Is this a deal? - Posted by Jerry-Fl

Posted by MattFL on September 12, 2003 at 07:11:26:

If you really feel that this houses’ worth is closer to the high end of the comps then you have a lot of options. What will it take to re-instate the loan? What are the monthly payments? You could have the seller fill out a forebearance agreement and ask the lender to back-end the arrearage. Then take over the property subject to and keep the loan in place. It sounds like there could be some good cash flow here. Put a tenant buyer in there, let him/her pay down the mortgage for a while, get some money up front and make it a longer term deal. If the lender won’t back-end the amount to re-instate and it is maybe 4k or less, then cover it with the option money from a tenant buyer. It depends on what your needs are right now and what the seller needs from this deal. When is he moving out? I suggest you order the short sale packet anyway and weigh all your options. Who is the 1st lender? Some lenders are reading and willing to take a discount, some are not. You never know what is going on behind the scenes with the lender. They could desperately need to get rid of some of their non-performing assets. Then again, if they are a small local lender, they may not have many foreclosures there and may not know what you’re talking about when you say short sale and BPO.

Is this a deal? - Posted by Jerry-Fl

Posted by Jerry-Fl on September 11, 2003 at 11:52:19:

House needs paint in/out and carpet cleaning. 2,500

Comps: 90K, 85K, 66K and 68K

3/1.5 carport, 2 sheds stocked with tools

Owner is in foreclosure

Mtg Balance (ameriquest) 66,500 +/-
owner wants 1,500 to move OR 1st/last on an apartment

My exit would be to wholesale this for a 5K profit.

90K-2,500 = 87,500
5K for me = 82,500
minus mortgage= 66,500
leaves 15,500 profit for the next guy.

Is this do able?

Would a short sale be possible?. - Posted by Randy

Posted by Randy on September 11, 2003 at 16:58:33:

If you had asked that question this morning I probably would have said no! But after listening to J.P. & Terry?s guest on the CRE Radio Show ?Short Sale Secret?s? my answer this afternoon is yes maybe? if you have the knowledge-persistence- and the right tools. As MattFL said do to the low comps, need for repairs ? the banks holding time and the current state of high foreclosures Nationwide it seems they have a choice ?lose $10k now or lose $15k-$20k later?. Which do you prefer?

Re: Is this a deal? - Posted by MattFL

Posted by MattFL on September 11, 2003 at 13:27:48:

I don’t believe that would be your best strategy. What does that place look like on the outside? Is it somewhat ugly? What you should do is a short sale and discount that mortgage. If the house needs some work and you can show them the low comps, you should be able to get at least a little discount. What part of Florida are you in? I also live in Florida and these are about all I do. Maybe I can help.

Re: Is this a deal? - Posted by Larry

Posted by Larry on September 11, 2003 at 12:26:02:

I don’t see how you can base your ARV of the highest comp available when you should be getting an average. An investor is going to look at all the comps and not just pick the highest priced. If you have other in the area that are in the mid 90’s then I would use them as well.

So presuming that you the average of the four comps you provided then the formula would look something like this.

$78,500 x 65% - $2,500 - $1,500 - $5,000 = $42,000

Work the formula. Arv x 65% - Repairs - C/C/Cost - AF = MAO
a) Arv = after repaired value
b) Note that if an investor is using a Hard Money Lender for the first time then the Loan to Value(LTV) will be 50% and not 65% as projected in the above formula
c)Repairs ? use the evaluation sheet
d)C/C/Cost = carrying and closing cost
e)AF = assignment fee
f)MAO = Max. Allowable offer
g)Even if you decide not to wholesale or flip properties this formula should still be considered when reviewing all your potential deals.

Re: Is this a deal? - Posted by jerry-fl

Posted by jerry-fl on September 11, 2003 at 14:15:01:

The property is in Orlando.

It needs to be painted and spruced up. New roof 3 years ago and doesn?t need much of anything. Would a short sale be possible in this situation even though the property isn?t over financed?