I need a numbers geek for this re-instatement - Posted by rm

Posted by JT-IN on September 17, 2003 at 08:12:41:

You said: “what I should do right away is develop a buyers list of rehabbers, so I can wholesale the deals that I don’t have the time/resources to work on”

Yes, this makes some sense. However, what is potentially more important is to generate some income, if even it must come from another source ourtside of RE, so that you aren’t under the financial pressure of seeking any deal, to make a deal. Oh yeah, and maybe a bigger reason is so that you have food, shelter and clothing… and don’t dig yourself into a finacial disaster, while attempting to master this thing we cal REI…

Success is much about having the time to be persistent. What facilitates having the time is having cash flow… which facilitates being persistent… See the circle here. Cash flow is ultra important.

Just the way that I view things…

JT-IN

I need a numbers geek for this re-instatement - Posted by rm

Posted by rm on September 16, 2003 at 16:52:44:

Got a call from an owner who owes 87008.47 on a property.

Tenant/Buyer agreed to pay 98k for the property.

Re-instatement would be 8700 on the loan.

Current payment is 1100. It’s on a 10-year amortization.

T/B pays 800/month.

Seller just wants out, and Franklin is making last-minute demands- looks to me like this buyer needs about 12 more months to get a real loan.

If you could take this property over with nothing down…

Under what circumstances would you take this property?

Since the pay-down is accelerated on this property, I thought I might be able to make this thing work.

Any ideas?

HP 12C could provide an analysis - Posted by JT-IN

Posted by JT-IN on September 16, 2003 at 20:46:53:

Oh sure, there is some number that an HP 12C could spit out that would say it was a good deal at ____ amount… based on time value of money, etc. (I say baloney to that).

But the real answer is there is NO number that makes a deal like this one work, unless you are sitting there with dough falling out of your pockets and in search of a spot to put it, in lieu of a 1.5% saving or MMA.

The real answer for this board is… it is NO DEAL. Do as Phil said, get a disount to payoff the loan in a short sale… anything other than that is mental hockey… IMHO. It also does not fall into the spectrum of how to make real money in this business. Sorry for the let down…

JT-IN

Re: I need a numbers geek for this re-instatement - Posted by phil fernandez

Posted by phil fernandez on September 16, 2003 at 18:43:25:

You say reinstatement of the mortgage is $8,700. Where is that amount coming from? What’;s the property worth now? I wouldn’t count on this current tenant/ buyer closing the deal. Especially if they need another 12 months. Why do they need the additional 12 months ?

These are all questions that you need answered before making a decision on this deal. The tenant/ buyers are paying $800/ month and the mortgage is $1,100/ month. Why are you willing to go into a deal where you will have a $300 negative cashflow? That’s $300 each month coming out of your pocket. Actually the negative will be much greater than $300 when yoiu factor in property taxes, water/ sewer, insurance etc.

Even if the tenant/ buyer agreed to pay $98,000, will they be able to close ? Sounds like maybe they can or maybe they can’t in 12 months. Even if they could close , the deal is just to skinny.

If it were me, I’d go short sale with the mortgagee so that I may have a bigger payday and to create more of an equity cushion if things should not go accordingly. But the mortgagee will want cash for a short sale and you want to get into the deal for nothing down.

My standards are so low right now - Posted by rm

Posted by rm on September 17, 2003 at 07:56:15:

Sorry for the let down…>

Should I call you Mr. Starr? Don’t tell him I said that.

I think I’ve unfortunately fallen into the trap of trying to figure out how to make every deal work, for reasons of cash flow, and for want of learning how to create solutions on deals.

Right now, I have 5 short sale deals submitted to the lenders- all of which are moving forward. (BTW, the numbers are better than the one I mentioned in this thread- by orders of magnitude.)

However, as you realize, I have no way of knowing which ones are going to actually work.

All need varying degrees of work- two need extensive rehab. I have a rehab which will be done the end of the month which will yield a very nice five-figure payday.

Therefore, I need to conserve cash. So, I’m looking for deals where I can get in with no money. While the “deal” or “hockey game” I mentioned wouldn’t generate any cash flow, it would lock in back-end profits without me having to find a T/B, and without having to put any money into it… until something goes wrong- right? Ha. Which is why I posted it here, rather than run out and do something foolish.

What I probably needed most was the kick in the pants that you delivered, to keep me out of trouble. Thank you!

And what I should do right away is develop a buyers list of rehabbers, so I can wholesale the deals that I don’t have the time/resources to work on while I await my larger checks on my “home run” deals.

Re: I need a numbers geek for this re-instatement - Posted by rm

Posted by rm on September 17, 2003 at 07:33:08:

>

Between the seller, the T/B… according to a re-instatement schedule TBA by the mortgagee. The property is worth 100k.

What I plan to do is have the buyer pay an extra $300/month, which would be credited to his down payment. His income’s sufficient that we’re within standard lending ratios.

TI is already in there.

Actually, he’s a pretty typical T/B for this price range.

The short sale would have been my first solution, but the numbers (and the short-sale potential), IMO, don’t justify the cash out.

I’m trying to keep my powder dry for the home runs, and wanted to check with y’all to see if it would be worthwhile to try this thing with little-to-no-money down. Based on your responses, and even looking at my answers to your questions, it doesn’t sound like it.