This type property is usually not worth bothering with.You can do better. The owner borrowed the money, what did he do with it? He got it, let him pay it back.
If he will pay you to take the property off his hands OK, but that isn’t going to happen.
Sometimes after the bank forecloses, they sell for less than the loan balance.
I have heard of buying such properties from the owner subject to and lease optioning them for more than they are worth. This to me is stupid if you can find better deals. But one person who claims to be doing it, specialises in 1 or 2 year old houses,in new subdivisions, in a hot market. Small profit per unit but quick turnover and no muss no fuss.
Can someone lend a bit of insite on how to profit from a situation where a motavated seller owes more on a home than what it is valued at? Ie: house value…$100,000
owe on house…$106,000
Is it possible to make this a worthwhile investment without any money down? Lease Option or Subject to possibly?
Thanks in advance
Re: owe more than the house is worth… - Posted by Dan O’Connor
Posted by Dan O’Connor on April 02, 2002 at 11:42:47:
Matt,
There are several ways to make a deal like that work.
1.Let’s say the current int rate is 7%.You could take the house 'subject to’and then sell on a wrap for $110,000 or $115,000 at 9.75% with $10-15,000 down since owner financing demands a premium price.You pay down the debt,make some cash on the frontend as well as monthly cashflow.
2.Have the owner pay you $6,0000 to buy the place.Then either L/O or sell on a wrap.
There are other ways to make this work.Simply tweek the numbers and consider different possibilities for your situation.