How cheap is cheap enough on this second??? - Posted by Drew
Posted by Drew on February 02, 2000 at 21:48:33:
Hello to all you cashflow junkies out there!
Just got off the phone with guy that is holding a $17,500 interest only, 3 year balloon, 2nd TD on home worth $185,000. The 1st is for $154,000 so the total LTV is a whopping 93%. Neither he nor the payors have any other colatteral to attach it to. Normally, I would send this guy to the butt-head across town just to waste some of his time (see John, I was paying attention at the bootcamp), but…
…then things started to get interesting. Just for kicks, I asked him what he wanted for it and what he intended to use the money for. He says he intends to file bankruptcy soon (a couple of weeks) and wants to get some cash for his assets prior to filing. He also says he was hoping to get $8,000 for the note. I chuckle a bit and tell him “good luck.” I tell him that his note is worth very very little and he proceeds to talk himself down to $4,000.
Now before anybody tears me a new one, I know John taught me (among other things) not to go over 80% LTV for safety’s sake, but at $4,000 for the note I could be making a 90% return assuming they are able to handle the balloon, a bit less if I renegotiate it with them. I’d bet I can get him down to $3,000 or maybe even less. I mean, 90% is better than most Lonnie deals without the wear and tear on my shocks.
So the question is…should I even be considering this note? Or is this something I should only put “Vegas” money into?
All of your input is much appreciated!