lease/optioning a forclosure - Posted by Kris


#1

Posted by Kris on November 07, 1998 at 01:53:59:

I’m sorry guys,

I didn’t mean to confuse you on the 6unit. There are actually 2bldgs that are being sold. Both bldgs are being sold at 310k each, both bldgs. have 6 units in them. They can be purchased separatly as well; I don’t have to buy both of them. I’ts not a type of package deal.


#2

lease/optioning a forclosure - Posted by Kris

Posted by Kris on November 05, 1998 at 03:07:13:

Hi guys,

I’m looking into a 3bdrm 2bath single family house in my area. The lot size is 2221sqft, the house itself is around 1025sqft. found it through a broker and their asking $150,000 for it. I got comps faxed to me from a title company in my area and it seems like that is a good price for that particular property (maybe a bit below market even). I’d like to do a lease option on it and then sell my lease option rights to someone else for several grand before closing. The catcher: It’s a FORCLOSURE!! Can I still feesably work a lease option deal on such a property? Any suggestions on how I should proceed?

All experienced investor advice is welcomed and much appreciated. Thanks guys.


#3

Re: lease/optioning a forclosure - Posted by hk CA

Posted by hk CA on November 05, 1998 at 12:38:01:

Do you mean that the property is currently in the foreclosure process? This would be “preforeclosure” and lasts from the time the lender begins foreclosure proceedings until the property goes on the block at the Trustee’s sale.

Or do you mean that it is currently owned by the lender and was taken through the foreclosure process (a REO)?


#4

Re: lease/optioning a forclosure - Posted by Kevin(OK)

Posted by Kevin(OK) on November 05, 1998 at 10:04:15:

It seems to me that if it is listed with a Broker, then the broker is helping to keep this house from going back to the bank. You may be able to work a deal with the owner who is in default, but the Broker is going to want their commission. Do you have cash to pay back payments, lawyer fees, etc.? Does this house have enough equity to make it worth your while?

My advice would be to try and find these types of deals before a Broker becomes involved.

Hope this helps!

Kevin(OK)


#5

Re: lease/optioning a forclosure - Posted by Kris

Posted by Kris on November 05, 1998 at 22:23:39:

According to the info faxed to me by the broker, it was schedualed to be auctioned off on 9/27/98. That was a couple of monthes ago and it was still listed as of the time I got the info faxed to me. He, the broker is checking to see if it is still on the market. As of this moment I’m not sure if its been sold or taken back by the bank. I’m waiting to hear from the broker.

So, if its taken back by the bank, then there is no chance of a no money down offer, short of finding and individual with a lot of money? If this one falls trough, then there is still the 6unit that I was considering earlier for 310k that was formally 340k and it is a for sale by owner, payments current. Maybe I can do a leas/option on this one. The units are all rented with long standing tenents. They are two buldings. Bulding 1: total operating expense and ins.+ $1,765/mo. mortgage pmt. comes up to $2,777. Total rents from the 6 units of that bldg. (and rents could be raised)are$3,985/mo. Building 2: total operating expense and ins.+$1,797/mo. mortg pmt. comes up to $2,902 and the total monthly rents from its 6units (again rents can be raised)are $4,425/mo. I just talked to the seller and Iknow that he has had this property for about10 yrs and the 30 yr.assumable 1st. mortgages (on bldg1:$224,010; bldg2: $228,099, both @ 7.375% adj.)are pretty much principle pmts, not intrest pmts. with only 20 more years to go. I’m still waiting for the comps on this one to justfy the asking price.

I know that I kinda switched properties on ya but I really want to make this work. I don’t want to own property in the begining, I just want to get in and flip it to another investor interested in owning, and my possibly coming out with a few extra coins in the transaction. Do you think that the lease/option would work on this property? Suggestions would be very much appreciated. Thanks.


#6

No. - Posted by Redline

Posted by Redline on November 05, 1998 at 10:15:37:

Someone here is a little confused. If this house is a FORCLOSURE that means the bank now owns the property and they probably will not entertain a lease/option deal. They’ll probably be looking for a conventional purchase especially if it’s a good house for a good price in a decent neighborhood.

I believe your getting a FORECLOSURE mixed up with a PRE-FORCLOSURE in which there still is a homeowner and the bank is filing to take the home back but has yet to do so. This is where this deal might’ve worked.

RL


#7

Did I miss something? - Posted by hk CA

Posted by hk CA on November 06, 1998 at 12:08:06:

First, on the house that you originally talked about. If it’s now owned by the bank, I don’t see any easy way to do a no money deal that would make the whole thing worth the trouble, since it’s only “a bit below market.” I’d move on.

On the “6 unit,” I’m completely lost. You first say it’s a 6 unit property with 2 buildings. Then you say each building has 6 units. You go on to say you’re considering offering 310k (was 340k) and then you say the total mortgages amount to over $450k. Something’s out of wack.

The first thing ANYONE should do before trying to decide how to make a deal is to get all the facts. Until you find out everything you can about a property, you cannot make an intelligent decision on what to do with it. With ALL the facts in hand, you can then proceed to figure your options and direction. Until then, you’re chasing your tail.


#8

Re: No. - Posted by Kevin(OK)

Posted by Kevin(OK) on November 05, 1998 at 22:26:00:

We both should have asked what ckCA asked. Believe me, I started to write that it was an REO, but then I remembered various conversations with Realtors where they said the house is a foreclosure, but it was really a pre-foreclosure. We spoke to soon. Good to see you are on your toes, though.

Kevin(OK)