No - Posted by Don (VA)
Posted by Don (VA) on June 25, 2007 at 10:01:23:
If I’m following your scenario correctly, there’s no deal here. You say you’d like to buy a home worth $225,000 for $200,000. OK, you’re buying it for $25,000 under market. Not enough for any real investor, but…
You expect it to sell within a month or two. If the home is worth $225,000, unless you’re in a hot market (not too many of those around today), you’d probably want to price it at $210,000 (roughly) to move it quickly…maybe less. But you’ve bought it for $200,000. There goes all your profit. Plus your holding costs for “a month or two” will be $2,500-$5,000, roughly. And what about your marketing costs to sell it? And any fix-up or repairs?
Let’s say the homeowner would simply hand the property over to you for what he/she owes: $147,000. Even then, it might or might not be workable. You’d still have to look at holding costs and transaction costs. Plus rehab. And to sell it quickly, you’d again be looking at a sales price of maybe slighly over $200,000. But there’s no room to pay the seller $23,000…and/or $30,000.
Finally, why would the lender agree to let you assume the loan? Very likely, the loan is not assumable. Only time a lender might consider it is if the interest rate on the loan is way above market. Sure, a lender wouldn’t mind letting you assume a 10% loan…but that might not be a good move on your part.
Or am I missing something here?