Posted by Jim Kennedy on May 25, 1999 at 14:00:48:
John,
In addition to David?s questions:
Does the property need any repairs and, if so, how much?
What is your exit strategy (what do you plan to do with the property - e. g. wholesale flip, retail flip, hold for rental, occupy as your personal residence)?
You mentioned that you don?t have good credit. How bad is it? (Rhetorical question, I don?t really want to know but it may not be as bad as you think. You may still be able to qualify for a loan.)
You wrote: ?If there is a mortgage then I guess with bad credit there is no way to make an offer.? Definitely inaccurate ? they are several strategies available to you even with poor credit. That is one of the advantages of CREATIVE real estate. Once we know your exit strategy, we will be able to point you in the right direction.
?What I thought was if they want $119K for the property but owe say $90K then do you try to borrow $90K from a hard lender and then they take a second for the $19K.? At first glance, this does not look like an appropriate solution for this transaction. Let me suggest that I only consider using hard money for short term deals, like rehabs, where I am in and out of the deal in a very short period of time and where the profit in the deal supports the cost of the hard money. Also, most hard money lenders (at least the ones I know about) won?t go above 65% LTV.
Start by giving us some additional information and then we can go from there.
I talked to a seller wanting me to talk to their lender. There is a mortgage on it. The person’s mother passed away and they want to get rid of it rather than pay the mortgage themselves. I don’t have good credit and I can see the difference in a home with no mortgage. If there is a mortgage then I guess with bad credit there is no way to make an offer. I mean the loan amount has to be paid. What I thought was if they want $119K for the property but owe say $90K then do you try to borrow $90K from a hard lender and then they take a second for the $19K. I ran into two properties like this. HELP!!! How do you deal with these situations. Thanks in advance.
If I understand this situation correctly, this person’s mother was the owner of a home. She had a loan on it. She passed away. Now the son is paying the loan and he doesn’t want to anymore.
Assuming that I have stated the scenario correctly, I would think this situation would be ideal for taking title subject to the loan (take the loan over). The son owns the property, but he is NOT responsible for the loan unless he signed the loan?.his dead mother is. If you take the loan over subject to, what’s the worst case scenario? That you don’t pay? And what impact does that have on the son (the owner)? Zip. How does the lender, in the event of a default, collect from a dead person? But you are going to pay aren’t you? And if this is a good deal, you could sell to someone else who obtained a loan to pay the existing loan off, couldn’t you?
If there are other facts here that you haven’t mentioned (like the son has also signed the loan, or he assumed the loan after his mother died) then what I have just stated wouldn’t be true.