Posted by EB on August 22, 2003 at 10:43:07:
It is on the east coast - Vero Beach - which is becoming a real hot-spot.
How To Do This Deal… - Posted by EB
Posted by EB on August 22, 2003 at 08:42:55:
Here’s the scoop: An attorney I know from another state told me about a property near us that was being transferred in a deed in lieu of foreclosure. The property, a townhouse, will sell for $95,000 minimum (we pulled comps) and needs no repairs. We can buy this property from the people foreclosing for $75,000. That is exactly the amount they are settling with the man for. (They are in Mass and do not want a Florida property on the coast! 
There is currently a month-to-month tenant in there, paying $600 rent (market is $1200!) We want to quick flip this property and make a little quick cash.
The problem: We have no cash! We are checking today to see about getting an equity loan on a rental we own; market $150,000, mortgage 98,000. If we can pull this together we can get about $20,000. We can borrow hard money at 5 points and 15% to purchase this property. They will lend 69%, so I calculate we need about $15,000 from the equity loan. I have also been told that there is an assumable mortgage on this property from Washington Mutual, but don’t have any details on this since my attorney friend is on vacation this week and had not yet received the package from them. Can this figure into this deal somehow or with needing hard money is this something not to be considered?
We were going to try the equity route anyway and pull some cash from this house. The current tenants will probably go into a lease-option in December. They desperately want to buy this house, but their credit is poor. They have paid us $1,250 faithfully every month. They have $10,000 they can put down for option money, so this should work for that property. We are essentially pulling the end-cash (between the equity loan and option money) out now rather than in two years.
Our credit is fine (around 700) but high debt to income. Anybody have any good suggestions to make this current deal better?
Re: How To Do This Deal… - Posted by Brad
Posted by Brad on August 23, 2003 at 12:46:12:
If all you want to do is flip it for a few bucks then I like Ken’s idea of just selling the contract. Then you really don’t have to put up any money if you find someone to take over the contract before you close. Although it sounds like you may be running out of time.
Or as someone else wrote, look for a partner or make up the back payments and penalties.
If you are just going to flip it, I may be interested. I am looking to acquire a couple of more rentals right now to try and build more cash flow. Or if you want to discuss other possibilities, let me know.
Re: How To Do This Deal… - Posted by rm
Posted by rm on August 23, 2003 at 08:59:23:
Why not try to get the loan re-instated?
You could probably do so with less cash than it would take to get a new loan on the property.
And, the work-out process would buy you time to get your ducks in a row so you can market the property and assess repairs, etc.
Re: How To Do This Deal… - Posted by ken in sc
Posted by ken in sc on August 22, 2003 at 11:54:01:
How about an unsecured line of credit? The bank you normally bank with will loan you some money just on your signature if you have good credit, more if you have a good financial picture (net worth). This plus your hard money might do the trick.
Seems to me that there is not enough time to get the Wash Mut. refi done. It is taking about a month to get a loan due to the backlog of refi’s and purchases with the low interest rate boom.
I would probably look for a rental investor who likes this property and see if I could sell my contract and make a couple bucks. Or better yet, partner up with him with you bringing the good deal, and him bringing the cash and financing - then you could hold it as a rental for 30 years and wind up with some real money.
Good luck-
Ken
Re: How To Do This Deal… - Posted by rhunter
Posted by rhunter on August 22, 2003 at 10:31:53:
EB,
Where in Florida is this property located?
Rich( Tampa/ St. Pete, FL)
Re: How To Do This Deal… - Posted by Ronald * Starr(in No CA)
Posted by Ronald * Starr(in No CA) on August 22, 2003 at 10:18:08:
EB–(FL)---------
Good for you, taking action, finding good deals.
When you buy a property intending to resell right away, you usually should not get a new loan to do so. If the property will sell quickly, simply tie it up with a purchase agreement, with a slow close if possible or an option. Then peddle the place.
When your buyer closes on the purchase, they get a new loan. You never have a loan. You have little or no money into the deal. Marketing costs, good faith deposit, mail and phone costs. That’s about it.
Now, if you want to be sure to get it resold quickly, price it toward the low end of the market value. Say ask $89,950 and be willing to settle for $87K or so.
Now, that rent given that market value makes this an attractive rental property, I would think. Why not buy and hold?
Good InvestingRon Starr******