Owner wants to give it away! - Posted by Francis M

Posted by PBoone on October 25, 2000 at 02:03:56:

The deal must seem good to you, there is no reason to get defensive.
I only look at deals if they are 70 to 75 cents on the dollar. 10K below supposed market in our market of 175K median is not enough.
Yes I will gladly sell you any house we have in our portfolio for 10K under market if that is your target.

Owner wants to give it away! - Posted by Francis M

Posted by Francis M on October 24, 2000 at 15:07:34:

I have an owner that wants to basically give me their house! Their getting Divorced and want out from under this house. They have a 1st and 2nd on the house. The total of the two are 10K below market value. However the payments are a little higher than the going rental rate. Is this ok to do?

Also in a case like this, when would the closing take place? TODAY? or should I wait until I have the title checked? Don’t forget…I’m taking over subject to…The seller wants $0.00 except the 10 bucks for a earnest money deposit (Guess you need that to be legal) or do I even have to put that up?

Thanks for the help!

Francis M

Why would you do it? - Posted by PBoone

Posted by PBoone on October 24, 2000 at 19:34:33:

The sellers have a house 10K below market value
Answer: Big deal and based on who’s market value. Every appraisal can be based on rationalization in any given geographic region. Can you sell this house tomorrow for the 10K over and above what is paid? Probably not.
The house payments are above current rental value.
Answer: There is the answer to your question… If you have to pay to own a house for some future potential profit (providing the current value increases) Then I hope you have a high paying job or business with tons of cash to make the payments.
I for one disagree with many of the people selling books and tapes who say “put in a trust for the equity” or “Real estate ALWAYS goes up in value”. These people either (in my opinion) do not take the responsibility to make the payments when the house is vacant or have tons of cash laying around to make these payments when vacant.
After saying this and you still go through this transaction please call me I will sell you plenty of properties immediatly at 10K below market and positive cash flow.

Re: Owner wants to give it away! - Posted by B.L.Renfrow

Posted by B.L.Renfrow on October 24, 2000 at 17:48:26:

Whether it’s OK to do depends on a number of factors, some of which include:

  1. What are the arrears on both loans?
  2. Do you have the cash available to bring them current?
  3. Has foreclosure been started?
  4. How much higher than the rental rate are the payments?
  5. What are you going to do with the property? Repairs needed?
  6. Are you using a land trust?
  7. Have you done a subject-to deal before? If you don’t know what you’re doing, you can end up with some big problems.

If it truly sounds like a good deal, I would go ahead and do the paperwork and get the deed from the sellers…but I’d wait to record it until I checked the title to make sure there aren’t any other liens they “forgot” to tell you about. That way, if something’s fishy, you can just tear it up and go on your way. I always tell my subject-to sellers very clearly that the deal is not done until I have checked and verified everything to my satisfaction and recorded the deed.

If you don’t have experience with this type of deal, I’d get someone in your state to help you out on this one. Then, if it’s an area you intend to pursue, spend the money for Bill Bronchick’s land trust course.

Brian (NY)

PS: And no, you don’t need a deposit to make the contract legal.

Re: Why wouldn’t you do it? - Posted by Francis M

Posted by Francis M on October 24, 2000 at 23:54:19:

Hey Pat!

Ever hear of “Owner Financing”? Ever hear of the “CYA Letter” that says I make no payments until I find an occupant? Ever hear of the saying “My house can be sold for more because I provide owner financing to my buyers”? And an appraiser will come in with that higher appraisal because I do in fact supply Owner Financing! Also the area this house is in, is in the fastest growing community in the State! The payments are current and I get in with $0.00 down! If you think that is not such a good deal, then you my friend don’t get the picture!

There is a lot of money to be made for people that can see beyond the surface of things. You obviously are happy with a bare minimum.

Let me know where those houses are that you spoke about. I’ll bet I can make some money on them!

Unless of course you have since changed your mind. Hmmmm

Also the comment that you hope I have a high paying job or a business with tons of cash to make the payments is stupid…\

Pat… I am never, I said NEVER personally liable for any loan that I take subject to! i do however pay them but if the bottom falls out I am protected because my name is nowhere on the records therefore no one ever knocks on Francis’ door for payments!

You’ll learn this someday perhaps!


Re: Why wouldn’t you do it? - Posted by dewCO

Posted by dewCO on October 25, 2000 at 22:11:09:

So what’s the real story here. You come iwth all the answers but ask stupid questions. When do you close? You need $10 earnest money? Geez, let’s don’t mislead the rest of the folks here who need help. You go subject to, there is no “close” and no earnest money.

Re: Why wouldn’t you do it? - Posted by JohnBoy

Posted by JohnBoy on October 25, 2000 at 02:09:44:

You seem to already know the answers to the questions you asked above. Based on this second post you sound as if you have done at least several subject to deals already. I’m a little confused, what was the point of asking in the first place if you have already been through this process several times before?