Pre-Foreclosures - Posted by Anthony


#1

Posted by johnman on December 21, 1998 at 20:06:37:

Anthony,

Read the answers to my questions about this deal and you will see that I am trying to acquire a property by having the owners transfer the title into a land trust. I won’t go into details of land trust because I’m not the expert but with this technique the seller needs to be motivated. This seller is about to loose their house. I have explained to them that the note will still be in their name but the title will be transfered into a land trust. I bought Mr. Bronchick’s course “Get that property out of your name”. This is what I’m using as a guide.

If you read another post of mine in connection with this deal, “A SELLERS’ QUESTION/CONCERN” , there are good tips here too.

To give you more to work with :

The loan is qualifying assumable
The loan balance is $58,000 (just found this out)
The houses sell between $70-$77K
Back payments and ins $3,600
Taxes $1,200
Repairs(approx) $2,000
Owed on new A/C $1,100 (just found out)
200 for title search
total expenses $8,100 (at this time)

If I intend to re-sale, it’s not a good deal! Here’s why:

Assume selling price is at $74,000

$74,000

  • $58,000 (loan balance)
  • $8,100 (expenses fro above)
  • $2,960 (4% negotiated realtor fee)
  • $2,000 (closing cost approx)
    PROFIT OF $2,940

If my math is correct, this isn’t worth it.

But if I hold it as rental, then I could do a lease/option deal. This would be profitable because I would probably received $2,500-$4,000 option money upfront non-refundable. Plus selling the property at $77-78K, plus rent. Then I wouldn’t have to dish out $2,960 for realtor fee.

I hope this helps you. I will post an update so the others could make their comments about my analysis.

Johnman


#2

Pre-Foreclosures - Posted by Anthony

Posted by Anthony on December 21, 1998 at 19:22:24:

Hello,
I am interested in buying pre-foreclosures and had some questions from a previous posting on Dec 16, by Johnman.

If the comps are all good and the house is below market value and the deal looks like a go, Johnman mentioned that he would have them sign a contract stating they are selling the property for a set price and they would place the property in a land trust, and the note will still be in their name and only the title will transfer. After a title search, he would fill out the paperwork to transfer beneficial interest to him. Could someone explain this in greater detail & let me know if it could work & what would happen after the beneficiary transfer.

Thanks