NEED HELP ON SUBJECT TO FINANCING!!!!!!!**HELP! - Posted by Andrew

Real Estate Investing
1

Posted by Jonathan Rexford on May 12, 2007 at 18:05:56:

Andrew,

1st do you know what you are going to do with the house? I can’t see holding it. Buying it sub2 and retail would be one way. But not at the 165K price. Assumption with that note…Not likely unless they are !#@$$#@!
Option selling you the note. You can make offer but it will take you 4 weeks to find someone to talk too.

I would probably take it sub2 and give her a note for around 10-15K tops Maybe less. Make note payable when you sell the property. Keep in mind of the 1800 clicking along.

2

NEED HELP ON SUBJECT TO FINANCING!!!**HELP! - Posted by Andrew

Posted by Andrew on May 12, 2007 at 16:22:12:

Hi:

I have a potential lead where the home-owner owes 108K on the property. The home-owner refinanced the property on a 3 yr ARM a few yrs back and now the rate has jumped to almost 12%, which has caused the payments to skyrocket to $1800. The homeowner is now behind on the payment by 2 months, and with late fees and charges, owes the bank roughly 5K.

The home is legitimately worth 175K, and the home-owner has it listed for 179K (with a realtor), but the catch is that the bank is set to foreclose within the next 4 weeks.

I would like to know your opinion on how to acquire this property, outside of the typical way. Here are my current thoughts. Please respond with observations/suggestions if you can. thanks:

  1. Purchase property for 165K. I would ask her to pay closing costs as well as buy/sell side realtor commissions. Her net would then be roughly $150K

  2. Find a way to somehow “Assume” the loan, even though it most likely is not an assumable loan. If I could give her 30K in cash, assume the loan and then refinance in my name, the home-owner would most likely go for it. The problem is that I HAVE NOT DONE THIS AND DO NOT KNOW THE STEPS! Help here please

  3. If possible, loan her the money to cure her default payment of 5K and bring the loan current. I would then take a 2nd on the property. The home-owner would then have to repair their credit in order to refinance the property again and cash me out. If not, how could I put myself in a position to acquire the property?

  4. Option one has the loan. Highly improbably that O1 would negotiate a discounted sale of the paper to me, but anything is possible. Please let me know your thoughts on this - i.e. going to the bank to acquire the paper.

PLEASE LET ME KNOW YOUR THOUGHTS. NEED TO HAVE THIS KNOCKED OUT ASAP! thanks for the help and replied

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Re: NEED HELP - Posted by TeddyB_SC

Posted by TeddyB_SC on May 13, 2007 at 17:31:15:

Andrew,

I, and I’m sure the others have seen this same scenario over and over. A person in foreclosure will list their house with a realtor, who will put it on the market for top dollar (that’s the RE agents payday)and then let it sit and get foreclosed on.

In this instance I’m sure the realtor knows the 108K balance, but they will still try to get top dollar up until the day this home is foreclosed on. If you came in and offered 125K through the realtor, I doubt they would present it to the seller. It amazes me that I see this time and time again.

Unless you help this seller ASAP, and yes I mean help the seller, they will not get a penny and the home will be foreclosed on in 4 weeks. The day after foreclosure I’ll bet the seller wished you had come foward and offered 5K plus arrears to take the home subject to.

Don’t forget the home is listed by an agent, i.e., someone will want $$$.

4

Re: NEED HELP - Posted by Joe Kaiser

Posted by Joe Kaiser on May 13, 2007 at 02:40:52:

Your objective, I’m assuming (forgive me), is to get paid. Please correct
me if I am mistaken.

Getting paid requires equity, all things being equal. The more equity
you can snag, the better the chance of actually getting paid.

Buying and selling real estate costs money. Closing costs in my area
are 10% for a seller. And it takes time to close, (months). Time costs
you as well.

Start by determining what equity is there right now, and then begin
taking away whatever you believe it will cost you to get involved, like
money to the seller, holding costs, fix-up costs, closing costs, etc.

You’ll quickly realize that getting paid, your objective, becomes highly
doubtful if you cannot buy this thing for much more than what is owed.

And in reality, since she’ll likely be losing it to foreclosure and getting
nothing in that process, ANYTHING you give her is free money (to her,
not to you).

Be stingy with those dollars.

Joe

P.S. And do not forget, the top 20% in any speculative real estate
purchase is little more than “air.” Smart investors knock that right off
the top as step one.

P.P.S. Learn what makes a deal, a deal. Smart investors understand
things like profit, 10x, certainty, and speed all come into play. You
have very few of those factors going for you here.

5

Re: NEED HELP ON SUBJECT TO FINANCING!!! - Posted by Colin Bochicchio

Posted by Colin Bochicchio on May 13, 2007 at 01:49:22:

First I agree with Jonathan option #2 is a bad idea since you are not leveraging by putting up 30K for the sellers equity then you being responisble for all the payments as well…?? That is not a sub2 deal you are doing a straight conventional purchase…

If the loan is not assumable there is nothing you can do there.
Do not loan her any monies you would either negotiate with the bannk on the arrearances maybe they will discount some of the fees maybe not depending on the deal if this homeowner is only 2 months they may not be interested since the seller is not that far in default.
What is the exit strategy as Jonathan asked that is important in how to move forward on this in my view.
I work with trusts and if you cure the arrearances you can put the property into a trust w/o taking title and assst protecting the property. Does the homeowner wish to staty in or move out it is best if they leave since foreclosure bailouts are very difficult to do.
Do you have a tenant ready to go or can you getone for this property…??
If I can assist email me at coltrust07@gmail.com I have some solutions for you to consider…