Re: Newbie needs advice on this deal… - Posted by Brent_IL
Posted by Brent_IL on September 09, 2003 at 12:30:36:
If the house is worth $180K and he has no equity because he owes $180K, your friend can’t sell it below market value because any buyer will have to pay off the liens. Even if the new buyer takes over the loan payments subject-to, the loan balances aren’t going anywhere.
The banks won’t care about the selling price as long as their loans are paid in full.
Your friend is going to be stuck with responsibility for the loans, regardless. He took the money from the second and now doesn’t want to make the payments. He’s trying to give away his problems, but it doesn’t work like that.
No-money-down doesn’t automatically mean that the deal is a good one. In fact, in the hands of the inexperienced, NMD deals offered by sellers are rarely profitable in most areas of the country.
The bottom line is the relationship of the monthly total of mortgage payments to rental rates and operating expenses, or, as an alternative, to the local premium paid for owner financing. If there is an adequate spread, you may be able to help him to pass the payments to someone else. If the numbers don?t work out, your friend may have to bite the bullet and at least partially subsidize the monthly payments to get rid of his headache.