1999 at 23:09:46:

Foreclosures are not the best route for novices but if you must you want to be in control. Someone will have to send the mortgage company a check for about $5,000. Have him deed you the property with the option to buy back at a certain price and time period. If your laws are unfriendly when in foreclosure then do it on another property you like with plenty of equity.

My concern is if this property is occupied what has been happening to the rents. Is bankruptcy in the future? Due diligence is required.

import · March 22, 1999, 8:27pm

Re: Help With Possible First Deal - Posted by Jim IL

Posted by Jim IL on March 22, 1999 at 21:27:31:

Just my uneducated and limited experience speaking, so take it for what it is worth…but,
I have ONE question??
IF this guy owns all these rentals and has equity in the others, then WHY is he facing foreclosure in the first place?
Seems to be zomzing vewry stwainge goingk on here?
or,
You got a good deal to JUMP ON HERE!
LEt him pay the thing current, and then just TAKE IT OVER.
Refi later?
Who knows, just take a LONG HARD LOOK at the ENTIRE situtaion before you leap on it.
Good luck to you,
Jim

import · March 23, 1999, 4:58pm

Re: Help With Possible First Deal - Posted by Bill K. (AZ)

Posted by Bill K. (AZ) on March 23, 1999 at 17:58:23:

Bud,

It seems to me that many motivated sellers might be in the same situation (pending foreclosure, bankruptcy, etc.). In other words, some form of financial problem. That’s what makes them motivated.

If I pass on a foreclosure, or other seller financial problem, because I am a novice, I’m afraid that I may pass up many opportunities before getting to my first payday. Are other types of motivated sellers (estate sale, divorce, tired landlord) just as easy to find?

I agree with you. Due diligence is quite important in these “special” situations. I’ll keep your advice in mind as I proceed.

Thanks for the post.

Bill K. (AZ)

import · March 22, 1999, 8:34pm

Re: Help With Possible First Deal - Posted by Bill K. (AZ)

Posted by Bill K. (AZ) on March 22, 1999 at 21:34:36:

Jim,

You’re right. I haven’t been able to piece together exactly what went wrong for this guy. The scenario he described doesn’t make a lot of sense, but he’s in trouble. I believe that he’s sincere and just doesn’t understand his options. I’m not going to take advantage of the guy. That’s not my style. That’s why I recommend that he try to refi the thing using equity in his other properties.

In any event, he explained that he still wants to get rid of his out-of-state properties. So, if he succeeds with the refi, I hope to take that “problem” off of his hands.

Thanks for the feedback.

Bill K. (AZ)

import · March 22, 1999, 10:17pm

Re: Help With Possible First Deal - Posted by Reif

Posted by Reif on March 22, 1999 at 23:17:09:

Remember, just because he has equity doesn’t mean he can use it.

If he’s got rental properties worth 100K each and he has 20K equity in each, he can’t cash that out easily non-owner occupied - especially if he is stretched thin in his personal situation, which seems to be the case.

If he’s serious about dealing in SoCal - I’ll listen for sure. I’d definitely explore the L/O option with him.

I’m in San Diego.

Reif Reifsnyder
(619) 483-3276