MENTOR-HELP AVOID FORECLOSURE on my own home. - Posted by Cris

Posted by Brad Crouch on February 15, 2000 at 05:01:46:

An impressive senario!

MENTOR-HELP AVOID FORECLOSURE on my own home. - Posted by Cris

Posted by Cris on February 14, 2000 at 17:02:43:

I got myself in a situation where I have been sick for
some time and unable to go back to work. I estimate to be working in a couple of weeks.Last month’s check for the
1st $2236.00 bounced and on the 2-16 I have to pay again but still have no income.
I had A+ credit up to now.

Purchase price 395k with 10%down.
1st 2236.00 bal 312.662k
2nd 463.00 a month. bal 37.860k
Would rent for 2200k aprox.
The house appreciated to 460K or more in the last 16mths.This is S California.
I would thank any help in structuring this, talking to lenders etc.
I have two small children and barely can think at this time. One of my plans was to get a 3-4plex in a nearby cheaper area using as collateral the equity I do have. Then renting my home on an option, only the house, not the land.
I do not know if this happens to other single parents, that they feel overwhelmed and do not know where to start from.I know that I can accomplish, but guidance from this warm and great board is needed. Thanks to all again in advance.

PS:I had planned to go to Atlanta. If my health and the houses get on the path of resolution, I will be there and finaly meet everybody and get the CRE learning juices flowing.

Re: MENTOR-HELP AVOID FORECLOSURE on my own home. - Posted by Bill Gatten

Posted by Bill Gatten on February 14, 2000 at 20:09:40:

If all else fails (and I’ve done this more than once) and you can’t get a hard-money loan for what you need, consider running an ad in the newspaper under Business Opportunities that reads:

“INVESTORS NOTE: $460K Residential income property with NO payments, NO maintenance, No upkeep, No repair or other costs…$15,000 cash now is all that’s required. Call xxx xxx xxxx for details.”

When they call, you explain that the property is owned in a title-holding land trust, and that you will agree to continue living in it and making all payments and costs, while assigning them ownership in the property via a co-beneficiary interest in the trust. Explain that their $15,000 will buy them, say $20,000 ($25,000?) worth of existing equity, plus, some (50%?) percentage of the future appreciation over, say, the next 2,3 or 4 years. At the end of the trust term?you explain?you?ll agree to refinance or sell and pay them off completely. This gives them the opportunity of nearly doubling their money on day one, plus owning So. Cal. real estate without cost or management headaches (a dream come true).

This may seem drastic, but this way, Chris, you get to keep your house, all of your equity, and enough money to bail yourself out and make payments for another several months if circumstances don’t change. When I did it on three properties I owned in the late 80?s, I offered the investors double their money in equity. For example, on a property worth $163,000 on which I owed $120,000: for an investment of $10,000, I set the Mutually Agreed (equity share) Value at $143,000 in order to allow me to tout that they would effectively be doubling their money on the first day of our deal.

Note that I just picked the amount of $15,000 out of the air…you could possibly get more (maybe a lot more): obviously, the less you get the lower the ?share ratio? should be.

Bill Gatten

Try this out… - Posted by JohnWe (NoCA)

Posted by JohnWe (NoCA) on February 14, 2000 at 20:00:55:

Wow Cris,

Sorry to hear about the news. Don’t worry, you’ll bounce back stronger than before. I really think you can pull out of this one.

After thinking about it for a while, here’s what I came up with. It’s only an idea, hopefully you’ll get others from the others on the forum.

You say the FMV on the house is $460K. I would try to sell the house for $500K, on an ILC, owner financing with 10% down @ 10.75% interest. Here’s how th ad would go…

No Bank Qual, Bad Credit OK
EZ Financing, Quick Sell
$50K Down, $4200/Mo

Here’s how the numbers break out:
Sales Price: $500K
Down Payment: $50K
Term: 30 Yrs
Interest: 10.75%
Payment: $4200.67 per month

With the down payment of $50K, pay off the 2nd mort and back and current payments on the 1st. This should leave you with $7,668 emergency money.

The underlying loan payment is $2,236, so your monthly cash flow is $1,964.67. This should be enough to get you into a decent place.

Hope this helps. Let me know how it goes.

Good Luck!

Re: MENTOR-HELP AVOID FORECLOSURE on my own home. - Posted by Chris

Posted by Chris on February 14, 2000 at 18:18:34:

Hi Cris-

I’m sorry to hear about your illness. Please get better soon.

I am thinking along the lines that you contact the lenders ASAP to work out a plan. Possibly a forebearance agreement where you could make up back payments at a later date. This is the time to act before lawyers fees, etc. start to add up.

Try to get that worked out before you become a motivated buyer and cannot look at the other properties with a clear state of mind.

It sounds like you are on the right track.

-Good luck, Chris

Re: MENTOR-HELP AVOID FORECLOSURE on my own home. - Posted by FJW

Posted by FJW on February 15, 2000 at 10:32:04:

Mr. Gatten…

Sometimes I get the inclination that you haven’t even shared half of what that thingy, your PACTrust™, can do. Now, if you could just bottle that expert knowledge and salesmanship of yours, we’d have it made. It’s good to see your posts again…